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EMERGING TRENDS IN GLOBAL BUSINESS

Edited By FIRST EDITION Dr.P.V.Prabha S.Viswanathan & A.Prasath Kumar

RVS Institute of Management Studies & RVS College of Engineering & Technology Department of Management Studies
Kumaran Kottam Campus, Kannampalayam, Coimbatore 641 402

Note from the Editors No part of this publication should be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the author and the publisher, First Edition: 2011

DISCLAIMER The authors are solely responsible for the contents of the papers compiled in this volume. The publishers or editors do not take any responsibility for the same in any manner.

Publishers Identifier Number Category No ISBN

: : :

909150 5 978-93-81537-00-8

Published by NCRC Publications, 687, Oppanakara Street, Coimbatore- 1. Phone: 9843423321 Email: ncrcparveen@gmail.com

FOREWORD MESSAGE

Dr.P.V.Prabha Director - RVS IMS I congratulate the conference coordinators and staff members of RVS Institute of Management Studies and RVS College of Engineering and Technology, Department of Management Studies for organizing this one day national conference on Emerging Trends in Global Business. This book is a compilation of papers presented in the conference. The basic purpose of any conference like this is to bring out the findings of researcher in the form of papers on a theme, to provide a platform for discussion and to disseminate this knowledge to the public. Crisis is increasingly used as an excuse for bad performance at all levels thus limiting the search for routes out of it. It should not be seen as a destroyer but as a purifier, ensuring the survival and prosperity of the fittest. Business environment has changed and will be changing more than ever in years that are to come - some traditionally powerful markets have weakened while others have grown, cultural and geographical distances between people are fading, innovation in all aspects has become paramount for companies sustainable competitive advantage. How to deal with fast changing environment and how to deal with its outcomes presents an important issue to be tackled by both academics and practitioners. The purpose of this conference is to provide a research forum for academics and practitioners engaged in generating insights for doing business in turbulent environment. This book provides an opportunity for an interdisciplinary take on this issue from HR, Marketing, Finance, General Management, Production and Entrepreneurship viewpoints.

ACKNOWLEDGEMENT
With the blessings of our beloved chairman Dr.K.V.Kuppusamy, Trustee Tmt.Padmavathi Kuppusamy and under the guidance if our Managing Trustee Shri.K.Senthil Ganesh, RVS College if Engineering and Technology and RVS Institute of Management Studies has organized a one day National Conference on Emerging Trends in Global Business on 10th September 2011. We take great pleasure to extend whole hearted gratitude to the intellectual community who contributed their valuable studies and thoughts to our national conference on Emerging Trends in Global Business. We extend our sincere gratitude to the Chief Guest Shri.M.Settu, President, Coimbatore Productivity Counsel and CEO, Syndicate Exports Limited, Coimbatore,, who inaugurated this conference and Lion.K.G.Ramakrishna Murthy, Director, PAST International, Coimbatore, who delivered the special address. Our national conference was enriched by the presence of the Chairpersons Dr.R.Karuppasamy, Dean, SNS College of Technology, Coimbatore, Dr.R.Saravanan, Director, VLB Janakiammal College of Engineering and Technology, Dr.L.Manivannan, Reader, Erode Arts and Science College, Erode, Dr.R.Vijayakumar, Assistant Professor, Govt. Arts College, Coimbatore, Dr.J.Shanthi Lakshmi Assistant Professor (HR), Sardar Vallabhbhai Patel International School of Textiles and Management, Coimbatore. We thank them wholeheartedly. We are very much thankful to our beloved Director Dr.P.V.Prabha and Principal Dr.V.Gunaraj for their valuable support and guidance for conducting this conference. We extend our warm thanks to our rapporteurs of the sessions for conducting the technical sessions in a successful manner. We thank all our faculty members and students for their wholehearted support rendered for organizing this national conference a remarkable one. And finally, we would likely to express our thanks to the Publisher NCRC Publications for bringing out the research articles as book of edited volume.

Dr.P.V.Prabha Prof. S.Viswanathan & Prof. A.Prasath kumar, Conference Conveners

CONTENTS
S.No. Title Page No.

MARKETING
CONSUMERS SATISFACTION ON THE SERVICES OF THE DEPARTMENTAL STORES IN COIMBATORE Dr.R.Vijayakumar, Assistant Professor, Department of Commerce, Government Arts College (Autonomous), Coimbatore -641 019 Dr.G.Kavitha, Assistant Professor, Department of Commerce, Government Arts College (Autonomous), Coimbatore -641 019 GREEN MARKETING Mr.J.Almson- MBA, PGDED Asst. Professor, RVS Faculty of Management, Coimbatore SME MARKETING S.Indirani, Asst. Professor, STET school of Management, Mannargudi MARKETING INNOVATION R.Karthika, Asst.Professor, M.A.M. B School, Trichy THE IMPACT OF ADVERTISING AND PRICE PROMOTION ON BRAND EQUITY - Mr. Srinivasan.K, B.Tech, MBA, Student, School of Management Studies, Vel Tech Dr.RR & Dr.SR Technical University Avadi, Chennai 600 062 LUXURY MARKETING P.RAJKUMAR, MBA, PGDCA, V.MEERA Mcom, M.Phil, (PhD), Vel Tech Ranga Sanku College LATEST TRENDS IN LUXURY AND LIFESTYLE RETAIL IN INDIA A MULTIFACETED MARKET N.Ramkumar, Assistant professor/MBA, Selvam college of Technology, Namakkal A STUDY ON RURAL MARKETING STRATEGY FROM COCO- COLA V.Uma maheswari Kuriji College of Engineering and Technology, Manaparai CUSTOMER RELATIONSHIP MANAGEMENT - Shanmukavadivoo S.R.M Research Scholar (M.Phil), Karpagam University, Coimbatore., Dr. N. Shani, Director, Akshaya Institute Of Management Studies, Coimbatore GREEN MARKETING A PERSPECTIVE Dr. R. Amutha Associate Professor, Justice Basheer Ahmed Sayeed College for Women (Autonomous), Chennai CUSTOMER RELATIONSHIP MANAGEMENT Mrs.G.Vijayalakshmi, Asst.Professor, STET School of Management GREEN MARKETING ISSUES AND CHALLENGES Praveen Kumar.T Lecturer - St.Peters College Of Engineering And Technology,Chennai

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CUSTOMER RELATIONSHIP MANAGEMENT (CRM) Mohamed Naimudeen. A, Assistant Professor, Department of Management Studies, St.Michael Engineering College. CUSTOMER AND BRAND EQUITY Mrs. K.R. Padma Priya M.com., M.Phil., M.B.A., Research Scholar & Asst Professor, Anna Adarsh College For Women, Chennai 600040. MARKETING STRATEGIES FOR SERVICE FIRMS Mrs. R. M. Shanthi, Head , B.Com ( Bank Management), R. B. Gothi Jain College For Women Redhills , Chennai CONCEPTUALIZING, MEASURING, AND MANAGING CUSTOMERBASED BRAND LOYALTY Dr. V.N. JOTHI, Associate Professor, Department of Commerce, Kanchi Shri Krishna College of Arts and Science College Kilambi, Krishnapuram 631 551, Kanchipuram SERVICE MARKETING IN BANKING SECTOR - Mrs. S.Punitha Devi, Assistant Professor, Kongunadu Arts & Science College, Coimbatore., Mrs.R. Rajalakshmi, Department of Commerce, Kongunadu Arts & Science College, Coimbatore. RURAL MARKETING TRIBULATIONS AND CHALLENGES IN INDIA Mr.M.Ramesh Kanna, Assistant Professor, CARE School of Management, Trichy, Mr.J.Chandrakhanthan, Assistant Professor, M.A.M. B School, Siruganur, Trichy 621 105 GREEN MANAGEMENT J.Shanmuganathan / Associate Professor/ K.S.R. School of Management, Tiruchengode., A.S.Sathishkumar / Assistant Professor / K.S.R. School of Management, Tiruchengode. C.Vinodkumar / Assistant Professor / K.S.R. School of Management, Tiruchengode. S.Thiriveni Sripriya / Assistant Professor/ Janson school of business, Coimbatore

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CUSTOMER RELATIONSHIP MANAGEMENT IN HOSPITALS Mr.R.Thirunavukkarasu, Lecturer, Mr.A.Pughazhendi, Research Scholar, Mr.V.Arun Birla, 81 Student, Muthayammal Engineering College, Rasipuram LUXURY MARKETING - Ms. M. Ramya, Ms. B. Susithra Students Vasavi Vidya Trust Group Of Institutions GREEN MARKETING - S BHUVANESHWARI, Student, Business Administration, Vel Tech Ranga Sanku Arts College SYNTHESIZING SYSTEM WITH CRM IN BANKING INDUSTRY S.Muralidhar, R.Seranmadevi, S.Piradeep Assistant Professor(s) KSR School of Management, KSR College of Technology, Tiruchengode DYNAMIC SCENARIO OF CUSTOMER RELATIONSHIP MANAGEMENT IN RETAILING - DR. P. SHYAMALA M.B.A., M.PHIL., PH.D., ASST. PROFESSOR, DEPT. OF IT & M, FATIMA COLLEGE, MADURAI 625018. AN EMPIRICAL INVESTIGATION ON IMPACT OF SUPPLIERSELECTION, SUPPLY EFFORT MANAGEMENT, LOGISTICS CAPABILITIES AND SUPPLY CHAIN MANAGEMENT STRATEGIES ON FIRM PERFORMANCE Mrs.M.Meena, Asst.Prof., Michael institute of Management, Madurai, Mr.D.M.Sezhiyan, Asst.Prof., National Institute of Technology, Trichy, 83 86 88

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INTERACTIVE MARKETING AND SOCIAL MEDIA Mrs P. ANNAPURANI ,M.A, M.Phil, (Ph.D), Lecturer, Vel Tech Engineering College, Vel Tech Road, Chennai . Mrs. P. R. JAEL PERSIS, M.A., M.Phil, B.Ed.,Lecturer, Vel Tech High Tech Dr. RR and Dr. SR Engineering college BUYING BEHAVIOR OF CONSUMER TOWARDS KHADI(KVIC) WITH SPECIAL REFERENCE TO MADURAI CITY Mrs S.Rosary Arul Kavitha Asst.professorMichael Institute of Management Madurai A STUDY ON CUSTOMER PREFERENCE AND SATISFACTION TOWARDS RETAIL OUTLETS, CHENNAI Ms.Janet Glory M C, Lecturer, Department of Management Studies, Rajalakshmi Institute of Technology, Chennai CONSUMERS PERCEPTION ON COMPARING QUALITY OF CELEBRITY AND BRAND FEATURES IN ADVERTISEMENT K.KANNAN M.B.A; M.PHIL, B.SATHEESH RAJA, ASSISTANT PROFESSORS RVS INSTITUTE OF MANAGEMENT STUDIES COMPETITIVE ADVANTAGE THROUGH CORPORATE SOCIAL RESPONSIBILITY PRACTICES Dr. S. Jaya Bharathi, Ms. R. Ananthi and Mr. Y. Babu Vinothkumar Faculty Members Department of Management Studies and Research, Coimbatore Institute of Engineering and Technology A STUDY ON CUSTOMER SATISFACTION ON AYURVEDIC HEALTHCARE SERVICES Dr.A.Lakshmi Director, School of Management, K.S.Rangasamy College of Technology, Tiruchengode. V.S.Vijaya Chander Assistant Professor and Research Scholar, School of Management, K.S.Rangasamy College of Technology, Tiruchengode ONLINE PURCHASE INTENTIONS A STUDY OF ANTECEDENT VARIABLES Anu George Viswajyothi College of Engineering and Technology, Vazhakulam, Kerala, S. Ganesan Suguna Spark Business School, Coimbatore M K Ramachandran Nair IMK, University of Kerala, Trivandrum SERVICE QUALITY GAP ANALYSIS IN EDUCATIONAL SERVICE M.Ramakrishnan M.Tech., MBA., M.Phil, (Ph.D), Assistant Professor, Department of Management Studies, K.S. Rangasamy College of Technology, Tiruchengode 637209 SERVICES MARKETING AND MANAGEMENT Mr.G.Nagamanickam, Lecturer in Management Studies, Muthayammal Engineering College, Rasipuram & Ms.S.Dhivya, M.B.A. (II year), Dept of Management Studies, Muthayammal Engineering College, Rasipuram BUSINESS ETHICS AND CORPORATE SOCIAL RESPONSIBILITY K.Damodaran, Asst.prof, Professional School of Management, N.Aarthy, Asst.prof, Professional School of Management. THE PARADIGM SHIFT UNORGANISED TO ORGANISED RETAILING S. ANITHA, Assistant Professor, Department of Management Studies, Tagore Engineering College, ChennaI CUSTOMER RELATIONSHIP MANAGEMENT IN INDIAN INDUSTRIES - Ms. A.Jayanthi MBA, M.Phil, PGDCA, (PH.D, Assistant Professor, Department of Management Sciences, D J Academy for Managerial Excellence, Coimbatore =641032 BUILDING SUCCESSFUL INDIAN RETAIL BRANDS Dr.R.Karuppasamy,Director- SNS College of Engineering, Coimbatore

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Mr.N.Ramesh Kumar MBA., (Ph.D), Research Scholar Asst. Professor, Nehru College of Management, Coimbatore AN EMPIRICAL ANALYSIS ON FACTOR INFLUENCING THE PURCHASE BEHAVIOUR OF BEVERAGE PRODUCTS BY THE CONSUMERS IN SALEM DT. 145 P.Arun, Research Scholar, BSMED, Bharathiar university, Coimbatore, Tamilnadu, India FORECASTING IN FASHION MARKETING Dr.R.Karpagam, Associate Professor Professional School of Management Palladam 152 Mr.A.Mohammed Yasser Arafath, Ph.D Scholar Dr.NGP Institute of Management Coimbatore EMERGING GREEN MARKETING TRENDS Mrs.C.Indhumathi, Assistant Professor and Ph.D Research Scholar, Department of Commerce, Karpagam University, Coimbatore 21. Dr.P.Palanivelu, Professor, School of Commerce and Management, Karpagam University,Coimbatore21 ROLE OF ADVERTISING IN AUTOMOBILE BRAND SELECTION N.Krishnaveni MBA., Research Scholar Mother Teresa Womens University, Kodaikanal.

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FINANCE
43 44 45 GLOBAL PRACTICES IN INDIAN BANKING INDUSTRY L.Meena, Assistant Professor, Department of Management Studies, Fatima College (Autonomous), Madurai 18 CONTEMPRARY ISSUES IN BANKING Name : M.Hemasundari, Asst. Professor, STET school of Management, Mannargudi FINANCIAL MARKETS INTEGRATION IN INDIA B.ALAGARSAMY & C.Prabu Asst.Professor, Dept. of Management Studies, St.Michael College of Engg.and Tech., Kalayarkoil 630 551, Sivagangai Dist. CUSTOMER RELATIONSHIP MANAGEMENT IN BANKING INDUSTRY MR.R.SENTHIL KUMARAN, HOD/MBA, Selvam College of Technology, Namakkal A STUDY OF THE PATENTABILITY OF FINANCIAL INNOVATIONS IN INDIA Dr.S.RADHIKA,M.Com.,M.Phil., Ph.D., Professor, MBA Department, VELTECH Dr.RR & Dr. SR TECHNICAL UNIVERSITY, Avadi, Chennai DERIVATIVE MARKET IN INDIA A GROWTH PERSPECTIVE Dr.R.Karuppasamy M.Com., MBA. M.Phil. Ph.D, Director-Academic & Research, Nehru Institute of Management Studies, Coimbatore-641 105 Mr. S.Viswanathan, Research Scholar, Bharathiar University & Assistant Professor, RVS Institute of Management, Coimbatore INTERNATIONAL MONEY MARKET - EUROCURRENCY MARKET Dr. M.BALAMURUGAN & A.V.KARTHICK, Asst. Professor, Dept. of Management Studies, St.Michael College of Engg & Tech., Kalayarkoil -630 551. MOTIVES FOR MERGERS AND ACQUISITIONS IN THE INDIAN BANKING SECTOR A NOTE ON OPPORTUNITIES & IMPERATIVES Ms.J.Aarthi, MBA, M.Phil & Mr.P.S.Sridharan, MBA, M.Phil Assistant Professor,Department of Management Studies, Guru Nanak College,Velachery,Chennai-42 160 164 167 170

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INNOVATIVE FINANCIAL INSTRUMENT - CARBON CREDITING & CARBON TRADING T.Suganthalakshmi, Assistant Professor, School of Management Studies, Anna university of technology,. Dr.C.Muthuvelayutham, Assistant Professor, Directorate of online and distance Education Anna University of Technology, Coimbatore INVENTION OF IDEAS AND STRATEGIES IN INVESTING Mr. K. Damodaran, Asst. Prof, Professor School of Management AN ANALYSIS OF FINANCIAL BEHAVIOUR OF INVESTORS IN MUTUAL FUND INVESTMENT S.N.Selvaraj, H. Shamin and C.Dhanya, Assistant Professor, Wisdom School of Management, Udumalpet CONTEMPORARY ISSUES IN E-BANKING Mrs.D.Charumathi & Mrs.V.Uma Maheswari Department of MBA, Guru Nanak College CONTEMPORARY ISSUES & FUTURE OF INDIAN BANKING SECTOR G. Kiruthika, Lecturer, SSM College of Engineering, Komarapalayam, Namakkal Dist, THE INITIATIVES AND IMPACT OF INDIAN BANKING SECTOR ON FINANCIAL INCLUSION S.Vijay Mallik Raj, Assistant Professor, OAA MAVMM School of Management, Kidaripatti Post,Madurai - 625301 MERGERS AND ACQUISITION KATHIRVEL.K, Assistant Professor, Department of Commerce(UG), Kongunadu Arts & Science College, P.SOUNDARYAN, Department of Commerce(UG), Kongunadu Arts & Science College, Coimbatore-29. MERGERS AND ACQUISITION IN INDIA IN THE EMERGING GLOBAL BUSINESS SCENARIO Mrs.V.O.KAVITHA, Research Scholar, DOMS, Jawaharlal Institute of Technology,Coimbatore. MUTUAL FUND AND HEDGE FUNDS Ms. R. PRIYA RATHNA , Faculty, Ms. R. DIVYA & Ms. K. KANMANI Students NON PERFORMING ASSETS PERTAINING TO HOUSING Mrs.P.Vijaya Lakhsmi, - Assistant Professor, R.V.S. College of Engineering and Technology, Dindigul FOREIGN DIRECT INVESTMENT IN MULTI-BRAND RETAILING Mr.S.Chelladurai, Assistant Professor, MBA Department, Nehru Institute of Engineering & Technology Coimbatore 641 105 Mrs.K.Sarguna, Assistant Professor, BBM Department, Nehru Arts and Science College Coimbatore 641 105 IMPACT OF GLOBAL FINANCIAL CRISIS ON SHARE MARKET IN INDIA Dr.S.Gandhimathi, Assistant professor of Economics, Avinashilingam Deemed University for Women, Coimbatore. FOREIGN CAPITAL INFLOWS TO REAL ESTATE INDUSTRY IN INDIA DURING LIBERALISATION ERA Dr. S.JAYAKKUMAR, Associate professor of commerce, Guru Nanak College, ChennaiAN OVERVIEW OF HEDGE FUND Dr.R.Geethalakshmi & Mr.C.Yuvaraj, Assistant Professor, Coimbatore Institute of Management & Technology.

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E-CRM & BANKING P. Senthilmurugan, Lecturer, Dept of Management Studies Tagore Engg. College, INVESTMENTS AND RISKS M.GAYATHRI DEVI M.B.A, RVS INSTITUTE OF MANAGEMENT STUDIES PERSPECTIVES OF SMALL INVESTORS ON INVESTMENT AND RISK M.Kalavalli, Research Scholar, DOMs,Jawaharlal Institute of Technology, Coimbatore Dr.P.T.Vijaya Rajakumar, Professor & Director, DOMs, Nehru Institute of Engineering & Technology, Coimbatore MERGER & ACQUISITION Ms. R. PRIYA RATHNA (Faculty), Ms. K. MARAGATHAM & Mr. A. BHUVARAGAVAN, VASAVI VIDYA TRUST GROUP OF INSTITUTIONS RECENT TRENDS IN MICRO FINANCE IN INDIA Mr.M.KARTHIKEYAN, Assistant Professor, Ph.D Research Scholar Department of Commerce, Karpagam University, Coimbatore. Dr.P.SIVAKAMI, Assistant Professor, Department of Commerce,Govt Arts College,Coimbatore. FINANCIAL MARKETS INNOVATIONS AND GROWTH Mrs.S.Sasirekha, Mr.S.Athul Pandey, VLB Janakiammal College of Arts & College

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A STUDY ON BEHAVIOURAL MAPPING OF INDIVIDUAL INVESTORS


Dr.Anuvalentina, Mrs V.Eveline Vijaya, Mrs Lydia.H.Swamy, Asst professor, Nirmala college for women ,Redfields Coimbatore

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HUMAN RESOURCES
72 73 74 TALENT MANAGEMENT Mr.K.Srivignesh Kumar, Assistant-Professor Department Of Management(U.G) Sree Saraswathi Thyagaraja Colege,Thippampati, Pollachi LEADERSHIP DEVELOPMENT AND SUCCESSION PLANNING S. Muthu Kaleeswaran, Student, K.Ramakrishnan College of Engineering & V.Sruthi, Student, K. Ramakrishnan College of Engineering AN ANALYSIS ON LEADERSHIP BEHAVIOUR AND ITS EFFECTIVENESS IN INDIAN BUSINESS ORGANISATIONS WITH SPECIAL REFERENCE TO TAMIL NADU, T. Prakash, ph.d. Research scholar, department of economcs, urmu dhanalakshmi college Trichy , Dr. S. Mookiah, centre for the study of social exclusion and inclusive policy, manonmaniam sundaranar university, tirunelveli 627 012 CROSS CULTURAL ENVIRONMENT TRAINING Mr.S.Theodore Manova, Asst.Prof, Selvam College of Technology, Namakkal COMPETENCY MAPPING Mr.A.Jayaseelan, Asst.Prof/M.B.A, Selvam College of Technology, Namakkal PERFORMANCE APPRAISAL OF EMPLOYEES R.Sathya Aarthi., Asst.prof, Vel Tech Ranga Sanku Arts College, Chennai TALENT MANAGEMENT M.R.PRAKASH, MBA, M.PHIL, ASSISTANT PROFESSOR, VEL TECH RANGA SANKU ARTS COLLEGE.DEPARTMENT OF MANAGEMENT STUDIES, CHENNAI. K.ANTONY BASKARAN, M.COM, M.PHIL, PGDPM, PH.D, ASSISTANT PROFESSOR, SACRED HEART COLLEGE, TIRUPATTUR.635601 271 274

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DEPARTMENT OF COMMERCE 79 CONFLICT MANAGEMENT AND ITS IMPACT ON ORGANIZATION DEVELOPMENT Mr.V.Arunkumar, Assistant Professor, Department of management studies, Sudharsan Engineering College, Pudukottai. Mr. Ram Achuthan, II-MBA, Sudharsan Engineering College, Pudukottai. REWARD & RECOGNITION SYSTEM THAT ARE FOLLOWING IN THE ORGANISATIONS K. SARULATHA, RS, L. SURESH, STUDENT, MBA DEPARTMENT , SUDHARSAN ENGINEERING COLLEGE RECENT TRENDS IN OCCUPATIONAL HEALTH AND SAFETY MANAGEMENT R.Matheswari, Assistant Professor, Department of MBA, Selvam College of Technology,, Namakkal, Tamil Nadu, India ANALYSIS AND REVIEW ON STRESS MANAGEMENT IN APPAREL INDUSTRY. Prof. A. Srinivasan., MBA., MPhil.,PGDBA.,Department of MBA, Nehru College of Management & Research Scholar Ph.D, Bharathiyar University, Dr. R. Ganesan, MBA., M.com., MPhil., Ph.D.,PGDCA., Principal Sri Venkateswara College of Computer Application & Management, Ettimadai, Coimbatore QUALITY OF WORK LIFE IN AAVIN MILK COOPERATIVE INDUSTRY V.Uma., Research Scholar, Karpagam University, Coimbatore Dr. R. Mary Metilda, Associate Professor & Head, School of Business, SNS College of Technology THE STUDY ON EMPLOYEE RESISTANCE TOWARDS CHANGE WITH SPECIAL REFERENCE TO RANE BRAKE LINING LTD IN AMBATHUR. Mr. P. Venkatesh, MBA, Lecturer, MBA Dept, Srinivasa Institute of Engineering and Technology, Chennai 56 HR EXCELLENCE IN ORGANIZATIONAL CULTURE MANAGEMENT K.Uma Shankar, Asst. Prof.,-MBA, Jawaharlal Institute of Technology, Coimbatore. Govinda Solai, Asst. Prof.,,-MBA(Aero)-NA&AM, NGI, Coimbatore. A STUDY ON JOB STRESS AMONG NATIONALISED BANK EMPLOYEES IN THANJAVUR DISTRICT Dr. R. Saminathan, Principal I/C, Bharathidasan University Model College, Aranthangi. K.Kumar, Assistant Professor,Gnanam School of Business Thanjavur Sengipatti 613 402. KNOWLEDGE MANAGEMENT Ms.M.GUNASUNDHARI, MBA, Assistant Professor, Vel Tech multi tech Dr.Rangarajan Dr.Sakunthala Engg College, Department of Management Studies, Avadi, Vel Tech Road, Chennai. R.Saranya, MCA, Lecturer, Vel Tech Ranga Sanku Arts College, Department of MCA, Avadi, Vel Tech Road, Chennai. TALENT MANAGEMENT :CHALLENGES TO HRM Lekha.H,MBA,Mphil ,Asisstant Professor,Department of management studies ,Adi shankara institute of engineering and technology, kalady ,kerala LEADERSHIP DEVELOPMENT AND SUCCESSION PLANNING M. Jola, Research Scholar, Karpagam University, Coimbatore -21. Dr. N. Shani, Akshya Institute of Management Studies, Coimbatore. EVALUATION OF EFFECTIVENESS OF EXIT INTERVIEW: A STUDY WITH REFERENCE TO IT SECTOR IN CHENNAI CITY

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C.Senthil Kumar.,M.Com., M.Phil., M.B.A., (Ph.D) Ph.D., Research Scholar, University of Madras, Chennai-05 HUMAN RESOURCE MANAGEMENT CHALLENGES AND ISSUES IN BANKING SECTOR IN INDIA 338 C.Loganathan, Department of Management, Email: clogu77@gmail.com Dr.A.Valarmathi, Professor, RVS-IMS, Kannampalayam, Coimbatore IMPACT OF TALENT MANAGEMENT PRACTICES IN CHENNAI COMPANYS Dr.A.Velanganni Joseph., Asst Prof., Anna University of Technology, 341 Tiruchirappalli., A.Vanitha.,Asst Prof, St.Micheal College of Eng. And Tech., Kalayarkovil TALENT MANAGEMENT- HOW TO RETAIN YOUR BEST PEOPLE C.V.Suganthamani, Assistant Professor, Guruvayurappan Institute of 347 Management, Navakkarai Coimbatore-105 E-mailcv_suganthamani@yahoo.com STRESS AND ITS MANAGEMENT - A rising concern J. VIJAYA SHANTH, RESEARCH SCHOLAR, DEPT OF COMMERCE, 350 BHARTIYAR U NIVERSITY, COIMBATORE & LECTURER, DEPT OF COMMERCE, ANNA ADARSH COLLEGE FOR WOMEN , CHENNAI RECRUITING & HIRING J. Anushya, Department of Management Studies, Karpagam University, Coimbatore- 641021. 353 Dr.P.Palanivelu, Professor, Department of Management Studies, Karpagam University, Coimbatore- 641021. TALENT MANAGEMENT Syed Mansoor Pasha: Asst Prof. Dept of Business Management Lalitha PG 355 College, Venkatapur (V), & Ghatkesar (M). Hyderabad. TALENT MANAGEMENT MRS. V.KOTHAINAYAKI, HEAD OF THE DEPARTMENT OF 359 COMMERCE (CORP. SEC.) R.B GOTHI JAIN COLLEGE FOR WOMEN, REDHILLS CHENNAI 52 PERFORMANCE AND COMPENSATION MANAGEMENT MRS.K. KARPAGAMBIGAI, M.COM, M.PHIL., ASSISTANT 362 PROFESSOR,DEPARTMENT OF COMMERCE (BANK MANAGEMENT), R.B.GOTHI JAIN COLLEGE FOR WOMEN REDHILLS, CHENNAI PERFORMANCE AND COMPANSATION MANAGEMENT R.KARTHIKKEYAN. Lecturer. & R.VIGNESH WARAN, Student. & 364 D.KARTHIK. Student. Department of Management Studies,, Kurinji College of Engg & Tech, Manapparai EFFECTIVE PERFORMANCE MANAGEMENT: LINKAGE OF HRM TO PERFORMANCE MANAGEMENT Mrs. P Sangeetha BE., MBA., (PHD), Assistant Professor, Department of Management Sciences, D J Academy for Managerial Excellence, Coimbatore TALENT MANAGEMENT Mrs. K.SABANA ASHMIN, Assistant Professor, Department of Management Studies, R.V.S. College of Engineering & Technology, Dindigul - 5 Mrs. A. ANANDHI, Assistant Professor, Department of Management Studies, R.V.S. College of Engineering & Technology, Dindigul - 5 Mrs. R. ANITHA, Assistant Professor, Department of Management Studies, R.V.S. College of Engineering & Technology, Dindigul - 5 AN IMPLEMENTATION OF TALENT MANAGEMENT ON SMEs K.Logasakthi, MBA, Lecturer, VSA School of Management, VSA Group of Institutions Salem. D.Arul, Lecturer, VSA School of Engineering, VSA Group of Institutions Salem. 367

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M.Vivek, II-MBA, VSA School of Management, VSA Group of Institutions Salem. HR ISSUES IN MERGERS AND ACQUISITIONS A.PRABHU, Assistant Professor in Commerce (UG), J.DUKE, Student of III B.Com, Kongunadu Arts and Science College, Coimbatore. A STUDY QUALITY OF WORK LIFE OF WORKERS IN MAGNESITE INDUSTRY K.Logasakthi,. MBA., Ph.D,Lecturer, School of Management, VSA Group of Institutions, Salem. M.Rajeshkumar., MBA., Lecturer, School of Management, VSA Group of Institutions, Salem. S.Sudharson, II-MBA, Lecturer, School of Management, VSA Group of Institutions, Salem. WORK ENGAGEMENT R.MANJU SHREE MBA, M.Phil, ( Ph.D), Assistant Professor, RVS Institute of Management studies, Kumarankottam campus, Kannampalayam,Coimbatore ANN MARY JOSE Student, RVS Institute of Management studies, Kumarankottam campus, Kannampalayam, Coimbatore 641 402. LEADERSHIP DEVELOPMENT AND SUCCESSION PLANNING ENSURING LEADERSHIP CONTINUITY & BEST PRACTICES IN SUCCESSION PLANNING S.Viviliya Paulin, Asst.Professor Guruvayurappan Institute of Management, Coimbatore Leadership for next decade Deepa Ramachandran , Faculty Member, DBA school of advanced studies, Bangalore, Dr .P. Karthikeyan, Assistant Professor,Kongu Engineering College,Perundurai, Emerging Trends in Global Business From BREAD BAKER TO BREAD EARNER The new role of women in managing work and life. Smitha Mathew & G H Kerinab Beenu, AP- MBA, Tagore Engg. College, Chennai TALENT MANAGEMENT Lt Col (Retd) AE Charles, Prof, Nehru Institute of Management Studies INTERNATIONAL BUSINESS & CHALLENGES OF HR T.Kumar M.com., M.Phil. & Delcya Nicholas, Assistant Professor, Department of Commerce, Kongunadu Arts and Science College, Coimbatore 29 AN EMPIRICAL RESEARCH ON THE MECHANISM OF EMPLOYER BRANDING PROCESS Dr. A. Shameem, Prof & Head, Dept of Management Studies, Tagore Engineering. College, Chennai R. Maha Prabhu, Asst. Prof., Dept of Management Studies, Tagore Engineering. College, Chennai RECRUITING AND HIRING Ms. R. PRIYA RATHNA (Faculty), Ms. S. SOWMYANARAYANI & Ms. K. SUSHMA (Student), VASAVI VIDYA TRUST GROUP OF INSTITUTIONS PERFORMANCE AND COMPENSATION MANAGEMENT T.Bakkia Rani, II MBA & P.Asha, II MBA, Michael Institute of Management, Madurai. EMERGING TRENDS IN GLOBAL BUSINESS-NEW ROLE OF WOMEN IN MANAGEMENT Ms.A.J. Freni ,A.P, Department of Management Studies, Tagore Engineering Collge, Chennai-44

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AN EMPIRICAL INVESTIGATION TO ASSESS TALENT MANAGEMENT INITIATIVES OF IT FIRMS IN CHENNAI CITY S. Swathi, Lecturer, Department of Management Studies, Tagore Engineering College, Chennai. EMPLOYER BRANDING TO ATTRACT AND RETAIN TALENTED EMPLOYEES P. Suvitha, Assistant Professor, Guruvayurappan Institute of Management, Coimbatore Palakkad Highway, Navakkarai Post, Coimbatore 641 105 A STUDY ON EMPLOYEE ATTRITION RATE SPECIAL REFERENCE TO IT COMPANIES IN MADURAI V.B.Devi BALA, Department of Management Studies, Michael Institute of Management, Madurai, Tamil Nadu Dr.P.Anbuoli, Department of Management Studies, Anna University of Technology Madurai PERFORMANCE AND COMPENSATION MANAGEMENT WITH SPECIAL REFERENCE TO IT INDUSTRIES. Dr.A.Lakshmi1, 1 Director, School of Management, K.S.Rangasamy College of Technology, Tiruchengode. M.Maheswari, Assistant Professor and Research Scholar, School of Management, K.S.Rangasamy College of Technology,Tiruchengode NATURE AND CONSEQUENCES OF STRESS AND WORK LIFE BALANCE DR.S.V.SHINDE, D.A.V.VELANKAR COLLEGE OF COMMERCE,SOLAPUR PERCEPTION OF EMPLOYEES TOWARDS NEED FOR TRAINING IN AVIATION INDUSTRIES PROF.J.NIRUBRANI, RVS INSTITUTE OF MANAGEMENT STUDIES, COIMBATORE. EVOLUTION OF HR PRACTICES IN INDIAN CORPORATE Mr.S.Karthikeyan, Assistant Professor, Anna University of Technology, CBE Ms.S.G.Aparna Lecturer, Coimbatore Institute of Engg and Technology,CBE RETENTION OF HUMAN RESOURCES- CHALLENGE IN GLOBAL MANAGEMENT G.Sivakumar, MBA, Mphil., MA (PMIR)., Assistant Professor, SNR Institute of Management Studies, SNR College, Coimbatore. TALENT MANAGEMENT Dr.P.Radha, Associate Professor, RVS Institute of Management Studies, Coimbatore A CASE STUDY ON WORK LIFE BALANCE AMONG THE EMPLOYEES AT TVS SRICHAKRA LIMITED B. POONGODI B.Sc.(Agri), MBA, M.Phil,(Ph.D.), Assistant Professor, Dept. OF Mgt. Studies, SNS COLLEGE OF ENGINEERING, Coimbatore-641107 ROLE OF GREEN HR INITIATIVES IN SUSTAINABLE DEVELOPMENT Elizabeth George (MBA,MPhil,UGC-NET), Asst. Professor, Department of Management Studies, Adi Shankara Institute of Engineering and Technology HR CHALLENGES IN NEW MANAGEMENT PARADIGM: VIRTUAL ORGANIZATION R. Alamelu, AP, Fatima College, Madurai 18

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EMOTIONAL INTELLIGENCE AND EMPLOYMENT PRACTICES A TOOL FORGROOMING EMPLOYEES Dr.J.Senthil Vel Murugan, Faculty-PRIMS,Periyar University S.Bala Murugan, Assistant professor, RVS Institute of management studies COACHING STRATEGIES TO BE ADAPTED BY ORGANIZATIONS FOR DIFFERENT BEHAVIOUR STYLES OF AN INDIVIDUALS OPTIMAL PERFORMANCE Mrs. D.VIJAYALAKSHMI Assistant Professor, Department of Management, RVS College of Engg. & Tech, Coimbatore MAKING COUNSELLING EFFECTIVE IN EMPLOYEES CAREER S.Chandra Sekar,II BCA, R.V.S College Of Arts And Science, Sullur. RETENTION OF TALENT MANAGEMENT Dr.B.ADALARASU MBA., M.Phil, PGDPMIR. HDSE,MISTE ,Ph.D.- Dean RVS Faculty of Management Mr.K.RAMESH MBA., DISM., (Ph.D) . Assistant Professor, RVS Faculty Of Management

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131 132 133 NEED AND IMPORTANCE OF ENTREPRENEURSHIP T.Gomathi, Assistant Professor/M.B.A Selvam college of Technology Namakkal, ETHNIC ENTREPRENURSHIP AND MIGRATION C.LUMINIA VINODHINI, Asst Professor -Dept of Commerce, Anna Adarsh College for women, QUALITIES OF MODERN ENTREPRENEURSHIP Ms.S.Jagadeeswari, Assistant Professor, Department of Management studies & Ms.D.Durga Assistant Professor,GRT Group of Institutions, BKR College of Engineering & Technology, Tiruttani, Thiruvallur Dt MICROFINANCE AND WOMEN ENTREPRENEURSHIP Dr. G. Santhiyavalli, Associate professor & M. Esther Jansi, Lecturer Department of Commerce, Avinashilingam Institute for Home Science and Higher Education for Women GROWING COMPANIES AND ENTREPRENEURSHIP Researching the Interface between learning and the Entrepreneurial context. G.Jayanthi, Research Scholar, Karunya University, Coimbatore-641 114 468 471

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136 IMPACT OF SUPPLY CHAIN MANAGEMENT ON GROWTH PROSPECTS OF TEXTILES & APPARELS IN SOUTH TAMILNADU. N.Amul Praveena.BE,MBA,(PhD), MISTE, Dr. A.Mahadevan, Director, Excel Business School A COMPREHENSIVE PRODUCTION SYSTEM IN AN ENGINEERING INDUSTRY - GOVINDA BHAT S Head (Department of Management Studies) ASIET, KALADY MANUFACTURING AUTOMATION MYTHS AND REALITIES Rejish David Jose.P- Assistant Professor / MBA, Meenashi Sundar.R- II MBA RVS College of Engineering andTechnology. ROLE OF ADVANCED MANUFACTURING SYSTEMS DURING BUSINESS TRENDS - RENGANATHAN.R(MBA,MPHIL) LECTURER(MBA-DEPT) RAJALAKSHMI INSTITUTE OF TECHNOLOGY, KUTHAMBAKKAM ERP IN MIS DEVELOPMENT S.Arul Krishnan, M.Sc, MBA, M.Phil., , Assistant Professor Vel Tech Ranga Sanku Arts College, 486

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GENERAL MANAGEMENT
141 142 BUSINESS ETHICS Mrs. R. Bhuvaneswari, MBA, M.Phil, MHRM, MDCA, MISTE, UGC-NET. Assistant Professor, STET School of Management, Mannargudi. INNOVATIVE MANAGEMENT - J. Aruna, AP, Thiruvarur ASSESSING THE INPUTS AND OUTPUTS OF PARTNERSHIP ARRANGEMENTS FOR HEALTH AND SAFETY MANAGEMENT Palanivel.R.V, Assistant Professor, M.A.M.B-School, Siruganur-621 105, Tiruchirappalli R.Anbarasan, Assistant Professor, M.A.M. B-School, Siruganur, Tiruchirappalli, A Case Study of Vishranthi Dr. Shanthi Nachiappan, HOD & Prof, Rajalakshmi Institute of Technology, Chennai WOMEN EMPOWERMENT THROUGH SELF-HELP GROUP P.Murali, Assistant Professor, Department of MBA, Selvam College of Technology, Namakkal, VIRTUAL MANAGEMENT Ms.M.Surya, Asst.Professor, M.A.M. B School, Trichy CORPORATE SOCIAL RESPONSIBILITY IN INDIA Mr.R.A.Ayyapparajan Asst. Professor ,Mr.B. Sathishkumar Asst.Professor, A.Elgin Asst.Professor, School of Management , V.L.B. Janakiammal College of Engineering and Techonology, Coimbatore INNOVATION MANAGEMENT B.DivyaPriya, Head, Department of Commerce (UG) & Maria Nancy Nicholas II B.Com. Kongunadu Arts and Science College, Coimbatore. CONTEMPORARY ISSUES IN GLOBAL BUSINESS A.Anitha Assistant Professor, Department of Management, Sree Saraswathi Thyagaraja college,Pollachi A.Meenakshi Lecturer, Department of Commerce, Avinashilingam University, Coimbatore G-EDGE GREEN EDGE EMERALD DOMAIN IN GREEN ENVIRONS Mr.M.Thambidurai, Asst.Prof, Professional School of Management. SOCIAL SUPPORT AND WORK-FAMILY BALANCE -AN OVERVIEW Dr.N.Brindha, Associate Professor, Department of Management Studies, Karpagam College of Engineering, Coimbatore 32. B.Sharathbabu II MBA, Karpagam College of Engineering, Coimbatore 32. CORPORATE SOCIAL RESPONSIBILITY AND THE BEVERAGE ALCOHOL INDUSTRY Ms Prasanthi, Asst Prof. & Ms.SeemaNazneen,AsstProf, Department of Business Management. Lalitha P.G College, Venkatapur (V), Ghatkesar (M). R.R District. Hyderabad. Andhra Pradesh. EMERGING TRENDS IN GLOBAL BUSINESS - Charith. B, Sujata Raje and Vinoth. S Assistant Professor, Guru Nanak College, Chennai ORGANIZATIONAL MANAGEMENT Mrs.V.NAGAVALLI, Assistant Professor, R B Gothi Jain College for Women, Red hills, Chennai 501 504

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BUSINESS ETHICS Mrs. ANITHA, Mrs. K. SABANA ASHMIN, Mrs. ANANDHI - Assistant Professors, RVS COLLEGE OF ENGINEERING AND TECHNOLOGY, DINDIGUL CUSTOMER RELATIONSHIP MANAGEMENT Mrs. ANITHA, Mrs. ANANDHI, Mrs. K. SABANA ASHMIN - Assistant Professors, RVS COLLEGE OF ENGINEERING AND TECHNOLOGY, DINDIGUL PSYCHO SOCIAL FACTORS INFLUENCING WOMEN IN BUSINESS Dr.S. Sangeetha, Associate Professor & HOD, Department of Management Studies & Mrs.S.U.Silambarasi Assistant Professor, GRT Group of Institutions, BKR College of Engineering & Technology, Tiruttani, Thiruvallur Dt. INNOVATIVE BUSINESS OPPORTUNITIES AND SMART BUSINESS MANAGEMENT TECHNIQUES FROM GREEN CLOUD (REV 3). VIJAYKUMAR Thiagarajar School of Management Thirupparankundram, Madurai. , C. DHIVAGAR, Thiagarajar School of Management, Thirupparankundram, Madurai ., R. M. JAGANLAL, Thiagarajar School of Management, Thirupparankundram, Madurai. CYBER BULLYING - A COUNTER ATTACK TO BUSINESS ETHICS Ganesan.D Research Scholar (Management, part time - External), Manonmaniam Sundaranar University, Tirunelveli-627012 & Arunkumar. P Final year MBA, Muthayammal Engineering College, Rasipuram-637 408 EMERGING TRENDS IN FAST FOOD INDUSTRY INDIA Dr.M.G.Saravanaraj MBA, M.Phil, PhD, Professor& Head /MBA, Muthayammal Engineering College- Rasipuram.., T.Sudha MBA, M.Phil, (PhD), Asst.Prof /RVS Faculty of Management Coimbatore. , A.Brindha MBA, DBAA, DND, Asst.Prof /RVS Faculty of Management Coimbatore. NEW ROLE OF WOMEN IN MANAGEMENT Kannammal.A (Lecturer) & Loganathan.v.p (Student)Department of Management Studies, Shree Venkateshwara Hi-Tech Engineering College, Gobi E-BUSINESS WITH INFORMATION TECHNOLOGY YUVARAAJAA. L, MCA, LECTURER, MCA, VEL TECH RANGA SANKU ARTS COLLEGE, VEL TECH ROAD, AVADI, CHENNAI. CORPORATE SOCIAL RESPONSIBILITY AND EMERGING TRENDS IN GLOBAL BUSINESS - S.AARTHI MBA., M, Phil, ASSISTANT PROFESSOR, FATIMA COLLEGE, MADURAI -625002 P.ALAGARSAMY M.COM.,M.PHIL.,(PH.D), RESEARCH SCHOLAR, P.G &RESEARCH DEPT OF COMMERCE, CTA COLLEGE BODINAYAKANUR CONSTRUCTION AND SELECTION OF CONTINUOUS SAMPLING PLAN - Radhakrishnan. R Associate Professor, Department of Statistics, P.S.G. College of Arts and Science, Coimbatore 641 014., Esther Jenitha.K, Assistant Professor, RVS Institute of Management Studies, Coimbatore 641 402. ATTAINMENT OF SUSTAINABLE DEVELOPMENT THROUGH GREEN MANAGEMENT Vennila Gopal, Assistant Professor, Nehru Arts and Science College, Coimbatore. 105, Dr. K. Shobha, Reader in Economics, Government Arts College, Coimbatore. 018 MOBILE AD-HOC NETWORK (MANET) A.Savitha, Asst professor, RVSCET, Renuga.A, III B.Sc-IT, Rose Mary College Tirunelveli ERP IN MIS DEVELOPMENT

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CONSUMERS SATISFACTION ON THE SERVICES OF THE DEPARTMENTAL STORES IN COIMBATORE


Dr.R.Vijayakumar, Assistant Professor, Department of Commerce, Government Arts College (Autonomous), Coimbatore -641 019 Dr.G.Kavitha, Assistant Professor, Department of Commerce, Government Arts College (Autonomous), Coimbatore -641 019 ABSTRACT The retail sector is the second largest employer after agriculture sector in India. There are nearly twelve million retail outlets are functioning in India and this sector is highly fragmented and consists of predominantly of small, independent, and owner managed shops. The departmental stores offer various facilities and make the shopping as convenient and easy from the point of view of the customers. The departmental stores fulfill the needs and expectations of the consumers with great attention. They employ well trained, experienced and motivated staff to serve our valuable customers with great attention and enthusiasm. The present study is carried on by the researchers with the primary objective of assessing the level of satisfaction derived by the consumers of departmental stores in Coimbatore and to find out the factors that influence the same. The study also offers constructive suggestions for improving the satisfaction of the consumers of departmental stores. INTRODUCTION The retail sector is the second largest employer after agriculture sector in India. There are nearly twelve million retail outlets are functioning in India and this sector is highly fragmented and consists of predominantly of small, independent, and owner managed shops. There has been a boom in the retail trade in India owing to a gradual increase in the disposable income of the middle-class households. More and more players are venturing into the retail business in India to introduce new attractive retail formats like malls, supermarkets, discount stores, department stores and even changing the traditional look of the bookstores, chemist shops, and furnishing stores. In the fast moving world, customers are looking for ambience and convenience while they do shopping and at the same time the time they prefer to spend only less time for shopping. They prefer to carry out the activity of their whole purchases under one roof. The departmental stores offer this facility and make the shopping as convenient and easy from the point of view of the customers. OBJECTIVES OF THE STUDY: The present study is carried on by the researchers with the primary objective of assessing the level of satisfaction derived by the consumers of departmental stores in Coimbatore and to find out the factors that influence the same. HYPOTHESES: In tune with the objective of the study, hypotheses were formulated that the various factors relating to the sample respondents such as sex, age, monthly family income, frequency of purchase and average value of consumption and their opinion on price , quality , purity , weights and measure , availability of variety of goods , discounts and special offers , services of salesmen , packing , amenities and door delivery facilities offered by the departmental stores do not significantly influence the satisfaction derived by the consumers on the services of the departmental stores in Coimbatore. METHODOLOGY AND TOOLS USED The study is based on the primary data and the necessary data required for the study were collected through the structured interview schedules. Two hundred and fifty consumers of various departmental stores in this city were selected as sample respondents for the study on the basis of convenient sampling method. In order to the find out the factors that influence the level of satisfaction

2 derived by the consumers on the services of the departmental stores, Chi square test has been employed. LEVEL OF SATISFACTION DERIVED BY THE RESPONDENTS The sample respondents were divided into three groups in accordance with their satisfaction scores as less satisfied respondents; medium satisfied respondents and highly satisfied respondents. Out of two hundred and fifty sample respondents, 40 respondents (16.00%) derived low level of satisfaction; 98 respondents (39.20%) derived medium level of satisfaction and 112 respondents (44.80%) derived high level of satisfaction on the services of the departmental stores. Table 1: Level of satisfaction derived by the respondents Level of Satisfaction Low Medium High Total Source: Survey Data EXTENT OF VARIATION IN THE SATISFACTION DERIVED BY THE SAMPLE RESPONDENTS: The extent of variation in the satisfaction derived by the sample respondents in accordance with their personal factors and their opinion on the various aspects with regard to the departmental stores is given in the following paragraphs. SEX GROUP OF THE RESPONDENTS AND LEVEL OF CUSTOMER SATISFACTION The distribution of respondents in accordance with their sex group and their level of satisfaction is given in Table 2 and it reveals that out of 250 respondents, one hundred and eighty six are female respondents (74.40%) and sixty four respondents (25.60%) are male respondents. Table 2: Sex group and Level of Consumer Satisfaction Level of Satisfaction Sex Group Female Male Total Source: Survey data Figures in the brackets represent the percentage to total Low 31 (16.67%) 9 (14.06%) 40 Medium 78 (41.94%) 20 (31.25%) 98 High 77 (41.40%) 35 (54.69%) 112 Total 186 64 250 No. of Respondents 40 98 112 250 Percentage 16.00 39.20 44.80 100

3 Table 2 indicates that the majority of the respondents (74.40%) are female respondents. It also indicates that the percentage of respondents (14.06%) with low level of satisfaction is the lowest and the percentage of respondents (54.69%) with high level of satisfaction is the highest among the male respondents and hence it can be inferred that the male respondents derived higher level of satisfaction than their female counterparts. AGE GROUP OF THE RESPONDENTS AND LEVEL OF CUSTOMER SATISFACTION The distribution of respondents in accordance with their age group and their level of satisfaction is given in Table 3 and it reveals that out of 250 respondents, sixty respondents (24.00%) belong to young age group (upto 30 years), eighty six respondents (28.00%) belong to middle age group (between 31years and 45 years) and the remaining one hundred and twenty respondents (48.00%) belong to old age group ( above 45 years) Table 3: Age group and Level of Consumer Satisfaction Level of Satisfaction Age Group Young Middle Old Total Source: Survey data Table 3 indicates that the majority of the respondents (48.00%) belong to old age group. It also indicates that the percentage of respondents (9.17%) with low level of satisfaction is the lowest and the percentage of respondents (55.00%) with high level of satisfaction is the highest among the old age group respondents and hence it can be inferred that the respondents who belong to old age group derived higher level of satisfaction than the other categories of respondents. MONTHLY FAMILY INCOME OF THE RESPONDNETS AND LEVEL OF CUSTOMER SATISFACTION The distribution of respondents in accordance with their monthly family income and their level of satisfaction is given in Table 4 and it reveals that out of 250 respondents, fifty seven respondents (22.80%) belong to low monthly income category (upto Rs. 7500/ - as monthly family income), the monthly family income for the one hundred and six respondents (42.40%) is medium (between Rs. 7501/- and Rs. 12500/-) and eighty seven respondents (34.80%) fall under high monthly family income category (above Rs. 12500 as monthly family income). Low 18 (30.00%) 11 (15.71%) 11 (9.17%) 40 Medium 28 (46.67%) 27 (38.57%) 43 (35.83%) 98 High 14 (23.33%) 32 (45.71%) 66 (55.00%) 112 Total 60 70 120 250

4 Table 4: Monthly Family Income and Level of Consumer Satisfaction Monthly Family Income Low Medium High Total Source: Survey data Table 4 indicates that the majority of the respondents (42.40%) belong to medium income category. It also indicates that the percentage of respondents (10.38%) with low level of satisfaction is the lowest and the percentage of respondents (54.72%) with high level of satisfaction is the highest among the respondents who belong to medium level income category and hence it can be inferred that the respondents who belong to medium level income category derived higher level of satisfaction than the respondents who belong to other income categories. FREQUENCY OF PURCHASE OF GOODS BY THE RESPONDENTS AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their frequency of consumptions of goods from the departmental stores and their level of satisfaction is given in Table 5 and it reveals that out of 250 respondents, one hundred and seventeen respondents (46.80%) consume the goods at least twice in a month, eighty six respondents (34.40%) consume at least once in a month and the remaining forty seven respondents (18.80%) rarely consume the goods from the departmental stores. Table 5: Frequency of Consumption and Level of Consumer Satisfaction Frequency of consumption Twice in a month Once in a month Rarely Total Source: Survey data Table 5 indicates that the majority of the respondents (46.80%) consume the goods at least two times in a month from the departmental stores. It also indicates that the percentage of respondents (9.40%) with low level of satisfaction is the lowest and the percentage of respondents (59.83%) with high level of satisfaction is the highest among the respondents who consume the goods at least two times in a month from the departmental stores and hence it can be inferred that the respondents who make their purchases frequently from the departmental stores derived higher level of satisfaction than the other categories of respondents. Low 11 (9.40%) 12 (13.95%) 17 (36.17%) 40 Level of Satisfaction Medium 36 (30.77%) 48 (55.81%) 14 (29.79%) 98 High 70 (59.83%) 26 (30.23%) 16 (34.04%) 112 Total 117 86 47 250 Level of Satisfaction Low 15 (26.32%) 11 (10.38%) 14 (16.09%) 40 Medium 30 (52.63%) 37 (34.91%) 31 (35.63%) 98 High 12 (21.05%) 58 (54.72%) 42 (48.28%) 112 Total 57 106 87 250

5 AVERAGE VALUE OF CONSUMPTION AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their monthly family income and their level of satisfaction is given in Table 6 and it reveals that out of 250 respondents, forty seven respondents (18.80%) belong to less consumption category (Upto the maximum of Rs. 1000 per month), sixty two respondents (24.80%) belong to medium consumption category (consumption between Rs. 1001 and Rs. 2000 per month) and the remaining one hundred and forty one respondents (56.40%) belong to high consumption category (consumption above Rs. 2000 per month). Table 6: Average value of consumption and Level of Consumer Satisfaction Average Value of Consumption Less Medium High Total Source: Survey data Table 6 indicates that the majority of the respondents (56.40%) consume more than two thousand rupees worth of goods per month from the departmental stores. It also indicates that the percentage of respondents (7.09%)with low level of satisfaction is the lowest and the percentage of respondents (51.06%)with high level of satisfaction is the highest among the respondents who consume more than two thousand rupees worth of goods per month from the departmental stores and hence it can be inferred that the respondents who consume a considerable amount of goods from the departmental stores derived higher level of satisfaction than the other categories of respondents. PRICE OF GOODS AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their opinion on price of goods in departmental stores and their level of satisfaction is given in Table- 7 and it indicates that out of two hundred and fifty respondents, one hundred and twenty nine respondents (51.60%) opined that the price is less, seventy five respondents (30.00%) expressed that the price is moderate and the remaining forty six respondents (18.40%) opined that the price of goods in the departmental stores is high. Level of Satisfaction Low 18 (38.30%) 12 (19.35%) 10 (7.09%) 40 Medium 17 (36.17%) 22 (35.48%) 59 (41.84%) 98 High 12 (25.53%) 28 (45.16%) 72 (51.06%) 112 Total 47 62 141 250

6 Table 7: Opinion on Price and Level of Consumer Satisfaction Level of Satisfaction Price Low Less Moderate High Total Source: Survey data Table- 7 indicates that majority of the respondents (51.60%) opined that the price of goods in the departmental stores is less. It also indicates that the percentage of respondents (7.75%) with low level of satisfaction is the lowest and the percentage of respondents (56.59%) with high level of satisfaction is the highest among the respondents who expressed that the price of goods in the departmental stores is less and hence it can be inferred that the respondents with the opinion that the price is less in departmental stores derived higher level of satisfaction. QUALITY OF GOODS AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their opinion on quality of goods in departmental stores and their level of satisfaction is given in Table- 8 and it indicates that out of two hundred and fifty respondents, forty seven respondents (18.80%) opined that the quality is poor, seventy seven respondents (30.8%) expressed that the quality is good and the remaining one hundred and twenty six respondents (50.4%) rated that the quality of goods in the departmental stores as excellent. Table 8: Opinion on Quality of Goods and Level of Consumer Satisfaction Level of Satisfaction Quality Poor Good Excellent Total Source: Survey data Table- 8 indicates that majority of the respondents (50.40%) opined that the quality of goods in the departmental stores is excellent. It also indicates that the percentage of respondents (7.94%) with low level of satisfaction is the lowest and the percentage of respondents (46.83%) with high level of satisfaction is the highest among the respondents who expressed that the quality of goods in the departmental stores is excellent and hence it can be inferred that the respondents with the opinion that the quality of goods in departmental stores is excellent derived higher level of satisfaction. Low 16 (34.04%) 14 (18.18%) 10(7.94%) 40 Medium 12(25.53%) 29(37.66%) 57(45.24%) 98 High 19(40.43%) 34(44.16%) 59(46.83%) 112 Total 47 77 126 250 10 (7.75%) 14 (18.67%) 16 (34.78%) 40 Medium 46 (35.66%) 35 (46.67%) 17 (36.96%) 98 High 73 (56.59%) 26 (34.67%) 13 (28.26%) 112 Total 129 75 46 250

7 h. PURITY OF GOODS AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their opinion on purity of goods in the departmental stores and their level of satisfaction is given in Table- 9 and it indicates that out of two hundred and fifty respondents, forty nine respondents (19.6%) expressed that the goods are less pure, sixty nine respondents (27.6%) opined that the goods are pure and the remaining one hundred and thirty two respondents (52.8%) opined that the goods are very pure in departmental stores. Table 9: Opinion on Purity of Goods and Level of Consumer Satisfaction Level of Satisfaction Purity Less Pure pure Very pure Total Source: Survey data Table- 9 indicates that majority of the respondents (52.80%) opined that the goods in the departmental stores are very pure. It also indicates that the percentage of respondents (10.61%) with low level of satisfaction is the lowest and the percentage of respondents (64.39%) with high level of satisfaction is the highest among the respondents who expressed that the goods in the departmental stores are very pure and hence it can be inferred that the respondents with the opinion that the goods available in departmental stores are very pure derived higher level of satisfaction. WEIGHTS AND MEASUREMENTS AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their opinion on weights and measures in departmental stores their level of satisfaction is given in Table- 10 and it indicates that out of two hundred and fifty respondents, thirty eight respondents (15.2%) opined that the weights and measures are imperfect, seventy two respondents (28.8%) expressed that the weights and measures are less imperfect and the remaining one hundred and forty respondents (56.00%) opined that the weights and measures of the goods in the departmental stores are perfect in departmental stores. Table 10: Opinion on Weights and Measurements and Level of Consumer Satisfaction Level of Satisfaction Weights and Measurements Imperfect Less Imperfect Perfect Total Source: Survey data Low 15(39.47%) 13(18.06%) 12(8.57%) 40 Medium 12(31.58%) 28(38.89%) 58(41.43%) 98 High 11(28.95%) 31(43.06%) 70(50.00%) 112 Total 38 72 140 250 Low 13 (26.53%) 13(18.84%) 14(10.61%) 40 Medium 19(38.78%) 25(36.23%) 33(25.00%) 98 High 17(34.69%) 31(44.93%) 85(64.39%) 112 Total 49 69 132 250

8 Table- 10 indicates that majority of the respondents (56.00%) opined that the weights and measure are perfect in the departmental stores. It also indicates that the percentage of respondents (8.57%) with low level of satisfaction is the lowest and the percentage of respondents (50.00%) with high level of satisfaction is the highest among the respondents who expressed that the weights and measure are perfect in the departmental stores and hence it can be inferred that the respondents with the opinion that the weights and measure are perfect in the departmental stores derived higher level of satisfaction. AVAILABILITY OF VARIETY OF GOODS AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their opinion on availability of variety of goods in departmental stores and their level of satisfaction is given in Table- 11 and it indicates that out of two hundred and fifty respondents, thirty five respondents (14.00%) opined that the goods offered in the departmental stores are less in variety, sixty seven respondents (26.80%) expressed that the variety of goods is more and the remaining one hundred and forty eight respondents (59.20%) opined that the goods offered by the departmental stores are plenty in varieties. Table 11: Opinion on Availability of variety of goods and Level of Consumer Satisfaction Level of Satisfaction Availability of variety of goods Less More Plenty Total Source: Survey data Table- 11 indicates that majority of the respondents (59.20%) opined that the departmental stores offer plenty of varieties of goods. It also indicates that the percentage of respondents (7.43%) with low level of satisfaction is the lowest and the percentage of respondents (53.38%) with high level of satisfaction is the highest among the respondents who expressed that the availability of varieties of goods in departmental stores is plenty and hence it can be inferred that the respondents with the opinion that the departmental stores offer plenty of varieties of goods derived higher level of satisfaction. DISCOUNTS AND SPECIAL OFFERS AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their opinion on discounts and special offers offered by the departmental stores and their level of satisfaction is given in Table- 12 and it indicates that out of two hundred and fifty respondents, forty nine respondents (19.60%) opined that the departmental stores offer less discounts and special offers, ninety seven respondents (38.80%) expressed that the discounts and special offers are moderate and the remaining one hundred and four respondents (41.60%) opined that the departmental stores offer more discounts and special offers. Low 13 (37.14%) 16(23.88%) 11(7.43%) 40 Medium 11(31.43%) 29(43.28%) 58(39.19%) 98 High 11(31.43%) 22(32.84%) 79(53.38%) 112 Total 35 67 148 250

9 Table 12: Opinion on Availability of Discounts and Special Offers and Level of Consumer Satisfaction Level of Satisfaction Discounts and Special Offers Less Moderate More Total Source: Survey data Table- 12 indicates that majority of the respondents (41.60%) opined that the departmental stores offer more discounts and special offers. It also indicates that the percentage of respondents (11.54%) with low level of satisfaction is the lowest and the percentage of respondents (50.96%) with high level of satisfaction is the highest among the respondents who expressed that the discounts and special offers offered by the departmental stores is more and hence it can be inferred that the respondents with the opinion that the departmental stores offer more discounts and special offers derived higher level of satisfaction. SERVICES OF SALESMEN AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their opinion on the services of sales men in the departmental stores and their level of satisfaction is given in Table- 13 and it indicates that out of two hundred and fifty respondents, forty respondents (16.00%) opined that the services of salesmen are poor, fifty four respondents (21.60%) expressed that the services of salesmen are good and the remaining one hundred and fifty six respondents (62.40%) rated the services of salesmen in the departmental stores as excellent. Table 13: Opinion on Services of Salesmen and Level of Consumer Satisfaction Level of Satisfaction Services of Salesmen Poor Good Excellent Total Source: Survey data Table- 13 indicates that majority of the respondents (62.40%) opined that the services of the salesmen are excellent in the departmental stores. It also indicates that the percentage of respondents (7.69%) with low level of satisfaction is the lowest and the percentage of respondents (52.56%) with high level of satisfaction is the highest among the respondents who expressed that the services of the Low 16(40.00%) 12(22.22%) 12(7.69%) 40 Medium 13(32.50%) 23(42.59%) 62(39.74%) 98 High 11(27.50%) 19(35.19%) 82(52.56%) 112 Total 40 54 156 250 Low 12(24.49%) 16(16.49%) 12(11.54%) 40 Medium 16(32.65%) 43(44.33%) 39(37.50%) 98 High 21(42.86%) 38(39.18%) 53(50.96%) 112 Total 49 97 104 250

10 salesmen are excellent and hence it can be inferred that the respondents with the opinion that the services of the salesmen are excellent in the departmental stores derived higher level of satisfaction. PACKING AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their opinion on the packing of goods in the departmental stores and their level of satisfaction is given in Table- 14 and it indicates that out of two hundred and fifty respondents, forty five respondents (18.00%) opined that the packing of goods is poor in the departmental stores, sixty three respondents (25.20%) expressed that the packing of goods is good and the remaining one hundred and forty two respondents (56.80%) rated the packing of goods in the departmental stores as excellent. Table 14: Opinion on Packing and Level of Consumer Satisfaction Opinion on Packing Poor Good Excellent Total Source: Survey data Low 17(37.78%) 12(19.05%) 11(7.75%) 40 Level of Satisfaction Medium 13(28.89%) 33(52.38%) 52(36.62%) 98 High 15(33.33%) 18(28.57%) 79(55.63%) 112 Total 45 63 142 250

Table- 14 indicates that majority of the respondents (56.80%) opined that the packing of goods in the departmental stores is excellent. It also indicates that the percentage of respondents (7.75%) with low level of satisfaction is the lowest and the percentage of respondents (55.63%) with high level of satisfaction is the highest among the respondents who expressed that packing of goods is excellent and hence it can be inferred that the respondents with the opinion that the packing of goods in the departmental stores is excellent derived higher level of satisfaction. AMENITIES AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their opinion on the amenities available in the departmental stores and their level of satisfaction is given in Table- 15 and it indicates that out of two hundred and fifty respondents, forty one respondents (16.40%) expressed that the amenities provided by the departmental stores are poor, sixty eight respondents (27.20%) opined that the amenities are good and the remaining one hundred and forty one respondents (56.40%) rated the amenities in the departmental stores as excellent. Table 15: Opinion on availability of Amenities and Level of Consumer Satisfaction Level of Satisfaction Availability of Amenities Poor Good Excellent Total Source: Survey data Low 17(41.46%) 12(17.65%) 11(7.80%) 40 Medium 12(29.27%) 25(36.76%) 61(43.26%) 98 High 12(29.27%) 31(45.59%) 69(48.94%) 112 Total 41 68 141 250

11 Table- 15 indicates that majority of the respondents (56.40%) opined that the availability of amenities in the departmental stores is excellent. It also indicates that the percentage of respondents (7.80%) with low level of satisfaction is the lowest and the percentage of respondents (48.94%) with high level of satisfaction is the highest among the respondents who expressed that amenities in the departmental stores is excellent and hence it can be inferred that the respondents with the opinion that the availability of amenities in the departmental stores is excellent derived higher level of satisfaction. DOOR DELIVERY AND LEVEL OF SATISFACTION The distribution of respondents in accordance with their opinion on the door delivery facilities provided by departmental stores and their level of satisfaction is given in Table- 16 and it indicates that out of two hundred and fifty respondents, forty one respondents (16.40%) opined that the door delivery facilities offered by the departmental stores are poor , fifty six respondents (22.40%) expressed that the door delivery facilities are good and the remaining one hundred and fifty three respondents (61.20%) rated the door delivery facilities offered by the departmental stores as excellent. Table 16: Opinion on Door Delivery facilities and Level of Consumer Satisfaction Door Delivery facilities Poor Good Excellent Total Source: Survey data Level of Satisfaction Low 15(36.59%) 13(23.21%) 12(7.84%) 40 Medium 15(36.59%) 19(33.93%) 64(41.83%) 98 High 11(26.83%) 24(42.86%) 77(50.33%) 112 Total 41 56 153 250

Table- 16 indicates that majority of the respondents (61.20%) opined that the door delivery facilities offered by the departmental stores is excellent. It also indicates that the percentage of respondents (7.84%) with low level of satisfaction is the lowest and the percentage of respondents (50.33%) with high level of satisfaction is the highest among the respondents who expressed that door delivery facilities in the departmental stores is excellent and hence it can be inferred that the respondents with the opinion that the door delivery facilities offered by the departmental stores is excellent derived higher level of satisfaction. FACTORS INFLUENCING THE SATISFACTION DERIVED BY THE RESPONDENTS The influence of the various factors relating to the sample respondents and their opinion on various aspects relating to the departmental stores on satisfaction derived by the respondents was tested with the help of Chi square test and the result of the test is presented in Table 17.

12 Table 17 : Factors influencing the satisfaction derived by the sample respondents Chi Square Test S. No 1 2 3 4 Factor d.f 2 4 4 4 4 4 4 4 4 4 4 4 4 4 4 Calculated value 11.20 21.03 19.03 35.79 27.75 26.03 18.69 16.41 21.87 25.96 6.39 28.95 32.75 27.14 23.83 Table Value* 9.210 13.277 13.277 13.277 13.277 13.277 13.277 13.277 13.277 13.277 13.277 13.277 13.277 13.277 13.277 Significance Significant Significant Significant Significant Significant Significant Significant Significant Significant Significant Not Significant Significant Significant Significant Significant

Sex Age Monthly family income Frequency of purchase Average value of 5 consumption 6 Price 7 Quality 8 Purity 9 Weights and measure Availability of variety of 10 goods 11 Discounts and special offers 12 Services of salesmen 13 Packing 14 Amenities 15 Door delivery *at 1% Level of Significance

The results of the Chi square indicates that the factors such as sex group of the respondents, age group of the respondents, monthly family income group of the respondents, frequency of purchase, average value of consumption and the opinion of the respondents on price, quality, purity, weights and measure, availability of variety of goods, services of salesmen, packing and amenities significantly influence the satisfaction derived by the sample respondents. It also indicates that the discounts and special offers offered by the departmental stores do not significantly influence the satisfaction of the respondents. FINDINGS OF THE STUDY The study revealed that forty respondents (16.00%) respondents derived low level of satisfaction, ninety eight respondents (39.20%) derived medium level of satisfaction and one hundred and twelve respondents (44.80%) derived high level of satisfaction on the services of the departmental stores. The results of the study also indicate that the respondents of the following categories derived higher level of satisfaction than their counterparts on the services of Departmental stores:

a) b) c) d) e) f) g) h) i) j) k)

Male respondents Old age group respondents The respondents with high Monthly Family Income The respondents with high frequency of consumption The respondents with high average value of consumption The respondents who opined that the price is less The respondents who opined that quality of goods is excellent The respondents who opined that goods are with high purity The respondents who opined that the weights and measure are perfect The respondents who opined that the variety of goods are plenty The respondents who opined that the discounts and special offers are more

13

l) m) n) o)

The respondents who opined that the services of the salesmen are excellent The respondents who opined that packing of goods is excellent The respondents who opined that the availability of amenities is excellent and the respondents who opined that the door delivery facilities in the departmental stores is excellent The study also revealed that sex group of the respondents, age group of the respondents, monthly family income of the respondents, frequency of purchase, average value of consumption and the opinion of the respondents on price, quality, purity, weights and measures, availability of variety of goods, services of salesmen, packing, amenities and door delivery facilities significantly influence the satisfaction derived by the sample respondents. It also indicates that the discounts and special offers offered by the departmental stores does not significantly influence the satisfaction derived by the sample respondents on the services offered by the departmental stores. SUGGESTIONS: In order to improve the satisfaction of the customers of departmental stores, the following suggestions have been offered by the researchers: a. Displaying the product details and descriptions at the various points will ease the identification of the products from the point of the customers and this will enhance customer satisfaction. b. The improvement in the basic facilities available at the departmental stores such as the water and toilet facilities will further improve the customer satisfaction. c. As the customers in many occasions have to wait in a long queue for payment of bills, adequate number of additional counters has to be established during the festival and other peak seasons. d. As these stores are heavily crowded, adequate ventilations have to be provided to make the customers more comfortable when they are being inside the stores. e. Though they are offering the products at competitive prices, still they have to find ways for further reduction in the prices which will contribute more for higher level of customer satisfaction. f. The offering of details regarding the date of manufacturing and date of expiry will strengthen the trust of the customers on the stores and it will improve their satisfaction also. g. The superiority in quality of the products supplied by these stores should be of will result in higher level of customer satisfaction. h. As the consumers spend a considerable amount of time in the departmental stores at the time of purchasing the products, the provision of safe and adequate parking facilities will enhance the customer satisfaction. i. The departmental stores may consider the provision of clock room facilities to keep the belongings of the customers. j. As the customers spend more amount of time in the stores once they enter into the stores for purchase of goods, provisions have to be created for offering refreshment facilities to the customers. k. The salesmen of the stores have to be provided with uniforms and identity cards so as to create easier identification by the customers. l. Wherever it is required, the demonstration facilities have to be offered. m. As the stores are functioning in multistory buildings, the lift provisions have to be created by the stores. n. As the customers buy large number of goods from the stores, more attention has to be paid on proper packing of goods, which will make easier to carry the goods by the customers.

14 CONCLUSION The departmental stores play an important role in effective performance of consumption and distribution functions by means of making the availability of different kinds of goods that are required by variety of consumers under one single roof. The study revealed the level of satisfaction derived by the consumers of departmental stores in Coimbatore and the factors that influence the same. The study also offered some constructive suggestions for improving the satisfaction of the consumers of departmental stores. As the retail industry is gaining its momentum in the recent days, the proper adoption of the suggestions offered through this study will enhance the satisfaction of the customers and facilitate the growth of these types of stores as they are capable of fulfilling the needs and wants of variety of customers. BIBLIOGRAPHY 1. 2. 3. 4. 5. 6. 7. Levy Weits. 2005. Retailing Management. New Delhi: Tata McGraw Hill Barry Bermand and Joel R. Evans. 2002. Retail Management A Strategic Approach. New Delhi: Prentice-Hall of India Private Ltd. Frederic A.Russel, Franic H.Beach and Richard H.Buskirt. 1988. Selling principles. Singapore: McGraw Hill Book Company Tyagi C.L. and Arun Kumar. 2004. Sales Management. New Delhi: Atlantic Publishers & Distributors Chetan Bajaj, Rajnish Tuli and Nidhi V. Srivastava. 2005. Retail Management. India: Oxford University Press Gupta, S.P. 2006. Statistical Methods. New Delhi: Sultan Chand and Sons Kothari C.R. 2003. Research Methodology. New Delhi: Wishwa Prakashan

15

GREEN MARKETING
Mr.J.Almson- MBA, PGDED Asst. Professor, RVS Faculty of Management, Coimbatore INTRODUCTION Although environmental issues influence all human activities, few academic disciplines have integrated green issues into their literature. This is especially true of marketing. As society becomes more concerned with the natural environment, businesses have begun to modify their behavior in an attempt to address society's "new" concerns. Some businesses have been quick to accept concepts like environmental management systems and waste minimization, and have integrated environmental issues into all organizational activities. Some evidence of this is the development of journals such as "Business Strategy and the Environment" and "Greener Management International," which are specifically designed to disseminate research relating to business environmental behavior. One business area where environmental issues have received a great deal of discussion in the popular and professional press is marketing. Terms like "Green Marketing" and "Environmental Marketing" appear frequently in the popular press. Many governments around the world have become so concerned about green marketing activities that they have attempted to regulate them (Polonsky 1994a). For example, in the United States (US) the Federal Trade Commission and the National Association of Attorneys-General have developed extensive documents examining green marketing issues (FTC 1991, NAAG 1990). One of the biggest problems with the green marketing area is that there has been little attempt to academically examine environmental or green marketing. While some literature does exist [Carlson, Grove and Kangun 1993, Davis 1992, Davis 1993], it comes from divergent perspectives. This paper will attempt 1) to introduce the terms and concepts of green marketing; 2) briefly discuss why going green is important; 3) examine some of the reason that organizations are adopting a green marketing philosophy; and 4) mention some of the problems with green marketing. WHAT IS GREEN MARKETING Unfortunately, a majority of people believe that green marketing refers solely to the promotion or advertising of products with environmental characteristics. Terms like Phosphate Free, Recyclable, Refillable, Ozone Friendly, and Environmentally Friendly are some of the things consumers most often associate with green marketing. While these terms are green marketing claims, in general green marketing is a much broader concept, one that can be applied to consumer goods, industrial goods and even services. For example, around the world there are resorts that are beginning to promote themselves as "ecotourist" facilities, i.e., facilities that "specialize" in experiencing nature or operating in a fashion that minimizes their environmental Impact (May 1991, Ingram and Durst 1989, Troumbis 1991). 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. Indeed the terminology used in this area has varied, it includes: Green Marketing, Environmental Marketing and Ecological Marketing. While green marketing came into prominence in the late 1980s and early 1990s, It was first discussed much earlier. The American Marketing Association (AMA) held the first workshop on "Ecological Marketing" in 1975. The proceedings of this workshop resulted in one of the first books on green marketing entitled "Ecological Marketing" (Manion and Kinnear 1976a). Since that time a number of other books on the topic have been published [Charter 1992, Coddington 1993, Ottman 19931.

16 The AMA workshop attempted to bring together academics, practitioners, and public policy makers to examine marketing's Impact on the natural environment. At this workshop ecological marketing was defined as: 1) The study of the positive and negative aspects of marketing activities on pollution, energy depletion and nonenergy resource depletion. (Hanlon and Kinnear 1976b, 11 This early definition has three key components, 1) It is a subset of the overall marketing activity; 2) it examines both the positive and negative activities; and 3) a narrow range of environmental issues are examined. While this definition is a useful starting point, to be comprehensive green marketing needs to be more broadly defined. Before providing an alternative definition it should be noted that no one definition or terminology has been universally accepted. Thus lack of consistency is a large part of the problem, for how can an issue be evaluated if all researchers have a different perception of what they are researching. The following definition is much broader than those of other researchers and It encompasses all major components of other definitions. My definition as: Green or Environmental Marketing consists of all activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants, such that the satisfaction of these needs and wants occurs, with minimal detrimental impact on the natural environment. (Polonsky 1994b, 2] This definition incorporates much of the traditional components of the marketing definition, that is "All activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants" [Stanton and Futrell 1987]. Therefore it ensures that the interests of the organization and all its consumers are protected, as voluntary exchange will not take place unless both the buyer and seller mutually benefit. The above definition also Includes the protection of the natural environment, by attempting to minimize the detrimental impact this exchange has on the environment. This second point is important, for human consumption by its very nature is destructive to the natural environment. (To be accurate products making green claims should state they are "less environmentally harmful" rather than "Environmentally Friendly.") Thus green marketing should look at minimizing environmental harm, not necessarily eliminating it. WHY IS GREEN MARKETING IMPORTANT The question of why green marketing has increased in importance is quite simple and relies on the basic definition of Economics: Economics is the study of how people use their limited resources to try to satisfy unlimited wants. (McTaggart, Findlay and Parkin 1992, 24) Thus mankind has limited resources on the earth, with which she/he must attempt to provide for the worlds' unlimited wants. (There is extensive debate as to whether the earth is a resource at man's disposal, for example, see Gore 1993.) While the question of whether these wants are reasonable or achievable is important, this issue will not be addressed in this paper. In market societies where there is "freedom of choice", it has generally been accepted that individuals and organizations have the nght to attempt to have their wants satisfied. As firms face limited natural resources, they must develop new or alternative ways of satisfying these unlimited wants. Ultimately green marketing looks at how marketing activities utilize these limited. WHY ARE FIRMS USING GREEN MARKETING? When looking through the literature there are several suggested reasons for firms increased use of Green Marketing. Five possible reasons cited are: 1. Organizations perceive environmental marketing to be an opportunity that can be used to achieve its objectives [Keller 1987, Shearer 19903; 2. Organizations believe they have a moral obligation to be more socially responsible (Davis 1992, Freeman and Liedtka 1991, Keller 1987, McIntosh 1990, Shearer 1990); 3. Governmental bodies are forcing firms to become more responsible (NAAG 1990);

17
4. Competitors' environmental activities pressure firms to change their environmental marketing

activities [NAAG 1-990]; and 5. Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behavior (Azzone and Manzini 19943. OPPORTUNITIES It appears that all types of consumers, both Individual and industrial are becoming more concerned and aware about the natural environment. in a 1992 study of 16 countries, more than 50% of consumers in each country, other than Singapore, indicated they were concerned about the environment [Ottman 19933. A 1994 study in Australia found that 84.6% of the sample believed all individuals had a responsibility to care for the environment. A further 80% of this sample indicated that they had modified their behavior, including their purchasing behavior, due to environmental reasons [EPA-NSW 19941. As demands change, many firms see these changes as an opportunity to be exploited_ Gwen these figures, it can be assumed that firms marketing goods with environmental characteristics will have a competitive advantage over firms marketing non-environmentally responsible alternatives. There are numerous example of firms who have strived to become more environmentally responsible, in an attempt to better satisfy their consumer needs. McDonald's replaced its clam shell packaging with waxed paper because of increased consumer concern relating to polystyrene production and Ozone depletion (Gifford 1991, Hume 19911. Tuna manufacturers modified their fishing techniques because of the increased concern over driftnet fishing, and the resulting death of dolphins (Advertising Age 1991). Xerox introduced a "high quality" recycled photocopier paper in an attempt to satisfy the demands of firms for loss environmontally harmful products. This is not to imply that all firms who have undertaken environmental marketing activities actually improve their behavior. In other cases firms have jumped on the green bandwagon without considering the accuracy of their behavior, their claims, or the effectiveness of their products. This lack of consideration of the true "greenness" of activities may result in firms making false or misleading green marketing claims. SOCIAL RESPONSIBILITY Many firms are beginning to realize that they are members of the wider community and therefore must behave in an environmentally responsible fashion. This translates Into firms that believe they must achieve environmental objectives as well as profit related objectives. This results in environmental issues being integrated into the firm's corporate culture. Firms in this situation can take two perspectives; 1) they can use the fact that they a re environmentally responsible as a marketing tool; or 2) they can become responsible without promoting this fact. There are examples of firms adopting both strategies. Organizations like the Body Shop heavily promote the fact that they are environmentally responsible. While this behavior is a competitive advantage, the firm was established specifically to offer consumers environmentally responsible alternatives to conventional cosmetic products. This philosophy is directly tied to the overall corporate culture, rather than simply being a Competitive tool. An example of a firm that does not promote its environmental initiatives is Coca-Cola. They have invested large sums of money in various recycling activities, as well as having modified their packaging to minimize its environmental impact. While being concerned about the environment, Coke has not used this concern as a marketing tool. Thus many consumers may not realize that Coke is a very environmentally committed organization. Another firm who is very environmentally responsible but does not promote this fact, at least outside the organization, is Walt Disney World (WOW). WOW has

18 an extensive waste management program and infrastructure in place, yet these facilities are not highlighted in their general tourist promotional activities (Murphy 1995). GOVERNMENTAL PRESSURE As with all marketing related activities, governments want to "protect" consumers and society; this protection has significant green marketing implications. Governmental regulations relating to environmental marketing are designed to protect consumers in several ways, 1) reduce production of harmful goods or byproducts; 2) modify consumer and industry's use and/or consumption of harmful goods; or 3) ensure that all types of consumers have the ability to evaluate the environmental composition of goods. Governments establish regulations designed to control the amount of hazardous wastes produced by firms. Many by-products of production are controlled through the issuing of various environmental licenses, thus modifying organizational behavior. In some cases governments try to "induce final consumers to become more responsible. For example, some governments have introduced voluntary curb-side recycling programs, making it easier for consumers to act responsibly. In other cases governments Lax individuals who act in an irresponsible fashion. For example in Australia there is a higher gas tax associated with leaded petrol. One of the more recent publicized environmental regulations undertaken by governments has been the establishment of guidelines designed to - control" green marketing claims [Polonsky 1994aj. These regulations include the Australian Trade Practices Commission's (TPC) "Environmental Claims in Marketing - A Guideline (TPC 19923, the US Federal Trade Commission's (FTC) "Guides for the Use of Environmental Marketing Claims" (FTC 1991 and 1992) and the regulations suggested by the National Association of Attorneys-General (NAAG 19901. These regulations are all designed to ensure consumers have the appropriate information which would enable them to evaluate firm's environmental claims. In addition to these guidelines many States in the US have introduced legislation to control various environmental marketing activities (Kangun and Polonsky 1994]. In most cases these State laws are more stringent than the FTC's guidelines. To date the majority of prosecutions of firms using misleading green marketing has occurred in State rather than Federal courts. Thus governmental attempts to protect consumers from false or misleading claims should theoretically provide consumers with the ability to make more informed decisions. In Australia where regulations have affected many companies, one unintended casualty was an advertisement for the Federal Government's environmental labeling program "Environmental Choice." This ad was deemed to breach the TPC's guidelines, as it implied that only products with the logo were environmentally responsible. COMPETITIVE PRESSURE Another major force in the environmental marketing area has been firms desire to maintain their competitive position. In many cases firms observe competitors promoting their environmental behaviors and attempt to emulate this behavior. In some instances this competitive pressure has caused an entire industry to modify and thus reduce its detrimental environmental behavior. For example, it could be argued that Xerox's "Revive 10001* Recycled paper was introduced a few years ago in an attempt to address the introduction of recycled photocopier paper by other manufacturers. In another example when one tuna manufacture stopped using driftnets the others followed suit (Advertising Age 1991]. COST OR PROFIT ISSUES Firms may also use green marketing in an attempt to address cost or profit related issues. Disposing of environmentally harmful by-products, such as polychlorinated biphenyl (PCB) contaminated oil are becoming increasingly costly and in some cases difficult. Therefore firms that

19 can reduce harmful wastes may incur substantial cost savings. When attempting to minimize waste, firms are often forced to re-examine their production processes. In these cases they often develop more effective production processes that not only reduce waste, but reduce the need for some raw materials. This serves as a double cost savings, since both waste and raw material are reduced. In other cases firms attempt to find end-of-pipe solutions, Instead of minimizing waste. In these situations firms try to find markets or uses for their waste materials, where one firm's waste becomes another firm's input of production. One Australian example of this is a firm who produces acidic waste water as a byproduct of production and sells it to a firm involved in neutralizing base materials. The last way in which cost or profit issues may affect firms' environmental marketing activities is that new industries may be developed. This can occur in two ways: 1) a firm develops a technology for reducing waste and sells it to other firms; or 2) a waste recycling or removal industry develops [Yurman 19941. For example, firms that clean the oil in large industrial condensers increase the life of those condensers, removing the need for replacing the oil, as well as the need to dispose of the waste oil. This reduces operating costs for those owning the condensers and generates revenue for those firms cleaning the oil. SOME PROBLEMS WITH GOING GREEN No matter why a firm uses green marketing there are a number of potential problems that they must overcome. One of the main problems is that firms using green marketing must ensure that their activities are not misleading to consumers or industry, and do not breach any of the regulations or laws dealing with environmental marketing. For example marketers in the US must ensure their green marketing claims can meet the following set of criteria, in order to comply with the FTC's guidelines. Green marketing claims must; Clearly state environmental benefits; Explain environmental characteristics; Explain how benefits are achieved; Ensure comparative differences are Justified; Only use meaningful terms and pictures. Another problem firms face is that those who modify their products due to increased consumer concern must contend with the fact that consumers perceptions are sometimes not correct. Take for example the McDonald's case where it haS replaced its clam shells with plastic coated paper. There is ongoing scientific debate which is more environmentally friendly. Some scientific evidence suggests that when taking a cradleto-grave approach, polystyrene is less environmentally harmful. If this is the case McDonald's bowed to consumer pressure, yet has chosen the more environmentally harmful option. When firms attempt to become socially responsible, they may face the risk that the environmentally responsible action of today will be found to be harmful in the future. Take for example the aerosol industry which has switched from CFCs (chlorofluorocarbons) to HFCs (hydrofluorocarbons) only to be told HFCs are also a greenhouse gas. Some firms now use DME (dimethyl ether) as an aerosol propellant, which may also harm the ozone layer (Debets 1989]. Given the limited scientific knowledge at any point in time, it may be impossible for a firm to be certain they have made the correct environmental decision. This may explain why some firms, like Coca-Cola and Walt Disney World, are becoming socially responsible without publicizing the point. They may be protecting themselves from potential future negative backlash, if it is determined they made the wrong decision in the past.

20 While governmental regulation is designed to give consumers the opportunity to make better decisions or to motivate them to be more environmentally responsible, there is difficulty in establishing policies that will address all environmental issues. For example, guidelines developed to control environmental marketing address only a very narrow set of issues, i.e., the truthfulness of environmental marketing claims [Schlossberg 19931. If governments want to modify consumer behavior they need to establish a different set of regulations. Thus governmental attempts to protect the environment may result in a proliferation of regulations and guidelines, with no one central controlling body. Reacting to competitive pressures can cause all "followers" to make the same mistake as the "leader A costly example of this was the Mobil Corporation who followed the competition and introduced -biodegradable" plastic garbage bags. While technically these bags were biodegradable, the conditions under which they were disposed did not allow biodegradation to occur. Mobil was sued by several US states for using misleading advertising claims [Lawrence 19911. Thus blindly following the competition can have costly ramifications. The push to reduce costs or increase profits may not force firms to address the important issue of environmental degradation. End-of-pipe solutions may not actually reduce the waste but rather shift it around. While this may be beneficial, it does not necessarily address the larger environmental problem, though it may minimize its short term affects. Ultimately most waste produced will enter the waste stream, therefore to be environmentally responsible organizations should attempt to minimize their waste, rather than find "appropriate" uses for it. CONCLUSION Green marketing covers more than a firm's marketing claims. While firms must bear much of the responsibility for environmental degradation, ultimately it is consumers who demand goods, and thus create environmental problems. One example of this is where McDonald's is often blamed for polluting the environment because much of their packaging finishes up as roadside waste. It must be remembered that it is the uncaring consumer who chooses to disposes of their waste in an inappropriate fashion. While firms can have a great impact on the natural environment, the responsibility should not be theirs alone. In the EPA's 1994 study consumers gave the following reasons for why they damage the environment. It appears that consumers are not overly committed to improving their environment and may be looking to lay too much responsibility on industry and government. Ultimately green marketing requires that consumers want a cleaner environment and are willing to "pay" for it, possibly through higher priced goods, modified individual lifestyles, or even governmental intervention. Until this occurs it will be difficult for firms alone to lead the green marketing revolution. It must not be forgotten that the industrial buyer also has the ability to pressure suppliers to modify their activities. Thus an environmental committed organization may not only produce goods that have reduced their detrimental Impact on the environment, they may also be able to pressure their suppliers to behave in a more environmentally "responsible fashion. Final consumers and industrial buyers also have the ability to pressure organizations to integrate the environment Into their corporate culture and thus ensure all organizations minimize the detrimental environmental impact of their activities.

21

SME MARKETING
S.Indirani, Asst. Professor, STET school of Management, Mannargudi What is SME Marketing SME or Small to Medium Enterprises marketing simply means marketing strategies that benefit small businesses. In this time of global recession, small companies are exceptionally proactive in keeping sales up. The online marketing arena has experienced significant growth over the past few years, while traditional marketing has deteriorated mainly due to its higher costs. With this kind of marketing, entrepreneurs are able to control and discover key revenue streams and make the right decisions with advanced reporting technology. It has been noted that advertisers are more aggressive now in terms of performance marketing with more than half of them planning to maintain or even increase investments in email and search engine marketing channels. Marketing Basics for the Small Business: The essence of marketing is to understand your customers' needs and develop a plan that surrounds those needs. Let's face it anyone that has a business has a desire to grow their business. The most effective way to grow and expand your business is by focusing on organic growth. You can increase organic growth in four different ways. They include: Acquiring more customers Persuading each customer to buy more products Persuading each customer to buy more expensive products or up selling each customer Persuading each customer to buy more profitable products All four of these increase your revenue and profit. Let me encourage you to focus on the first which is to acquire more customers. How can you use marketing to acquire more customers? Spend time researching and create a strategic marketing plan. Guide your product development to reach out to customers you aren't currently attracting. Price your products and services competitively. Develop your message and materials based on solution marketing. First Steps to Marketing a Small Business: (i) What is Marketing? We often hear about marketing and when we own a business we know it's something we are supposed to do, but what is marketing? There are so many definitions that describe marketing as small business owners understanding what it is can leave us confused. We hear about sales, advertising, public relations and marketing. (ii)Why Marketing is Worth the Expense Many companies view marketing as an expense. Truth is when a business understands the importance and the role it plays in growing a business it's clear on why it should be considered an investment. Marketing has an affect on your sales, pricing, promotions and your advertising strategies.

22 (iii)Understanding Market Research Market research helps you to determine how your product or service will be accepted among different demographics. This information can help you in establishing which segment of consumers will have an interest in your product and services and ultimately end up purchasing from you. You can use market research to gain specific information such as determining the age group, gender, location, and income level of potential customers that you should target using your marketing message.. (iv) Why Marketing Research is Important to Your Business Marketing research is delving into the behavior and buying habits of a specific segment that you have decided to target and ultimately it saves you money in by helping you avoid costly marketing mistakes. Learn why it's important and how you can use it to be create effective marketing strategies for your small business. (v) Why Consumers Buy What They Buy Our marketplace is changing, we see this in the spending habits of consumers as well as in the economy. Consumers are looking for something more than a flashy ad or attention grabbing commercial when considering where to spend their hard earned money. Learn why consumers buy what they buy and how you can influence their decision. Steps involved in the process of marketing planning? They are: Step 1: Marketing planning Marketing planning involves three key steps: establishing business mission, performing marketing audit and Core Strategy: It refers to determining how to achieve the business objectives. The process involves three important steps: (a)Determine target market: Target markets refer to the group of customer which is attractive to a business to choose to serve. While doing this, a business needs to analysis its capability. Moreover, when target customers' needs are changed, the business has to adapt its marketing mix accordingly. (b)Identify competitors' target: It is important to determine how a business will take on its competitors. Weak competitors are easy prey and stronger competitors may be major cause of concern for a business. (c)Competitive advantage: For a business to be successful, it is important to determine and achieve some edge over its competitors. This edge or competitive advantage can be achieved by combination of the following elements: Better quality products or service Anticipating and responding to customer needs faster than competitors Establishing closer long term relationship with customers than the competitors Lowest cost that can be translated into lowest price.

Marketing mix decisions: Marketing mix is the combination of product, price, promotion and place (distribution). While determining marketing mix, it is important to decide what type of combination of these elements will endow a business with competitive advantages over its competitors. It is however not possible to outsmart a competitor in all areas.

23 STEP 3: Marketing plan implementation Now the question is how to implement a marketing plan into a business. The way of implementation varies according to the objective a business wants to achieve. For example, a firm may try to increase revenue and profit, or only to maintain market share, or to increase profit at the expense of market share. Based on these objectives, there are the following implementation strategies: (i) Build objective: It is a good strategy for a growth market where overall sales are growing and all players can achieve higher sales. In a mature market, sales of one player can grow only at the expense of other. However, if a mature market offers exploitable weaknesses, build objective can be applied; or when the company has exploitable competitive strength or extensive experience, this strategy can be applied. How build objective can be achieved? (a)Merger or acquisition: Instead of engaging in a costly battle with competitors, merger or acquisition helps a company to gain strength and increase sales, especially when the merged companies operate in the same market. (b)Strategic Alliance: Another way instead of merger is strategic alliance when two companies reach some agreement which may be in terms of R&D, long term purchasing or supply agreement, licensing agreement, joint venture, etc. (c)Market expansion: Market expansion can be done by creating new users, new uses of products or increasing frequency of purchase of existing customers. (d)Winning market share: It refers, unlike market expansion, winning of competitors market share which can be done in different ways, like: Frontal Attack (attacking the main market of the market leader by launching a product with similar or superior marketing mix), Flanking attack (attacking weakly guarded market segments, Hold Objectives: It is about defending a companys current position against eminent competition. Usually the classic situation for applying this strategy is in a mature or declining market. (i)How hold objectives can be achieved? It can be done in two ways: (a)Monitor competition: When there is competitive stability, everyone is playing fair getting satisfaction from what they have. A company needs to constantly monitor whether this stability is there or not so that it can strategize accordingly. (b)Confront competition: It can be done in by position defense (building fortification around a company product with competitive pricing, good quality, better branding, patent, etc. so that a competitor cannot easily attack its market. Niche objectives: It is pursuing a small market or even a small segment. It is better for a company which has a small budget and strong competitors are dominating the main market. It depends of attractiveness of the niche, capability fo the company. Small company can do better R&D with focused efforts Harvest objective: it is better in mature or declining market since they loss money or make a little profit but has to use valuable resource and time for that. In harvesting only essential expenditures are done, R&D is eliminated, products are rationalized, ad and promotion are eliminated.

24 Divest objective: A company decides to divest itself from a business or product. Loss making products are eliminated if it is not contributing to sales of other products. STEP 4: Marketing control: This is the final step of the marketing planning process. At this stage, the results of the marketing plan are evaluated so that corrective actions can be taken and objectives can be achieved effectively. Such measures include sales, profit, cost, cash flow, etc. However, long term perspective is important while evaluating marketing planning activities. Conclusion: Organisations in our era are extremely sensitive - as they must be - to demographic, political, technological and economic developments. Environmental changes most affect strategic perspective. With respect to the marketing mix, quality in the biscuit industry is a key factor. For example, Arnott's uses its Sunshine brand to compete at the budget end of the market, but promotes its own brand on the basis of quality at the upper end. Competition with non-biscuit products such a snack food and confectionery is partly on the basis of packaging. Even though the two companies have different specialities, the price, distribution and promotion are very similar. It can be seen that Arnott's have a stronger market share than Nabisco due to stronger promotion, more variety of products and brand loyalty. An effective marketing program brings together all of the elements of the marketing mix to achieve the organisation's marketing objectives by delivering to customers what they want and need. Thus, the most successful companies will be those that can meet these needs most effectively

25

MARKETING INNOVATION
R.Karthika, Asst.Professor, M.A.M. B School, Trichy ABSTRACT In the present scenario innovation plays a vital role in the industry to sustain in the market. If the companies fail to adopt the new concepts may be they will loss the customers or market share. To survive in the market they have to focus on what is desirable to the users, what is viable in the market place and what is possible with technology. Organizational generally follow external and internal impetus as a sources of innovation. Management guru Peter Drucker 1909 has identified four internal and three external impetuses for innovation. Internal prompts include unexpected occurrences, incongruities, process needs, and industry or market changes. At the present scenario authenticity, net promoter scores, buzz tracking, From segmentation to insights, Green, Grey, Co-creation, Experimentational budgets, The return of the soap, More CGA prevails in the market. Mr. Gerber referred to this marketing methodology as the E-myth which was comprised of: innovation, quantification, orchestration, and documentation. The innovation has been implemented in many companies and they are running their business successfully. They are IBM, P&G, APPLE,Toyota Motors etc. To conclude if youre trying to enhance your marketing program, or create one from scratch, keep this methodology in mind: innovation, quantification, orchestration, documentation. This process will ensure constant growth and improvement in your marketing results Michael Fleischner, March 05, 2007. INTRODUCTION: The term innovation derives from the Latin word innovatus, which is the noun form of innovare "to renew or change," stemming from in-"into" + novus-"new". Although the term is broadly used, innovation generally refers to the creation of better or more effective products, processes, technologies, or ideas that affect markets, governments, and society. Innovation differs from invention or renovation in that innovation generally signifies a substantial change compared to entirely new or incremental changes. Marketing innovations are aimed at better addressing customer needs, opening up new markets, or newly positioning a firms product on the market, with the objective of increasing the firms sales. The distinguishing feature of a marketing innovation compared to other changes in a firm's marketing instruments is the implementation of a marketing method not previously used by the firm. It must be part of a new marketing concept or strategy that represents a significant departure from the firms existing marketing methods. The new marketing method can either be developed by the innovating firm or adopted from other firms or organizations. New marketing methods can be implemented for both new and existing products. Importance of Innovation The definition and description of innovation, as the Literature review shown, clearly indicate that impact of innovate thinking in the marketing activities is considerably high. Innovation and creativity, the combination of originality, divergent thinking and risk taking, is expected element used for creating guerrilla marketing campaigns. The necessity of applying innovate concepts in the marketing is supported by findings of the Primary research where 53% of the respondents stated that their companies marketing activities are interesting, eye-catching and differ from the campaigns of competitors. Moreover, 11% of the

26 respondents describe their marketing activities as "unexpected, shocking and completely different than what people would expect". The interest of respondents on innovation in their Internet marketing activities is expressed by 20 out of 28 respondents who positively answered that they would like to have some unexpected and interesting application on their website which would increase significantly the attention of the target audience. Therefore, as the research shows, use of innovation is necessary presumption for creating any guerrilla marketing campaign both offline and online Innovation is the act of introducing something new or doing something in a different way. Innovation in business differs from creativity in that the latter is generally associated with the generation of new ideas. In contrast, innovation refers to taking those new ideas and actually implementing them in the marketplace. Thus, creativity is simply one element of the innovation process through which new ideas lead to new products, procedures, or services. Business scholars often attribute company success to innovation. Because of growing international competition, innovation became even more vital for companies toward the end of the 20th century. Innovation usually results from trial-and-error experimentation and sometimes occurs incidentally where researchers produce something other than what they intended. Nevertheless, because of the growth of and accessibility to knowledge and information through the technology and information revolutions, researchers of the late 20th century generally could move from ideas to innovations much more quickly than their predecessors. A confluence of factors contributes to innovation in the business setting, including the research environment, market need, company strategy, and company resources.

HISTORY OF INNOVATION IN BUSINESS While innovation has existed as long as the species has, early innovations penetrated society and became established more slowly. For example, printing technology, various transportation innovations, and the use of gunpowder took centuries to reach most levels of society and become part of everyday life, according to Basil Blackwell and Samuel Eilon, authors of The Global Challenge of Innovation. The penetration and acceptance of various innovations began to accelerate with the gradual collaboration and cooperation of science and assorted crafts and industries, especially in the 19th century. The partnership between science and industry allowed scientists to produce practical, reproducible technologies, which businesses could reasonably afford. Because of this collaboration, innovation grew quickly. Despite the partnership, however, science and businesses still remained separate entities. Researchers worked either independently or as members of companies that specialized in developing, producing, and marketing innovations during this period. Consequently, many of these innovations failed to make it to the market. Companies, howeverespecially power, chemical, and communications companiesbegan creating in-house research and development divisions early in the 20th century. In addition, they enhanced and marketed the innovations of others, breaking down the barrier between innovator and company. As a result, companies, not individuals, began controlling the patents to new inventions. Furthermore, teams of company researchers, not lone inventors, became the primary innovators.

27 TRENDS IN MARKETING INNOVATION: Authenticity: Authenticity, honesty, realness should have been at the top of this list for the past 10 years but it seems as if it is actually breaking through now. Too many great examples of how companies enhanced their image and standing with either the general public or a relevant group of advocates have emanated recently Scobleizer has probably generated billions worth of goodwill for Microsoft. Net Promoter Scores Sell your shares in market research agencies their extensive research methods will go the way of the dinosaurs. Turns out, it all comes down to one question: "On a scale of 0 to 10, how likely are you to recommend brand/product X to someone else?" As the results of this research can be directly tied to revenue growth, instead of intangible (and not-boardroom safe) fuzzies like brand recognition, watch the corporate world being taken by storm by NPS, following the likes of GE and Philips.

The "table-stakes" set of innovation capabilities: the ideation stage, an ability to gain insight into customer needs and an understanding of the potential relevance of emerging technologies. At the product development stage, an ability to engage actively with customers to prove the validity of concepts and to assess market potential and risks, and the ability to leverage existing product platforms into new products. At the commercialization stage, an ability to work with pilot users to roll out products carefully but quickly, and to coordinate across the entire organization for an effective launch. But even more important, the best performing companies develop additional capabilities that are very specific to their chosen innovation strategies. The most successful companies, we found, are those that focus on a particular, specifically aligned set of common and distinct capabilities that enable them to better execute their chosen strategies. CONCLUSION For those companies that are struggling with their innovation efforts concludes by suggesting three key things they should consider doing right away: Diagnose their innovation efforts: take a step back and see where innovation efforts are strong and weak. Research five similar-sized firms: go completely outside of the industry and look for successful innovators that are the same size as their organization. What are they doing successfully that can be adopted. Get a meeting with those that matter: begin talking about strategy and process with the relevant people in the organization. The conversation about the important things in innovation can start from anywhere, but ownership must finally come from the top.

28

THE IMPACT OF ADVERTISING AND PRICE PROMOTION ON BRAND EQUITY


Mr. Srinivasan.K, B.Tech, MBA, Student, School of Management Studies, Vel Tech Dr.RR & Dr.SR Technical University, Avadi, Chennai 600 062 INTRODUCTION Brand equity, a measure of the overall value of a brand (Keller, 1998), is a key concept in brand management. Brand equity has been identified as a valuable source of competitive advantage for many organizations (Aaker, 1991; Bharadwaj, Varadarajan and Fahy, 1993; Keller ,1998). Keller (1993) conceptualizes brand equity as the differential effect of brand knowledge on consumer response to the marketing of the brand. Furthermore, Keller (1) proposes brand knowledge as central to the definition of brand equity and contends that high levels of brand knowledge increase the probability of brand choice, and (2) defines brand knowledge in terms of brand awareness and image. Keller conceptualizes brand awareness as the strength of the brand trace in memory that is reflected by the consumers ability to identify the brand under different conditions and defines brand image as perceptions about a brand as reflected by the brand associations held in consumer memory. The customer-based brand equity is a set of brand-related associations held by the consumer in memory (e.g., Keller, 1993). Under this perspective, brand equity is regarded as being largely attitudinal in nature, composed of beliefs, affect, and other subjective experiences related to the brand (i.e., brand attitude, brand image, etc.) RESEARCH HYPOTHESES: Relationship between Advertising and Brand Equity: This research proposes the H1 hypothesis about advertising expenditures and brand equity as below. H1: Advertising expenditures affects brand equity H1a: Advertising expenditures is positively related to perceived quality. H1b: Advertising expenditures is positively related to brand loyalty. H1c: Advertising expenditures is positively related to brand awareness. H1d: Advertising expenditures is positively related to brand associations. Relationship between Price Promotion and Brand Equity: This research proposes the research hypothesis. H2: Price promotion affects brand equity H2a: Price promotion is negatively related to perceived quality. H2b: Price promotion is negatively related to brand loyalty. H2c: Price promotion is negatively related to brand awareness. H2d: Price promotion is negatively related to brand associations. Pretest of Product Category This study chooses four product categories jean, fast-food restaurant, bank and KTV to be pretest by 85 students of the department/Graduate School of Business Management of Vel Tech Institutions, Avadi, Chennai. Table 1 shows that jean, fast-food restaurant and KTV are search products, because both the ability, before purchase, to judge the performance of each good/service and the ability, after use, to judge the performance of each good/service are greater than 3.0 in the fivepoint scale. However, the highest score of before purchase and after purchase is Jean. It means that respondents can judge Jeans quality well before and after purchase or use it. So Jean was chosen as search goods in this study. While the ability to judge quality before use is less than 3.0 point and the ability to judge quality after use is greater than 3.0, bank is certainly experience products after pretest. Therefore, the formal questionnaire design in this study chooses jean as search products and bank as experience products.

29 Table 1 Descriptive Statistics of Product Category Before purchase After use Before purchase After use Before purchase After use Before purchase After use N 85 85 85 85 85 85 85 85 Minimum 2.00 3.00 1.00 2.00 1.00 2.00 1.00 1.00 Maximum 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Mean Std. Deviation 3.5059 0.81099 4.2353 0.47926 0.88133 3.4941 4.1882 0.69854 0.88133 2.9059 3.6824 0.83398 3.3294 0.95604 4.0000 0.89974 Source: This research

Jean Fast-food restaurant bank KTV

Data Collection and Analysis: Survey by questionnaires was made during February, 2011 to April, 2011. Participants are students of Vel Tech Institutions, Avadi, Chennai. Two hundred questionnaires are usable. An effective response rate is 100.00%. The sample profile is shown as table 2. Table 2 Sample Profile Number of Percentage Demographic Item Respondents (%) Gender Male 139 69.5 Female 61 30.5 Age Under 20 23 11.5 21-30 174 87.5 31-40 3 1.5 41-50 0 0 Over 50 0 0 Department College of science and technology 139 69.5 College of business 61 30.5 Grade Freshman 19 9.5 Sophomore 7 3.5 Junior 34 17.0 Senior 28 14.0 First year of graduate school 27 13.5 Second year of graduate school 85 42.5 Income Under5000 46 23.0 5001-15000 118 59.0 15001-25000 24 12.0 25001-35000 10 5.0 35001-45000 1 0.5 45001-55000 1 0.5 Over 55001 0 0 Source: This research

30 Reliability and Validity Test: Table 3 <Jean>Factor Analysis of Marketing Communications Items The ad campaigns for my jean seem very expensive, compared to campaigns for competing brands. I think my jean brand is intensively advertised, compared to competing brands. The advertising campaigns for my jean are seen frequently. Price promotions for my jean are frequently offered. I think price promotions for my jean are more frequent than for competing brands. Price promotions for my jean are presented too many times. Factor1 0.931 0.963 0.948 0.918 0.914 0.895 Source: This research Table 4 <Jean>Factor Analysis of Brand Equity Items My jean is of high quality. The likelihood that my jean is reliable is very high. Compared to its competitors, I appreciate my jean brand. I consider myself to be loyal to my jean brand. My jean would be my first choice. I will not buy other brands if my jean is available at the store. I can recognize my jean among other competing brands. I am aware of my jean brand. I know my jean brand. Some characteristics of my jean come to my mind quickly. I can quickly recall the symbol or logo of my jean. My jean has a strong image. Factor1 Factor2 Factor3 Factor4 0.839 0.865 0.502 0.690 0.823 0.892 0.768 0.767 0.734 0.743 0.793 0.838 Factor2

Source: This research The scale of marketing communications included 6 items. Responses to the 6-items scales were extracted advertising and price promotion. The of sampling fitness by KMO test indicating that the KMO value is 0.788 which means the fitness of factor analysis reaches the medium high level. The accumulated percentage of variance explained is equal to 87.51%, sufficient to represent the original data. Factor loading of each item is greater than 0.5 indicating convergent validity. The details are shown in table 5.

31 Table 5 <Bank>Factor Analysis of Marketing Communications Items The ad campaigns for my bank seem very expensive, compared to campaigns for competing banks. I think my bank brand is intensively advertised, compared to competing banks. The advertising campaigns for my bank are seen frequently. Price promotions for my bank are frequently offered. I think price promotions for my bank more frequent than for competing brands. Price promotions for my bank are presented too many times. Factor1 0.915 0.945 0.904 0.920 0.929 0.869 Source: This research Table 6 <Bank>Factor Analysis of Brand Equity Items My bank is of high quality. The likelihood that my bank is reliable is very high Compared to its competitors, I appreciate my bank. I consider myself to be loyal to my bank. My bank would be my first choice. I will not deal with other banks if my bank is available nearby. I can recognize my bank among other competing banks. I am aware of my bank. I know my bank. Some characteristics of my bank come to my mind quickly. I can quickly recall the symbol or logo of my bank. My bank has a strong image. Table 7 <Jean> Cronbach's Z Value of Each Construct Construct Marketing Communications Dimension Advertising Price Promotion perceived quality Brand Equity brand loyalty brand awareness Items 3 3 3 3 3 Cronbachs Z 0.943 0.895 0.832 0.840 0.906 Factor1 Factor2 Factor3 Factor4 0.875 0.796 0.866 0.500 0.581 0.891 0.881 0.922 0.915 0.881 0.871 0.799 Source: This research Factor2

brand associations 3 0.916 Cronbachs Z was measured the consistence of each item under the same construct. All scales have greater than the suggested value of 0.7 advertising Z=0.937, price promotion Z=0.917, perceived

32 quality Z=0.866, brand loyalty Z=0.747, brand awareness Z=0.908 and brand associations Z=0.891. The alpha value for each construct demonstrates adequate internal consistency. Table 8 shows the result of reliabilities analysis of constructs. Table 8 <Bank> Cronbach's Z Value of Each Construct Construct Marketing Communications Dimension Advertising Price Promotion perceived quality Brand Equity brand loyalty brand awareness brand associations Items 3 3 3 3 3 3 Cronbachs Z 0.937 0.917 0.866 0.747 0.908 0.891

Source: This research Pearson Correlation Analyses: The Pearson Correlation Analyses were employed among variables. Table 9 shows the correlation analyses among advertising, price promotion and brand equity for jeans product. The result reveals that there is significant positive correlation between advertising and perceived quality (r=0.350, p<0.01), brand loyalty (r=0.231, p<0.01), brand awareness (r=0.581, p<0.01) and brand associations (r=0.491, p<0.01). There is significant negative correlation between price promotions and brand awareness (r=0.229, p<0.01) and brand associations (r=-0.150, p<0.05). It means that price promotions of search product may result in negative effect on brand equity, especially on brand awareness and brand associations. Table 9 <Jean> Pearson Correlation Analysis advertisin price perceived brand brand brand g promotion quality loyalty awareness associations advertising 1 price promotion -0.086 1 perceived -0.107 1 0.350** quality brand loyalty 0.231** -0.007 0.561** brand -0.229** 0.598** 0.581** awareness brand -0.150* 0.601** 0.491** associations **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed). Source: This research

1 0.441** 0.525** 1 0.766** 1

33 Table 10 <Bank> Pearson Correlation Analysis advertisin price perceived brand brand g promotion quality loyalty awareness advertising price promotion perceived quality brand loyalty 1 0.419** 0.385** 0.236** 1 0.337** 0.271** 1 0.545** 1 0.402** 0.504** 1 0.459** 1

brand associations

brand 0.158* 0.035 0.319** awareness brand 0.211** 0.427** 0.360** associations **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).

Source: This research Regression Analysis: Table 11 reveals that advertising has significant positive effect on perceived quality (\=0.343, t>1.645), brand loyalty (\=0.232, t>1.645), brand awareness (\=0.566, t>1.645) and brand associations (\=0.481, t>1.645). Price promotion has significant negative effect on brand awareness (\=-0.180, t<1.645) and brand associations (\=-0.108, t<-1.645) while the negative effect on perceived quality (\=0.078, t>-1.645) is not significant. In addition, price promotion has no significant effect on brand loyalty (\=0.013, t<1.645). Table 11 <Jean>The Results of Regression Analysis perceived brand brand brand Y quality loyalty awareness associations X 0.232*** 0.566*** 0.481*** 0.343*** Advertising t=5.138 t=3.336 t=9.972 t=7.780 -0.078 0.013 -0.180*** -0.108* Price Promotion t=-1.162 t=0.182 t=-3.172 t=-1.751 R Square 0.128 0.054 0.370 0.252 Adjusted R Square 0.119 0.044 5.570*** 0.364 57.920*** 0.245 33.227*** F 14.499*** ***P value<0.01; **P value<0.05; *P value<0.1

Source: This research Table12 reveals that advertising has significant positive effect on perceived quality (\=0.296, t>1.645), brand loyalty (\=0.149, t>1.645), brand awareness (\=0.174, t>1.645) and brand associations (\=0.329 t>1.645). Price promotion has significant positive effect on perceived quality (\=0.231), brand loyalty (\=0.209). Price promotion has no significant effect on brand awareness (\=-0.038) and brand associations (\=0.073). The correlation analyses illustrates that there is a significant relationship between advertising expenditures and price promotion. To avoid the impact of collinearity among independent variables, this study adopts collinearity diagnostics. The result demonstrates that VIF (Variance Inflation Factor) is less than 10. That is, the level of the collinearity does not significantly affect the estimation of the regression model (Huberty, 1989).

34 Table 12 <Bank>The Results of Regression Analysis perceived brand brand brand Y quality loyalty awareness associations X 0.149** 0.174** 0.329*** 0.296*** Advertising t=4.180 t=1.991 t=2.244 t=4.503 0.213*** 0.209*** -0.038 0.073 Price Promotion t=3.011 t=2.791 t=-0.488 t=1.002 R Square 0.186 0.092 0.026 0.134 Adjusted R Square 0.178 0.083 9.951*** 0.016 2.642* 0.125 15.203*** F 22.491*** ***P value<0.01; **P value<0.05; *P value<0.1

Source This study This study have tried to extend brand equity by using constructs, such as brand loyalty, brand awareness, perceived quality and brand associations. Such a specification can be conceptually problematic because the same construct then appears to play multiple roles. For instance, brand loyalty has been regarded as both a dimension and an outcome of brand equity (Morgan, 2000). Therefore, this study further examines the relationship among brand loyalty, brand awareness, perceived quality, and brand associations by treating brand loyalty as an outcome variable. Table 13 reveals that, for jean, perceived quality has significant positive effect on brand loyalty (\=0.392, t>1.645) and brand associations has significant positive effect on brand loyalty (\=0.317, t>1.645). In addition, brand awareness has no significant effect on brand loyalty (\=-0.037, t>-1.645). For bank, perceived quality, brand awareness and brand associations all have significant positive effect on brand loyalty (\=0.380 t>1.645), (\=0.158, t>1.645), (\=0.269, t>1.645). Table 13 <Jean>The Results of Regression Analysis Brand loyalty Jean Perceived quality Brand awareness Brand associations R Square Adjusted R Square F 0.392*** t=5.325 -0.037 t=-0.401 0.317*** t=3.461 0.370 0.361 38.441*** Bank 0.380*** t=6.168 0.158** t=2.514 0.269*** t=4.091 0.406 0.397 44.657***

CONCLUSION This research investigates advertising across search and experience product categories. Across both categories, the brand with the higher advertising budget yielded substantially higher levels of brand equity. This study notes that the firms advertising contributes to brand equity and increases loyalty. Perceived advertising spending showed a favorable causal relationship for three of the four dimensions of brand equity. The higher the spending on advertising for the brand, the better the quality of the product as perceived by the consumer, the higher the level of brand awareness and the more associations linked to the product, forming its brand loyalty. That is, effective advertising activities enable the formations of brand awareness and a positive perceived quality, brand loyalty and brand associations. To summarize, advertising has a positive effect on brand equity. Hence, hypothesis H1a, H1b, H1c and H1d are supported. The research question that concerns this study is whether price

35 promotions can contribute to building brand equity. Price promotions have a negative effect on brand equity in the long term. Price promotions as incentives to increase sales have been shown to have a negative effect on brand equity. Although they can cause a short-term benefit to the consumer, from a strategic perspective they showed negative effects. These effects can affect the perceived quality of the product adversely, since benefits gained through price promotion are not enduring, and do not transmit the security or the confidence that a brand should inspire with regard to its expected utility. However, adopting a consumer-based brand knowledge perspective of brand equity, this study shows that price promotions of bank are useful to create brand equity because of their positive effect on perceived quality, brand loyalty and brand associations. Nevertheless, the statistics of the search product proves that price promotion has significant negative impact on brand awareness and brand association. Hence, H2 is partially supported. This paper seeks to systematically examine the possible drivers of differences across product categories and the implications of our preliminary findings. The result proves that the product category does have moderate effect in between price promotion and brand equity. The result shows that product categories moderated the relationship between advertising, price promotion and brand equity. The influence of advertising and price promotion on brand equity is different from search goods/services and non-search (experience and credence) goods/services. Compare to non-search goods/services, search goods/services is positively more effective in advertising on brand equity. The impact direction and dimension of price promotion on brand equity in various product categories are different. In search products (jean), it has significant negative impact on brand awareness and brand association. In nonsearch products (bank), it has significant positive impact on perceived quality and brand loyalty. The product category exerts a moderator effect on the relationship between brand equity and advertising or price promotion. Hypotheses H3 and H4 are supported. References: Aaker, D. A. (1991) Managing Brand Equity. Capitalizing on the Value of Brand Name, The Free Press, New York, NY. Aaker, D. A. and A lvarez del Blanco, R. M. (1995) Estatura de la marca: Medir el valor por productos y mercados, Harvard-Deusto Business Review, No. 69, pp. 7487. Aaker, D. A. and Jacobson, R. (1994) The financial information content of perceived quality Journal of Marketing Research, Vol. XXXI, May, pp. 191201.

36

LUXURY MARKETING
P.Rajkumar, V.Meera Vel Tech Ranga Sanku College, ABSTRACT: When using luxury brands consumers make a subtle claim that they are special, different and at the very forefront of social trends. Therefore, creating a fit between the social trends and keeping up with them is one of the critical strategic issues for all luxury brands. However, with mass-market brands gradually upgrading their appearance, strategic response and approach to marketing their products, many luxury brands are finding it hard to stay ahead of the peck. In this scenario, many luxury brands have decided to move beyond their niche and diversify very quickly into other market spaces which the consumer may not associate with the specific luxury brand. The idea of brand extension and at times irrelevant diversification (i.e. moving away from one product category to another one) is particularly delicate issue for luxury brands. This is mainly because of the strong brand origin and brand image associations luxury brands have in consumer minds. While there are some brands who manage to extend their portfolio without any major issues, many luxury brands find it a massive struggle and therefore should think about such extensions carefully. For example, Pradas move from shoes to handbags and then into ready-to-wear market worked every time. Same was the case with Gucci. However, it took many years for the first Bulgari watch to become a success. In case of smaller and boutique luxury brands, due to financial and marketing resource limitations, the issue of brand extension looks very lucrative but can become a bottleneck very quickly. For example, in 2005, Mattel decided to create Barbie-themed clothing and accessories and involved fashion designers such as Tarina Tarantino and Anna Sui to interpret Barbies wardrobe for grownups. However, this extension was identified as one of the worst extension for the year and so its effects on the involved designers may be felt in long-term. Another example of this is Audi in US market. Audi still struggles to crack the US market as consumers remember those sudden unintended acceleration issues and a series of product recalls associated with it nearly 3 decades ago. Marketing luxury brands is significantly trickier than regularly purchased brands. In this regards, many luxury brands from Europe seem to be stepping up a new kind of luxury marketing activity exhibitions in prominent museums. For example, Inspiration Dior exhibition at the Pushkin Museum, Moscow; Culture Chanel at the Museum of Contemporary Art Shanghai; and Louis Vuitton Voyages exhibition in the National Museum of China. This exercise bags a question as to can this create a win-win situation for luxury brands and museums? In the following paragraphs, I shall share my views on marketing luxury brands through exhibitions. A win-win situation for marketing luxury brands and museums Many luxury brands continuously associate themselves with the local culture, local flavors and local identity in almost all their communications. In my earlier article on luxury marketing and brand origin effects, I specifically highlighted how brand origin connection is used by luxury brand marketers. Exhibitions provide another marketing opportunity to luxury brands to expose and engage those consumers who are less aware or feel psychologically distant from these brands. Many consumers still associate luxury brands with negative value associations such as snobbism or conspicuousness rather than the uniqueness or high quality. The negative association of snobbism or conspicuousness may not bode well for positioning purposes in present environment. Exhibitions, especially in world-renowned museums provides luxury brand an added benefit of going beyond those negative value associations and associate positively. On the other hand, museums increasingly look for exposing their visitors to world cultures and sub-cultures. For example, Victoria and Albert museum, a prominent art and heritage museum in London, identifies its purpose as to enable everyone to enjoy its collections and explore the cultures that created them; and to inspire those who shape contemporary design.

37 In this regard, luxury brands which associate themselves with a specific culture tone represent both culture and contemporary design objectives. Therefore, it creates a win-win situation for both luxury brands and museums. The brands gain stronger cultural tone, wider exposure (as masses may sometimes find some of these brands snobbish) and added prestige of being classic. Many consumers see museums as the most accurate snapshot of a specific culture or a specific event. In a way, many consumers take the museums view as the reality. In this regards, marketing the luxury brand via a museum gains a strong positive association due to the exhibition. The museum on the other hand may get more visitors who may be curious in looking at a certain outfit (e.g. Kate Middletons wedding dress is already being identified as a museum outfit). Thus, both brands and museums win. The increasing inclination from museums to host brand-focused exhibitions can be explained from a socio-cultural perspective also. Media exposure: Luxury is now mainstream: The media-cultural phenomenon is however, not restricted to the pages of glossy magazines. Mainstream media are taking a greater interest in luxury brands, fashion trends and consumer lifestyles. Weekend supplements in national newspapers devote pages to fashion features and product reviews. Increased product knowledge and brand awareness are translating into greater consumer confidence an important catalyst for luxury consumption in a fastemerging market. Luxury accessibility: The world at your doorstep: Luxury brands are now following the Indian consumer, expanding their sales operations not only in Delhi and Mumbai, but to smaller cities or metro cities such as Pune and Hyderabad. Luxury boutiques which were traditionally confined to the secure but often inaccessible surroundings of exclusive hotels have been thrown open to the masses thanks to the shopping mall boom. Market regulation: Although high import duties on luxury goods continue to prevail, Indias policy of liberalisation and deregulation has improved its image as an attractive destination for foreign investment. The changing face of the Indian luxury consumer: The luxury market has traditionally been segmented according to two very separate and distinct customer groups namely the affluent and the non-affluent. The transition towards a consumer society has changed the profile of the luxury consumer. Luxury is no longer reserved for the English-speaking elite. Priyanka,a BPO employee, loves shopping, worships brands and is typical of a new generation of luxury consumers the because Im worth it generation. Todays luxury shopper could be a broker, an entrepreneur, an IT specialist or a student. Maximizing the Indian luxury rupee (a) Beyond exclusivity (b) Beyond status (c) Beyond westernization (d) Burberry meets Bolly wood CONCLUSION: The starting point for identifying successful luxury brand strategies in India has been established by identifying certain salient aspects of luxury brands that remain constant as well as identifying the stage of mindset of the Indian consumer towards these brands. The focus is now towards how soon luxury brands will enter the market to gain a first mover advantage, which is of significant importance in India. Apart from how soon, we primarily focus on how will luxury brands cater to the mainly aspirational needs of the Indian consumer.

38 A word of caution that goes for luxury marketers, irrespective of their brands and geographical presence The luxury consumer is always looking for newer ways to satisfy his continuously changing needs. Hence, the need to keep a close tab through insightful research is of prime importance. As far as India is concerned, given the rapidly accelerating affluence of the masses, the scenario is set to witness a boom. The ones who will be riding the wave will be the ones whove kept their ears open to each and every word of their each and every customer. After all, in the luxury business, no marketer can afford the luxury of treating its consumers as a loosely bunched segment.

39

LATEST TRENDS IN LUXURY AND LIFESTYLE RETAIL IN INDIA A MULTIFACETED MARKET


N.Ramkumar, Assistant professor/MBA, Selvam college of Technology, Namakkal Abstract: Retailing, one of the largest sectors in the global economy, is going through a transition phase in India. Over the last few years, organized retailing in India is spreading and making its existence felt in different parts of the country. In organized retailing, one segment that has swiftly come into focus is luxury and lifestyle retail. Indias escalation as an economic power to reckon with, has forced the global companies to view it as one of the key markets from where future growth will emerge. India is home to some of the richest men in the world, with the fastest growing high net worth individuals in the Asia-Pacific region living here. The Indian luxury retail market is the beacon of the future, with a number of international brands are vying to design, develop and deliver the high-end goods and services to India consumers want. To do so, they are being forced to build their distribution and to spur consumer interest in products that aren't familiar to many Indian shoppers. The paper analyses the developments in this multifaceted luxury and lifestyle retailing in India and focuses on prospects and challenges for luxury retailers in India. Introduction The Indian retail market, the fifth largest retail destination globally, has been ranked as the most attractive emerging market for investment in the retail sector by AT Kearney's latest annual Global Retail Development Index (GRDI), in 2009. According to a study conducted by the Indian Council for Research on International Economic Relations (ICRIER), the retail sector is expected to contribute to 22 per cent of India's GDP by 2010 (Financial express report,2010). At present, the retail industry in India is estimated a US$ 400 billion industry. With rising consumer demand and greater disposable income, it is projected to grow to US$ 700 billion by 2010 with an expected annual growth rate of 30 percent, according to a report by global consultancy Northbridge Capital (Indian Express report, 2010). Further, the retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent (CRISIL report,2009). In absolute terms, this figure is very commendable but the actual contribution to the GDP comes only in the form of organized retail. Organized retail segment grew at the rate of 42.4 % in 2007 and is expected to maintain a much faster growth rate in next three years (Images F&R research, 2009). As of now, the organized part accounts for around 6.5% of the Indian retail market. Though, it is expected to maintain a faster growth rate in the coming years with an estimation of touching 13% by the end of 2010. Over the last few years Indian retail has witnessed rapid transformation in many areas of the business by setting scalable and profitable retail models across categories. Indian consumers are rapidly evolving and accepting modern retail formats. New and indigenized formats such as departmental stores, hypermarkets, supermarkets, specialty and convenience stores, and malls, multiplexes and fun zones are fast dotting the retail landscape. The Organized Retail share has been gaining strength owing to the robust economy that has given more disposable income in the hand of the consumer. This has led to increased demand of products/services and a better shopping environment. Over the long term (5 years), it is expected to grow at a CAGR close to 19 percent from Rs 852 billion in 2007-08 to Rs 2024 billion in 2012-13 as per CRISIL research (2009). The organized retail penetration as a result is expected to move upwards from 5.5 percent in 2007-08 to 7.3 percent in 2012-13.Exhibit 1 based on Images F&R research (2009) provides a glimpse of organized retail to total market for different retail segment for the period 20042007. It can be observed from the exhibit that organized retail has made its entry into all type of segments.

40 Share of organized retail to total market The degree of growth for any sector in a particular country depend lot on the government policies. These policies are very dynamic in nature and hence the changes in the investments and trends for a sector. The luxury retailing has been also affected by certain changes in the FDI in retail sector. Till end of 2005, no FDI was allowed in Indian retail market. Hence, number of international luxury brands were only limited to 8. These brands were present only through franchising route. Whereas, as government announced 51% FDI in single-brand format, the number of luxury brands increased to 25 by year 2008. However, 100 percent FDI is allowed in whole cash and carry (C&C) operations but that is not a model which luxury retailers will be able to leverage to attract its target customers. Despite foreign direct investment restrictions, companies such as Versace, Oakley and Nike Golf are increasing area and product assortments to draw consumer interest in what they consider one of the biggest markets in Asia.

Growth of luxury market in India Socio-Demographics The first classification of customers can be done based on the Income-group and can be clubbed into following three categories: 1. Luxury ready These are people whose annual income is over USD 100k. They are the present and primary consumers of luxury goods/services. Further, they are already exposed to the world-class living and thus for them luxury is a necessity rather than aspiration. 2. Future potential These are people whose annual income will be between USD 50K 100K. They are the one who have just got exposed to luxury product/services. Thus, their current focus lays on acquiring of luxury assets & products. They are ready to splurge on the brand of aspirations, though not very frequently. For them, the luxury is still to flaunt and not a necessity. 3. Others As obvious, people with income below USD 50K are clubbed in this category. As of now, they are no way going to spend on luxurious items but certainly they are the one who works really hard to move upwards in the ladder. Hence, it is advisable for all luxurious products/services having a long term plan for India to ensure the brand communication reaches to them. All the three categories of consumers are likely to grow in the near future in India. Some of the challenges inhibiting the growth of luxury retail in India would be: Rentals costs have gone up dramatically and now match those in Singapore or even London although sales for luxury goods are lower because India is still a developing market. This has put luxury brands in a spot, slowing expansion plans and, in some cases, forcing a reshuffle in franchise partners. In addition, luxury stores finding it difficult to break even at the current sales density and rent. Brands are now pushing back break-even points to around four years from two years as they had planned. Building scale is still a challenge as there are a few select cities with potentials for luxury retail. There is lack of high quality luxury retail environment, with its presence restricted to select hotels which leads to low footfalls. There are no modernized and dedicated luxury retail areas in protected areas like airports. There is high cost of setting up luxury stores due to high rentals on certain prominent high streets, besides this some of the high streets like Connaught Place (Delhi) are

41 cluttered and crowded, with a hot and humid climate. In addition, the high streets are unsuitable due to the absence of exclusive ambience demanded for luxury retail. Although, this situation is somewhat ease after opening of Indias first two luxury malls viz. the United Breweries Ltds UB City mall in Bangalore and DLF Ltds Emporio mall in New Delhi. CONCLUSION Luxury retail is growing at a frantic pace in India, but still there are a sizeable number of rich Indians not known to luxury, leaving lots of room for those trying to walk in the fray. The Indian luxury market is a story waiting to be told, as all segments of this market viz. Luxury product, services and assets are growing rapidly and can potentially triple in size by 2010. Indian luxury market will be very crucial to the global luxury retailers in near future. However, luxury retail players should keep in mind certain considerations before they make their foray into the Indian Luxury retail sector. The starting point for identifying successful Luxury brand strategies in India has been established by identifying certain salient aspects of luxury brands that remain constant as well as identifying the stage of mindset of the Indian consumer towards these brands. Going by the latest wheel in the luxury retail sector, India is debonair and is one of the fastest growing markets after the Gulf. With the inexorable pursuit for luxury, the affluent class with tremendous purchasing power are on the fast lane endorsing leading luxury brands which have all chosen India as the happening luxury retail destination.

42

A STUDY ON RURAL MARKETING STRATEGY FROM COCO- COLA


V.Uma Maheshwari, Kurinji College of Engineering & Technology, Manapparai. INTRODUCTION Nowadays in rural area the consuming of soft drink is increased due to the spreading of modern culture and changes in income status, so the researcher take special care on the study about the rural marketing regarding the adaptation of the new product. The rural marketing strategy and adaptation of the new product (Nimbu fresh) from coca cola in rural market with special reference to Tiruchirappalli region. This study reveals the impact of introduction of new products in rural marketing with respective to beverage. The rural marketing strategy of Coca Cola is based on three A's - Availability, Affordability and Acceptability. 'A' - Availability emphasized on the availability of the product to the customer 'A' - Affordability focused on product pricing 'A'- Acceptability focused on convincing the customer to buy the product. Availability Once Coca Cola India entered the rural market; it focused on strengthening its distribution network there. It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas. The company instead opted for a hub and spoke distribution system. Under the hub and spoke distribution system, stock was transported from the bottling plants to hubs and then from hubs, the stock was transported to spokes which were situated in small towns. These spokes fed the retailers catering to the demand in rural areas. Affordability A survey conducted by Coca Cola India in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle. It was also found that the price of Rs10/- per bottle was considered too high by rural consumers Acceptability The initiatives of Coca Cola India in distribution and pricing were supported by extensive marketing in the mass media as well as through outdoor advertising. The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages. To reach out to rural market, Coke started out by drawing up a hit list of high potential villages from various areas. Here the researcher takes ten villages from the list of villages from Tiruchirappalli districts for his study. OBJECTIVES OF THE STUDY To find out the Marketing strategy and adaptation of new product from coca cola in rural market with special reference to Tiruchirappalli To study the influencing factors initiate to buy a new product in rural marketing. To study on present promotional strategy of Coca Cola in rural markets

43 DATA ANALYSIS AND INTERPRETATION Simple percentage analysis Classification of respondents based on Gender Gender Number of Percentage of respondents respondents Male 70 70 Female 30 30 Total 100 100 Inference: Respondents were classified based on Gender status. Seventy percent of the respondents belongs to category of male, and the remaining 30% of the respondents belongs to category of female Classification of respondents based on age Age 10 - 20 20 - 30 30 - 40 40 - 50 50 - 60 Above 60 Total Number of respondents 26 46 14 10 4 0 100 Percentage of respondents 26 46 14 10 4 0 100

Inference: Respondents were classified based on age. Twenty six percent of the respondents belongs to category of 10-20 years, 46% of the respondents belongs to category of 20-30 years, 14% of the respondents belongs to the category of 30-40 years, 10% of the respondents belongs to the category of 40-50 years, 4% of the respondents belongs to the category of 50-60 years and None of them are belongs to category of above 60 years. Classification of respondents based on their rating to the Soft drinks Product Number of respondents Percentage of respondents Coke 10 10 Fanta 17 17 Sprite 8 8 Maaza 16 16 Thumsup 7 7 Limca 6 6 Kinly water 5 5 Kinley Soda 6 6 MM pulpy orange 8 8 MM Nimbu fresh 17 17 Total 100 100 Inference: The respondents were classified based on their rating to the soft drink - First. Ten percent of the respondents are selecting the Coke. 17% of the respondents are selecting the Fanta. 8% of the respondents are selecting the Sprite. 16% of the respondents are selecting the Maaza, 7% of the respondents are selecting the Thumsup, 6% of the respondents are selecting the Limca, 5% of the respondents are selecting the Kinley water, 6% of the respondents are selecting the Kinley soda, 8% of the respondents are selecting the MM Pulpy orange, remaining 17% of the respondents are selecting the MM Nimbu fresh

44 Classification of respondents based on their opinion towards the price which influence their buying behavior Opinion Highly Satisfied Satisfied Neutral Dissatisfied Highly Dissatisfied Total Number of respondents 15 35 45 3 2 100 Percentage of respondents 15 35 45 3 2 100

Opinion Highly Satisfied Satisfied Neutral Dissatisfied Highly Dissatisfied Total

Number of respondents 17 35 45 2 1 100

Percentage of respondents 17 35 45 2 1 100

Inference: The respondents were classified based on their opinion towards the price which influences their buying behavior. Fifteen percent of the respondents are expressed their opinion as highly satisfied. 35% of the respondents are expressed their opinion as satisfied, 45% of the respondents are expressed their opinion as neutral, 3% of the respondents are expressed their opinion as dissatisfied, remaining 2% of the respondents are expressed their opinion as highly dissatisfied. Classification of respondents based on their opinion towards the quality which influence their buying behavior Inference: The respondents were classified based on their opinion towards the quality which influences their buying behavior. Twenty percent of the respondents are expressed their opinion as highly satisfied. 45% of the respondents are expressed their opinion as satisfied, 30% of the respondents are expressed their opinion as neutral, 2% of the respondents are expressed their opinion as dissatisfied, remaining 3% of the respondents are expressed their opinion as highly dissatisfied. Classification of respondents based on their opinion towards the flavors which influence their buying behavior Opinion Number of Percentage of respondents respondents Highly Satisfied 20 20 Satisfied 40 40 Neutral 30 30 Dissatisfied 4 4 Highly Dissatisfied 6 6 Total 100 10

45 Inference: The respondents were classified based on their opinion towards the flavors which influence their buying behavior. Twenty percent of the respondents are expressed their opinion as highly satisfied. 40% of the respondents are expressed their opinion as satisfied, 30% of the respondents are expressed their opinion as neutral, 4% of the respondents are expressed their opinion as dissatisfied, remaining 6% of the respondents are expressed their opinion as highly dissatisfied. CONCLUSION The rural market in India is fascinating and challenging in spite of all the difficulties existing. The potential is enormous. Even though, these markets have weaknesses they also have tremendous opportunities which should be availed by the marketers. It is well known that Markets are created and not born. The market so created should be tapped effectively. The rural marketing strategy of Coca Cola is based on three A's - Availability, Affordability and Acceptability so the special care be take about pricing, promoting, distributing in rural areas The product and service is leading to exchange rural market which satisfies consumer demand and also achieves organizational objectives

46

CUSTOMER RELATIONSHIP MANAGEMENT


Shanmukavadivoo S.R.M Research Scholar (M.Phil), Karpagam University, Coimbatore. Dr. N. Shani, Director, Akshaya Institute Of Management Studies, Coimbatore ABSTRACT: (CRM) refers to the methodologies and tools that help businesses manage customer relationships in an organized way.CRM processes that help identify and target their best customers, generate quality sales leads, and plan and implement marketing campaigns with clear goals and objectives. CRM processes that help form individualized relationships with customers (to improve customer satisfaction) and provide the highest level of customer service to the most profitable customers;-CRM processes that provide employees with the information they need to know their customers' wants and needs, and build relationships between the company and its customers. Customer relationship management tools include software and browser-based applications that collect and organize information about customers. CRM is an information industry term for methodologies, software and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.CRM is the process of managing all aspects of interaction a company has with its customers, including prospecting, sales and service. CRM applications attempt to provide insight into and improve the company/customer relationship by combining all these views of customer interaction into one picture. CRM is an integrated approach to identifying, acquiring and retaining customers. By enabling organizations to manage and coordinate customer interactions across multiple channels, departments, lines of business and geographies, CRM helps organizations maximize the value of every customer interaction and drive superior corporate performance. CRM is an integrated information system that is used to plan, schedule and control the pre-sales and post-sales activities in an organization. CRM embraces all aspects of dealing with prospects and customers, including the call centre, sales-force, marketing, technical support and field service. The primary goal of CRM is to improve long-term growth and profitability through a better understanding of customer behavior. CRM aims to provide more effective feedback and improved integration to better gauge the return on investment (ROI) in these areas. organizing around customer segments, fostering behavior that satisfies customers and implementing customer centric processes. INTRODUCTION: CRM, Customer Relationship Management is a business strategy that enables organizations to get closer with their customers, to better serve their needs, improve customer service, enhance customer satisfaction and thereby maximize customer loyalty and retention. The present business scenario assigns great emphasis on managing business customers. Organizations are quickly recognizing that in order to survive competition it is important to grab customer attention with unique brand identity and superior service levels. Businesses which initially focused on finance / sales / marketing management are now shifting their priority towards customer relationship management. CRM solutions are flooding the market with easy-to-use tools to manage business customers. ORIGIN: CRM originated in early 1970s when the business units had a manifestation that it would be advisable to become customer emphatic rather that product emphatic. Birth of CRM was because of this heedful perceptiveness. The famous writer and management consultant Peter Drucker wrote; The true business of every company is to make and keep customers. Traditionally every transaction was on paper and dependent on goodwill which created hindrance in clutching customers. People used to work hard in entertaining customers by presenting new products with astonishing services; they were ready to work overtime for grasping more and more customers for increasing business. This too resulted in customer satisfaction and loyalty up to some extent, but at the end of the day there was no such bonding or relation between the two to carry on with future business smoothly.

47 COMPONENTS: CRM consists of three components: Customer, Relationship, and Management CRM tries to achieve a single integrated view of customers and a customer centric Approach Customer: The customer is the only source of the companys present profit and future growth. However, a good customer, who provides more profit with less resource, is always scarce because customers are knowledgeable and the competition is fierce. Sometimes it is difficult to distinguish who is the real customer because the buying decision is frequently a collaborative activity among participants of the decision-making process Information technologies can provide the abilities to distinguish and manage customers. CRM can be thought of as a marketing approach that is based on customer information Relationship: The relationship between a company and its customers involves continuous bidirectional communication and interaction. The relationship can be short-term or long-term, continuous or discrete, and repeating or one-time. Relationship can be attitudinal or behavioral. Even though customers have a positive attitude towards the company and its products, their buying behavior is highly situational. For example, the buying pattern for airline tickets depends on whether a person buys the ticket for their family vacation or a business trip. CRM involves managing this relationship so it is profitable and mutually beneficial. Management: CRM is not an activity only within a marketing department. Rather it involves continuous corporate change in culture and processes. The customer information collected is transformed into corporate knowledge that leads to activities that take advantage of the information and of market opportunities. CRM required a comprehensive change in the organization and its people. CRM & MARKETING: CRM leverages and amplifies customer base of an organization through efficacious and efficient marketing. In fact CRM has brought up new dimensions in the field of marketing by significantly improving marketing functioning and execution. Intuitive CRM associated marketing strategies like direct marketing, web marketing, e-mail marketing etc. have been matured during the recent past. These marketing strategies are more promising as compared to the traditional ways on marketing as they help delivering higher-up performance and walloping business. They also help meliorating response rates in marketing campaigns, cut cost on promotions due to low asset values and provide higher scrutiny on organizational investments. The various aspects of CRM oriented marketing are discussed below. 1. Web Marketing- With the growing popularity of web, customers are tending towards web marketing or web shopping. This helps both customers and suppliers to transact in a real time environment irrespective of their locations. Some of the major advantages of Web Marketing are listed below: It is relatively very inexpensive as it reduces the cost for physically reaching to the target customers for interaction. Suppliers can reach to more number of customers in lesser amount of time. The online marketing campaigns can be easily tracked, traced, calculated and tested. The selection process of any product or brand is simplified due to proven online research and analysis techniques. Online marketing campaigns are more promotional as compared to manual campaigns. 2. Email Marketing- Email marketing has turned out to be more efficacious and inexpensive as compared to mail or phone based marketing strategies. Email marketing is direct marketing which is

48 data driven and leads to more accurate customer response and effective fulfillment of customer needs. More attractive features include newsletters, sending of e coupons, e Cards, provision of saving events into calendars etc. 3. Analyzing customers buying behavior online- A CRM system provides a platform to analyze the customers buying behavior online. This interactive strategy provides great accuracy with high speed which includes profiling services furnishing elaborated bits of information regarding customers purchasing habits or behavior. Individualized analysis of this behavior also helps to identify to which product or brand the customers are more tended. For example an online selling website www.xyz.com can analyze the customers buying behavior by installing an in-house service with the help of a fullfledged CRM that checks what all products are being purchased by a particular customer and under which specific group they fall. This is achieved by personalized analyzing the buying history of customers in the past which predicts the future business with those customers also. This accomplishes to build a long-term relationship with customers by properly canvassing customer needs and resulting in customer satisfaction. Analyzing this particular buying behavior of customers online also helps to fix or change of marketing techniques or strategies to mould the system according to the future perspectives. COLLABORATIVE CRM: Collaborative CRM deals with synchronization and integration of customer interaction and channels of communications like phone, email, fax, web etc. with the intent of referencing the customers a consistent and systematic way. The idea is not only enhancing the interactions but also to increase and improve customer retention and liberty. Collaborative CRM entangles various departments of organization like sales, marketing, finance and service and shares the customer information among them to highlight better understanding of customers. For example, the information of preferred products could be shared with marketing department so that analysis can be performed in this aspect to provide preferred products to customers. The information regarding varied cost or price of a particular product in market defined by customers can be delivered to finance department so that strategies could be created to match the product cost with similar products in market and after analysis bring an affordable and efficient product in market. Department to improve or install that particular service in-house. All this is done efficaciously within the range of channels so that the process automates the needs and minimal time is required for fulfilling these needs. CONCLUSION: The present is an era of company loyalty to the customer in order to obtain customer loyalty to the company. Consumers are more knowledgeable than ever before and, because the customer is more knowledgeable, companies must be faster, more agile, and more creative than a few years ago.

49

GREEN MARKETING A PERSPECTIVE


Dr. R. Amutha Associate Professor, Justice Basheer Ahmed Sayeed College for Women (Autonomous), Chennai Abstract Green Marketing is marketing of products and services, which have essentially low impact on the environment. This has become a new trend with more and more companies opting for making products, which are environment friendly. Green marketing is extremely important because of successfully and widely implemented, the unlimited human wants can be met with comparatively limited resources. Companies take to eco-marketing as an opportunity to achieve various alternative objectives, i.e., other than those that are organizational, which includes, opportunities provided by Green Marketing social responsibility, pressure from the Government, competitive pressure, cost reduction and profit issues. Just as we have 4 Ps product, price, place and promotion in traditional marketing, we have 4 Ps in green marketing too, but they are a bit different by focusing on three additional Ps, namely people, planet and profits. It may be concluded, that although the government and many private companies have been making an effort to bring about a green mindset among the people and promote green products, a lot still need to be done to make green products truly viable and workable in India. Introduction There is a growing awareness among the consumers all over the world regarding protection of the environment in which they live. People do want to bequeath a clean earth to their offspring. Various studies by environmentalists indicate that people are concerned about the environment and are changing their behaviour pattern so as to be less hostile towards it. Now, we see that most of the consumers, both individual and industrial, are becoming more concerned about environment, friendly products. Most of them feel that environment friendly products are safe to use. As a result, green marketing has emerged, which aims at marketing sustainable and socially responsible products and services. Now is the era of recyclable, non-toxic and environment friendly goods. This has become the new mantra for marketers to satisfy the needs of consumers and earn better profits. Some of the terms like Green Marketing, Ecological Marketing and Environmental Marketing have cropped up in the marketing literature in recent times. These three terms are used synonymously in the marketing literature. 1. Objectives The principle objectives of this article are To understand the concept of Green Marketing. To examine the reason for the growth of Green Marketing. To discuss the Green Marketing mix. To highlight the commitment of companies in their green initiative. To recommend strategies that makes green products truly viable and workable. Methodology The methodology used for this study is exploratory in nature, and is based on secondary information. The study analyses the existing concepts of green marketing and tries to discuss the importance of three additional Ps, namely people, planet and profit in Green Marketing mix. It also explains the benefits and the concerns regarding the implementation of Green marketing. Finally it dwells on strategies for achieving mass consumption of green products in the long run. Definition The American Marketing Association defines Green Marketing as the marketing of products that are presumed to be environmentally safe for the consumers. It includes a wide range of activities, viz., product modification, changes in the production process, modification of the advertising messages, changes in the packaging of products, etc.,

50 Some examples of Green Marketing Green Marketing activities include the use of appropriate raw materials in the manufacture of products. Companies can change the raw materials from chemicals to natural materials. Taking the example of bath soaps, washing soaps, toothpaste, edible salt, etc., we observe that the manufacturers claim that their products contain natural materials like neem, tulsi, clove oil, sea salt, milk and milk cream, natural flowers for fragrances etc., instead of harmful chemicals. Listed below are examples of some companies, which have taken a green initiative in India. This shows the commitment of Indian companies, either as part of their corporate social responsibility or otherwise, to do something worthwhile in this direction. i. Tamil Nadu Newsprint and Papers Limited (TNPL) was awarded the Green Business Leadership Award in the pulp and paper sector for the year 2009-10, based on the EVI Green Business Survey conducted by Financial Express and Emergent Ventures India. This was given in recognition of two clean development mechanism project implemented by the company generating biogas from bagasse wash water, and using the same as a substitute for furnace oil. ii. Tata Metaliks Ltd., (TML) has initiated the use of only sunlight during daytime in its offices. iii. ITC has introduced Paper Kraft, a premium range of eco-friendly business paper. The companys social and farm forestry initiative has greened over 80,000 hectares of arid land. iv. Wipros computers division has launched energy star compliant products in the market. v. HCL Technologies is moving towards phasing out hazardous vinyl plastic and brominated flameretardants from its products. vi. Apple has adopted the philosophy that going green translates into alternative revenue streams. It recycles e-waste and also generates revenue therefrom. vii. IBM is selling green solution to corporate data centers where energy constraints and cost are limiting their ability to grow, with the promise that the energy costs would be reduced by half. viii. Oil and Natural Gas Corporation Ltd., (ONGC), Indias largest oil company, has introduced energy-efficient Mokshada Green Crematorium, which saves 60% to 70% of wood and a fourth of the burning time per cremation. ix. IndusInd Bank installed the countrys first solar-powered ATM and thus brought about an ecosavvy change in the Indian banking sector. x. Idea Cellular implemented its national campaign Use Mobile, Save Paper. The company organized Green Pledge campaigns to save paper and trees. Idea decorated bus shelters with potted plants and tendril climbers to communicate the green message. xi. Samsung, in fact, offers a host of eco-friendly products. It was the first to launch eco-friendly mobile handsets (made of renewable materials) W510 and F268 in India. xii. Nokias policy is to reduce the environmental impact of its products. It has taken the initiative to take back, recover useful materials and dispose of waste in a manner that causes least harm to the environment. xiii. Hero Honda Motors philosophy of continuous innovation in green products and solutions has enabled it to strike a balance between business, consumers and nature.

51 xiv. Honda India introduced its Civic Hybrid Car. However, initially it was unable to sell the same due to the high price. The price was reduced by Rs.8 lakh, and within a day, 98 Civic Hybrids were sold, which was more than what Honda had been able to sell during the previous five months since its launch. xv. Maruti and Hyundai have come up with LPG and CNG based variants for WagonR and Santro respectively. xvi. Reva, Indias Bangalore-based company, was the first in the world to commercially release an electric car. Reva is being sold in countries like UK, Ireland, Belgium, Spain, Cyprus, Greece and Norway. xvii. Mahindra Group had launched project Mahindra Hariyali in which one million trees would be planted nation-wide by Mahindra employees and other stakeholders including customers, vendors and dealers. xvii. McDonalds restaurants use napkins and bags made of recycled paper. Benefits of Green Marketing Green Marketing results in a wide variety of benefits: Environmental impact of industrial goods is reduced considerably, thereby providing a cleaner, greener and safer environment. Good quality products become available to consumers, though sometimes at a higher price. The available natural resources are optimally utilized and conserved. The corporate sector becomes more socially responsible. There would be growth in the organic food industry and such others, thereby promoting the overall health and well being of the people. Lends impetus to small-scale ventures in many fields. Companies engaged in development and marketing of green products achieve competitive advantage over their rivals. There is up gradation in the overall technology and products available in the market. Concerns regarding implementation of Green Marketing As explained above there are many benefits of green marketing. At the same time, there are many concerns regarding the commercial viability of green products, their acceptance by consumers and also how beneficial they really are : More importantly these is need for promotional activities which will create awareness regarding green products and facilitate their sale. Sometimes, the markets are not mature enough to accept green products because of their high price as compared to the non-green equivalents. So, green products have to be made more affordable in order to increase their acceptance. Otherwise, customers may not see any benefit in paying a high price for a product, when a cheaper substitute is available. Green Marketing is still in its infancy, can gain tremendous advantage if the initiative comes from the consumers, and companies are required to adopt practices in tune with consumer requirement. Government regulations pertaining to eco-friendliness play a limited role. They are primarily confined to regulating marketing claims and do not particularly aim at influencing consumer behaviour. Therefore, while companies should be responsible in their activities and claims, clear-cut standards, norms and regulations need to be put in place and properly enforced by the Governments. Penalties should be imposed on companies as well as on consumers when there is any behaviour, which is harmful to the environment. Further, customers too should be equally responsible in their purchase, consumption and disposal of products and services.

52 CONCLUSION In India, we have been following green marketing right from the use of biogas in villages to using environment friendly products like bamboo furniture, which are popular in the northeast. In fact, the pottery made from earthenware for drinking cool water rather than the refrigerator, is another interesting example. The use of coolers rather than air conditioners goes a long way in reducing the carbon footprint. However, these traditional items seem to be gradually losing their sheen, with more and more people using modern gadgets and gizmos. Further, to take consumers are becoming more and more conscious about the environment and are also becoming socially responsible. Therefore, green marketing results in a wide variety of benefit. Alongside, there are many concerns regarding the commercial viability of green products, their acceptance by consumers and also how beneficial they really are. Thus, it can be concluded that although the government and many private companies have been making an effort to bring about a green mindset among the people and promote green products, a lot still need to be done to make green products truly viable and workable in India. For green products to succeed, it is essential to educate consumers so that they demand green products and thus influence business into becoming eco-friendly.

53

CUSTOMER RELATIONSHIP MANAGEMENT


Mrs.G.Vijayalakshmi, Asst.Professor, STET School of Management (CRM) is a widely-implemented strategy for managing a companys interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processesprincipally sales activities, but also those for marketing, customer service, and support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments measuring and valuing customer relationships is critical to implementing this strategy. [ Introduction Customer Relationship Management originated years before the start of the first millennium in Mesopotamia. Farmers who were eager to sell their surplus produce became the first initiators of the customer oriented processes we are now familiar with. With the passage of time and the first millennium an accurate record of transactions was kept by the merchants accounting for what was sold and whom it was sold to. This list of customers provided the first comprehensive customer oriented data and proved to be the beginning of customer oriented strategies. The advent of the 1990's however saw a more refined customer oriented implementation taking place, laying the ground for the CRM strategy What is CRM? CRM stands for Customer Relationship Management. It is a process or methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends. CRM helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers. CRM consists of three components: 1. Customer 2. Relationship 3. Management Role of CRM in improving the Business All businesses are there to support its clients for it to achieve success. The focus of all the companies should be on their clients. In order to know the customer preferences, you will have to collect, group and analyze customer details, a tool that aids you in doing all these process is called as CRM Tool (Customer Relationship Management Tool). By knowing the likings and disliking of your customer will help you build a strong bond with existing clients and also to attract many more new clients. The customer data and information will be stored in a central site, and with the help of CRM tools you can access these details, manipulate them and make your decision from anyplace in the world at all times. The customer targeted scheme will help companies build a strong link with their customers and thus increasing its stronghold with its customer, giving a profitable Return of Investments thru the business.

54 Managing different types are business activates are made easy because of these CRM tools. Billing and Expense Sales and Marketing Human Resources Project Management

FIVE Es of eCRM The e in eCRM not only stands for electronic but also can be perceived to have many other connotations. Though the core of eCRM remains to be cross channel integration and organization; the six e: in eCRM can be used to frame alternative decisions of eCRM based upon the channels which eCRM utilizes, the issues which it impacts and other factors; the six es of eCRM are briefly explained as follows: 1. Electronic channels: New electronic channels such as the web and personalized e-messaging have become the medium for fast, interactive and economic communication, challenging companies to keep pace with this increased velocity. eCRM thrives on these electronic channels. 2. Enterprise: Through eCRM a company gains the means to touch and shape a customers experience through sales, services and corner offices-whose occupants need to understand and assess customer behavior. 3. Empowerment: eCRM strategies must be structured to accommodate consumers who now have the power to decide when and how to communicate with the company through which channel, at what frequency. An eCRM solution must be structured to deliver timely pertinent, valuable information that a consumer accepts in exchange for his or her attention. 4. Economics: An eCRM strategy ideally should concentrate on customer economics, which delivers smart asset-allocation decisions, directing efforts at individuals likely to provide the greatest return on customer communication initiatives. 5. Evaluation: Understanding customer economics relies on a companys ability to attribute customer behavior to market programs, evaluate customer interactions along various customer touch point channels, and compare anticipated ROI against actual returns through customer analytic reporting. Over the past decade, customer relationship management solutions have evolved to the extent that they enable a business to grow the lifetime value of its customers, as well as counter customer defections.

The individual firm is thus caught in an ethical dilemma. It wants to collect as

55 TECHNICAL IMMATURITY The concept, technologies, and understanding of CRM are still in its early adapter stage. Most of the CRM technologies are immature and the typical implementation costs and time are long enough to frustrate potential users. Many software and hardware vendors sell themselves as complete CRM solution providers but there is little standardized technologies and protocols for CRM implementation in the market. Even the scope and extent of what CRM includes differ from vendor to vendor; each has different implementation requirements to achieve the customers expectations. Benefits of CRM A CRM system may be chosen because it is thought to provide the following advantages] Quality and efficiency Decrease in overall costs Decision support Enterprise agility Customer Attention CONCLUSION In summary, to implement CRM successfully, you'll have to reorganize your customer and change your organizational mindset. When CRM works, it helps to solve this problem by meshing everyone together and focusing the entire organization on the customer. Like all strategic initiatives, CRM requires commitment and understanding throughout the company, not just in marketing. In all, it adds to a sense of expectation and lty being instilled within the consumer and the development of a relationship between company and customer that competitors find hard to break. Business decisions based on complete and reliable information about your customers are very difficult for your competitors to replicate and represent a key and sustainable competitive advantage

56

GREEN MARKETING ISSUES AND CHALLENGES


Praveen Kumar.T Lecturer - St.Peters College Of Engineering And Technology,Chennai Introduction: 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. Divergent aspects of green marketing include ecologically safer products, recyclable and biodegradable packaging, energy-efficient operations, and better pollution controls. Advances produced from green marketing include packaging made from recycled paper, phosphate-free detergents, refillable containers for cleaning products, and bottles using less plastic. As todays consumers become more conscious of the natural environment, businesses are beginning to modify their own thoughts and behaviour in an attempt to address the concerns of consumers. Green marketing is becoming more important to businesses because of the consumers genuine concerns about our limited resources on the earth. By implementing green marketing measures to save the earths resources in production, packaging, and operations, businesses are showing consumers they too share the same concerns, boosting their credibility. Definition: Pride and Ferrell (1993) Green marketing, also alternatively known as environmental marketing and sustainable marketing, refers to an organizations efforts at designing, promoting, pricing and distributing products that will not harm the environment Polonsky (1994) defines green marketing as .all activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants, such that the satisfaction of these needs and wants occurs, with minimal detrimental impact on the natural 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. INTRODUCTION TO GREEN PRODUCTS: 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. For wood or bio-based products, they employ "sustainable harvesting" practices They are biodegradable.

INITIATIVES TAKEN MARKETING:

57 UP BY BUSINESS ORGANISATIONS TOWARDS GREEN

India is growing at 9% annually and expected to double its energy consumption between 2009 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. 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. 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 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 organisation in the global competitive scenario. GREEN MARKETING ADOPTION BY THE FIRMS: Green marketing has been widely adopted by the firms worldwide and the following are the possible reasons cited for this wide adoption: OPPORTUNITIES: As demands change, many firms see these changes as an opportunity to be exploited and have a competitive advantage over firms marketing non-environmentally responsible alternatives. Some examples of firms who have strived to become more environmentally responsible, in an attempt to better satisfy their consumer needs McDonald's replaced its clam shell packaging with waxed paper because of increased consumer concern relating to polystyrene production and Ozone depletion.

58 SOCIAL RESPONSIBILITY: OPTING THE RIGHT GREEN MARKETING STRATEGY: Green marketing has not lived up to the hopes and dreams of many managers and activists. Although public opinion polls consistently show that consumers would prefer to choose a green product over one that is less friendly to the environment when all other things are equal, those "other things" are rarely equal in the minds of consumers. And hopes for green products also have been hurt by the perception that such products are of lower quality or don't really deliver on their environmental promises. Yet the news isn't all bad, as the growing number of people willing to pay a premium for green products from organic foods to energyefficient appliances attests. How, then, should companies handle the dilemmas associated with green marketing? They must always keep in mind that consumers are unlikely to compromise on traditional product attributes, such as convenience, availability, price, quality and performance. Since there is no single greenmarketing strategy that is right for every company experts suggest that companies should follow one of four strategies, depending on market and competitive conditions, from the relatively passive and silent "lean green" approach to the more aggressive and visible "extreme green" approach with "defensive green" and "shaded green" in between. Managers who understand these strategies and the underlying reasoning behind them will be better prepared to help their companies benefit from an environmentally friendly approach to marketing. CONCLUSION: Green marketing covers more than a firm's marketing claims. While firms must bear much of the responsibility for environmental degradation, the responsibility should not be theirs alone. Ultimately green marketing requires that consumers want a cleaner environment and are willing to "pay" for it, possibly through higher priced goods, modified individual lifestyles, or even governmental intervention. Until this occurs it will be difficult for firms alone to lead the green marketing revolution. The industrial buyer also has the ability to pressure suppliers to modify their activities. Thus an environmental committed organization may not only produce goods that have reduced their detrimental impact on the environment, they may also be able to pressure their suppliers to behave in a more environmentally "responsible" fashion. Final consumers and industrial buyers also have the ability to pressure organizations to integrate the environment into their corporate culture and thus ensure all organizations minimize the detrimental environmental impact of their activities. Thus green marketing should look at minimizing environmental harm, not necessarily eliminating it. References: 1. www.greenmarketing.net/stratergic.html 2. www.indiagreen.com 3. Paryavaran Mitra, Ahmedabad. 4. Indian Journal of Marketing, New Delhi.

59

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)


Mohamed Naimudeen. A, Assistant Professor, Department of Management Studies, St.Michael Engineering College. ABSTRACT Customer relationship management (CRM) is a widely-implemented strategy for managing a companys interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments. Measuring and valuing customer relationships is critical to implementing this strategy. Customer Relationship Management is one of the hottest and most talked about topics in the industry today and for good reason. CRM (customer relationship management) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. Simply stated, Customer Relationship Management (CRM) is about finding, getting, and retaining customers. CRM is at the core of any customer- focused business strategy and includes the people, processes, and technology questions associated with marketing, sales, and service. In todays hyper-competitive world, organizations looking to implement successful CRM strategies need to focus on a common view of the customer using integrated information systems and contact center implementations that allow the customer to communicate via any desired communication channel. Introduction Customer Relationship Management (CRM) is an enterprise-Wide initiative that belongs to all areas of an organization (Sing and Agarwal, 2003). It reflects the comprehensive strategy and process of acquiring, retaining,and partnering with selective customers to create superior value for the company and the customer. Literature Review Still relationship marketing appears to be an expensive alternative to firms practicing mass marketing due to the relatively high initial investments. Firms would adopt relationship marketing only if it has the potential to benefit them. The benefits come through lower costs of retention and increased profits due to lower defection rates (Reichheld and Sasser, 1990).When customers enter into a relationship with a firm, they are willingly foregoing other options and limiting their choice. Some of the personal motivations to do so result from greater efficiency in decision-making, reduction in information processing, achieving more cognitive consistency in decisions and reduction of perceived risks with future decisions (Sheth & Parvatiyar, 1995) Research Objectives The current research was aimed at determining the approach being adopted by businesses in India for customer relationship marketing. Building long term and profitable relationships with chosen customers. Getting closer to those customers with every point of contact. Management in service firms believe that their processes are customer centric Selecting technology based on an understanding of customer needs Empowered employees to deliver superior service Have a customer knowledge strategy

60 5- Factors rely on customers Relationship growth: The adoption of quality and standard programs by companies. The growth of service industries. Rapid technological improvements, especially in information and communication. Organizational development leads to the empowerment of individual and teams. An advance in the competitive intensity leads to concern for customer retention. Major CRM Strategic Capabilities: Technology: This will enable the desired functionality for CRM practice. People: Skills, abilities and attitudes of the people responsible for CRM initiatives. Process: The company can ensure that the CRM objectives are fulfilled that include transactional interactions. Knowledge and Insight: To ensure stronger and deeper relationship with the right set of customers. Companies need to identify the right approaches that will enable them to gain knowledge to gain insight for enhancing the customer value significantly. Methodology The research was exploratory in nature. 20 respondents from textile owners and Jewelers owners operating in Aruppu kottai were surveyed through respondent administered questionnaires. The survey focused on the quality and customer centric processes, technology selection, the owners of selected outlets were interviewed to understand the relationship marketing practices adopted by them. These interviews explored the following Techniques Price Discount & Cash Discounts. Festival and Seasonal Offers Gifts and Complements Entertainment & Amusements to kids Warm welcome & Respect to the consumers Purchase assistance CRM Techniques

Respondents Opinion

90% Price Discount & Cash Discounts. 80% Festival and Seasonal Offers 60% Gifts and Complements 60% Entertainment & Amusements to kids 65% Warm welcome & Respect to the 75% consumers Purchase assistance The above table shows the Various CRM techniques followed by the textile and Jwellers company to retain customer and profess to encourage the loyalty towards the particular brand name.

61

Textile & Jwellers


100% 50% 0% 90% 80% 60% 60% 65% 75%

CONCLUSION The following conclusions can be drawn from the study: As the key consumers become opinion leaders in these consumer communities, it is vital for organization to identify the components that build trust worthiness of these individuals. The opinion leaders can be subsequently leveraged by organizations to build greater value for their communities, brand and products. REFERENCE 1. 2. 3. Rajan Saxsena (2007),Marketing Management, McGraw-Hill Publication, Third Edition. Paul Greenberg (2003), CRM at the speed of Light, McGraw-Hill Publication, Second Edition. Shirin Alavi, Vandana Ahuja and Medury (2011), ECRM Using Online Communities,The IUP journal of Marketing Management,Vol X,No,1,2011.

62

CUSTOMER AND BRAND EQUITY


Mrs. K.R. Padma Priya M.com., M.Phil., M.B.A., Research Scholar & Asst Professor, Anna Adarsh College For Women, Chennai 600040. INTRODUCTION In the modern money using economy marketing gains momentum persistently in all walks of human life. Marketing starts with identifying latent needs, developing and promoting the products and services at the middle and ends with providing utmost satisfaction to the human beings. In this process marketing involves with introduction and promotion of utility goods and services. With the advent of new economic reforms in 21st century marketing may be felt as an indispensable and unequivocal activity that stimulates, provides and protects the needs satisfying means. Thus, marketing enunciates research process to comprehend and to test the trueness and appropriate usage of various strategies relating to linking the elements of marketing mix viz., product, price, promotion and physical distribution. Any conclusion derived may be in vain if marketing could not understand how the consumer gets satisfied, and the extent to which they support a particular product in the long run in order to provide a base for sustainable growth of a firm which initiates, activates and keeps going on formulating marketing strategies and actions. The quality of marketing is reflected by the extent of customers satisfaction. The success of marketing is resorted to how a product reaches the customer in terms of quality, price and other product benefits. Hence, marketing undertakes promotion maintenance of a brand which would be a motivating factor to the customer in identifying the product and its bestowed services. Many research studies have been exploring new thoughts and advocating new philosophy, out of which brand concepts of the product gained impetus in recent times. Of all the concepts of brand viz., brand awareness, brand knowledge and brand loyalty, brand equity has emerged as the central concept in marketing over the past twenty years. The brand equity of a particular product would be an outcome derived from the consumers response that penetrates the product to live long in the midst of hectic competition. BRAND EQUITY Brand equity has emerged as the central concept in marketing over the past 20 years. Much attention has been devoted recently to the concept of brand equity. Brand equity has been viewed from a variety of perceptive; more had been learnt about the source of brand equity as well as its many benefits for a firm and its customers. In todays competitive battleground, the concept of brand equity has proved to be an important source of strategic insights for marketers. CUSTOMER BASED BRAND EQUITY CBBE incorporates recent theoretical advances and managerial practices to understand and influence consumer behaviour. It gives a good exposure to the marketer to build a strong brand. Keller (1998), Customer-Based Brand Equity (CBBE) framework identifies a brands meaning as the key to create equity. He also stresses that meaningful differences among brands derive from brand associations that are unique, favorable and strong. Finally, he points out that firms enjoy a number of brand equity benefits related to growth and profits that ensure from increased customer loyalty levels. The possibility of extending loyalties from one generation to the other is an added benefit that has not yet been well recognized. NEED OF THE STUDY The CBBE referred to consumers ability to retain and recall the benefits and attributes of a particular product in the long run. From this, it may be noted that brand equity is an extension of brand knowledge and brand loyalty. Thus, a brand is said to have equity to the extent that consumers are more willing to purchase the branded product over an identical unbranded product. Any product may be restored with brand

63 equity only when the marketing efforts are inspiring the customers not only to get intended with a product but retained with it and get satisfied in the future. Any effort that interacts marketing efforts and learning about consumers would emphasize in identifying the extent of existing brand loyalty ending with equity for the produce. It provokes the researcher to choose the present study for the purpose of identifying the presence of the brand equity. Therefore, the present study makes an important distinction between what brand is at the marketer level, and how it is manifested at the consumer level. STATEMENT OF THE PROBLEM Every individual is a potential consumer of goods and services. The needs of the consumers throughout the world are similar, while the social, environmental and other forces that vary from place to place lead to differences I n buying and consumption patterns. They need information and guidance to help them decide on the relative merits of different products. Thus, marketing consists of a set of principles for choosing target markets, evaluating consumers needs, developing wants, satisfying product and services and delivering values to customers and profit to the company. Most successful companies owe their success to their practice of a thorough going marketing orientation. Business investors recognize the legalized brand name of the product as the companys most valuable asset. So the firm has to manage its own brand by not allowing the consumers to have a favour over the other brands. Thus, marketing battle will be a battle for brands. Thus, marketing and consumer research penetrates to identify the variables causing a concern to retain the customer forever to accomplish their end means by propagating not only the product innovation but also to retain and restore the product, starting with brand name / awareness and ending with brand equity. Hence, an attempt is imperative to thoroughly study the brand equity. OBJECTIVES OF THE STUDY The underlying objectives of the study are framed, formulated and analysed for screening the existence of brand equity. To identify and analyse the relationship of brand equity with socio economic characteristics of the consumers. To analyse the association between the brand equity and its fundamentals viz., product attributes, purchase decision, post purchase behavior and sales promotion mix. To identify the relationship of brand equity with regard to awareness, loyalty, association, performance and knowledge of brand. METHODOLOGY The study is conducted using both analytical and descriptive type of methodology. The study depends upon primary and secondary data. The primary sources like questionnaires and secondary sources like books, journals etc, are used for collecting the data. SUMMARY OF FINDINGS The study reveals that most of the respondents are male, moderately educated, employed in private sector with a family size of 3-5 members and having marginal income. The interest, awareness and knowledge over different attributes are more among the respondents It is identified that the purchase decision depends upon the two factors namely price-quality and service-availability. The consumers distinguish themselves from gender, age and income. Promotion and marketing mix are of the crucial factors that create significant impact on all the elements of brand equity. Brand awareness can be identified as Reputation-Offer and Appearance-Performance.

64 It is identified that advertisement, brand recall, consistency, relevancy and utility constitute brand association. Place of buying has no association with cluster of customers as they buy their products wherever they are available. It implies that brand shift affects and impedes the building block of brand equity

CONCLUSION The study deals with the concept of customer based brand equity considering the perception of customers in fetching equity to the product that they use. Selected demographic variables are considered as important factors which are signifying the formation of brand equity among the customers. As years of using the same brand is increased the customers attitude becomes positive to build brand equity. Promotion and marketing mix are tremendous essential factors that influence the various elements of brand equity.

65

MARKETING STRATEGIES FOR SERVICE FIRMS


Mrs. R. M. Shanthi, Head, B.Com (Bank Management) , R. B. Gothi Jain College For Women Redhills, Chennai. INTRODUCTION: Marketing theory and practice developed initially in connection with physical products such as toothpaste, cars and steel .Yet one of the major trends of recent years has been the phenomenal growth of services . In the united states , service jobs now account for 79 % of all jobs and 74% of gross domestic product . These numbers have led to a growing interest in solving problems of marketing services . A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything . Its production may may not be tied to a physical product . DEFINITION American Marketing Association defines services as activities , benefits or satisfactions which are affected for sale or are provided in connection with the sale of goods . Services are intangible dominant products that cannot be seen , felt , sensed and cannot be physically possessed . Services are differentiated from goods in the following respects : Intangibility , inseparability , perishability , fluctuating demand , heterogeneity , lack of standardization etc . Hence marketing of services needs a highly differentiated marketing system particularly on account of absence of certain marketing functions. MARKETING STRATEGIES: Until recently , service firms lagged behind manufacturing firms in their use of marketing . But his has changed. Three additional Ps like people , physical evidence and process are required for service marketing The service outcome is highly influenced by a host of variables .Service marketing requires external marketing and internal and interactive marketing . External marketing describes the normal work to prepare , price , distribute and promote the services to customers . Internal marketing the work to train and motivate the employees to serve the customer well . Interactive marketing describe the employee skill in serving the client. The service companies have the following strategies to attract the loyal customers: 1. MANAGING DIFFERENTIATION: Service marketers frequently complain about the difficulty of differentiating their services. To the extent that customers view a service as fairly homogeneous , they care less about the provider than the price The alternative to price competition is to develop a differentiated offer , delivery , or image . a. Offer : The offer include innovative features . Primary service package and secondary service features are expected by the customers . Many companies are using the Web to offer secondary service features that never possible before. But the major challenge is that most service innovations are easily copied . Sill the company that regularly introduces innovations will gain a succession over competitor b. Delivery ; A service company can hire and train better people to deliver its service . It can develop a more attractive physical environment in which to deliver the service c. Image ; Service companies can differentiate their image through symbols and branding.

66 2. MANAGING SERVICE QUALITY A service firm may win by delivering consistently higher quality service than competitors and exceeding customers expectations . These expectations are formed by their past experiences , word of mouth and advertising . After receiving the service , customers compare the perceived service with expected service .The determinants of service quality are reliability , responsiveness , assurance , empathy and tangibles . The service companies follow the following common practices: a. b. c. d. e. Strategic concept : The service companies develop a strategy for satisfying the customer needs . Top management commitment :The management looks for not only financial performance but also a service performance . High standard. The service providers set service - quality standards. Monitoring systems :The service firms audit their service performance by adopting the devices like comparison shopping , ghost shopping , customer surveys , suggestion and complaint forms .etc . Satisfying both employees and customers : The service companies carries out internal marketing and provides employee support and rewards for good performance . Management regularly audits employee job satisfaction. MANAGING PRODUCTIVITY firms are under pressure to keep costs down and increase productivity . Hire more skillful workers through better selection and training. Increase the quantity of service. Adding equipment and standardizing production. To present customers with incentives. Reduce or make obsolete the need for a service by inventing o product solution .

1. Service a. b. c. d. e.

Technology has great power to make service workers more productive. companies must avoid pushing productivity so hard so that they reduce perceived quality .Some methods lead to too much standardization and rob the customer of customized service . CONCLUSION: To conclude it can be said that , in the post industrial society , the service has grown rapidly and services are deciding the quality of life .Economic development of society and the accompanying socio-cultural changes are reasons behind the growth of service sector . Hence, marketing strategy is more important to fulfill the socio and psychological needs of mankind .

67

CONCEPTUALIZING, MEASURING, AND MANAGING CUSTOMER-BASED BRAND LOYALTY


Dr. V.N. JOTHI, Associate Professor, Department of Commerce, Kanchi Shri Krishna College of Arts and Science College, Kilambi, Krishnapuram 631 551, Kanchipuram ABSTRACT This paper attempts to diagnose some realities behind branding by measuring consumer attitude in purchase decision on branding, purchase loyalty and attitudinal loyalty. Behavioral or purchase loyalty consist of repeated purchase of brand, whereas attitudinal brand loyalty includes a degree of dispositional commitment in terms of some unique value, associated with the brand. Result suggest that consumers have preference for branded product and they feel branded products are very useful in identifying products and for guaranteed quality of products. The results of brand loyalty reveals that majority of consumers exhibit medium level of brand loyalty and if marketer fails to reciprocate the loyalty they can not sustain the patronage of consumers in the long-run. Conceptualizing, Measuring, and Managing Customer-Based Brand Loyalty Objectives of the study The objectives of the study are: To find out the demographic variable contributing to the brand loyalty. To investigate customers response to advertisement. To study customers information search and brand loyalty process. Methodology of the study The study is explorative in nature and focuses basically on primary data about customer preference for consumer goods. The study is based on convenient sampling. A well-structured and pretested questionnaire was administered to the respondents for the collection of data. A sample size of 100 has been taken for the purpose of the study. Brand loyalty and the advertisement response of customers are considered as dependent variables. Brand loyalty was measure by agreement with twelve statements constructed to reflect either the purchase related or attitudinal aspects of brand commitment and these statements relating to various means by which consumer try to influence their preference. The respondents are asked to mark their answer on a five point Likert Scale. Advertisement response is consist of seven statements drafted in a five point likert scale with scores from one to five from strongly disagree to strongly agree. Product characteristics are considered as independent variable. To identify the level of influence on the brand loyalty, the customers were asked to respond on a five point scale ranging from very high to very low. Brand Loyalty The Varimax factor analysis with Kaiser Rotation is carried out over twelve statements of brand loyalty aimed at the reduction of these statements into profound explanatory factors. In this factor analysis, two factors are identified comprising of the following statements named as purchase and attitudinal loyalty. The factor analysis reduces the twelve statements into two factors as given below: Factor 1 Purchase Loyalty The related statements are: I trust this brand I rely on this brand This is an honest brand This brand is safe I will buy this brand more frequently

68 I intend keep purchasing this brand and I feel good when I use this brand The factor loading registered for these statements are 0.733, 0.747, 0.706, 0.672, 0.672, 0.647, and 0.579 respectively. Factor 2 Attitudinal Loyalty The related statements are: I would be willing to pay a higher price for this brand over other brands I am committed to this brand This brand makes me happy This brand would your recommend and This brand gives me pleasure The factor loading registered are 0.739, 0.672, 0.638, 0.600, and 0.582 respectively The customers apply two types of loyalty to convince their brand when they decide to buy products. It is inferred from above analysis that customers predominantly apply purchase loyalty and use less attitudinal loyalty, to get the desired product. Table 1 Percentage of Variance of Brand Loyalty Extraction Sums of Squared Loadings Eigen value % of Variance Cumulative % 4.814 40.120 40.120 1.272 10.598 50.718 Source: Primary data. The total variation explained by the variables of brand loyalty is 50.718%. In the total variation, the first factor purchase loyalty exhibits a very high variance of 40.120% followed by (10.598%) variance of the attitudinal loyalty. Advertisement Response The Varimax analysis with Kaiser Rotation is carried out over seven statements of advertisement response against brand loyalty aimed at the reduction of the variables into profound explanatory factors. In this factor analysis, two factors are identified. They are decision making response and informative response. The factor analysis reduces the seven variables into two factors are given below: Factor 1 Decision Making Response The related statements are: Advertising results in lower price Advertising promotes competition which benefits the consumer Advertising is valuable source of product information Brand that are advertised are better in quality than brands that are not advertised Advertisements present a true picture of the product advertised. Factor 2 Informative Response The related statements are: Advertising persuades people to buy things, they should not buy Advertising tells me which brands have the features I am looking for The total variation explained by these variables is 64.125 percent. This analysis identified two categories of advertisement responses. The first factor decision making response has a contribution of 49.645 percent followed by informative response 14.479 percent. Hence two types of responses are identified .

69 Table 2, Percentage of Variance of Advertisement Response and Brand Loyalty Extraction Sums of Squared Loadings Eigen value % of Variance Cumulative % 3.475 49.645 49.645 1.014 14.479 64.125 Source: Primary data. In the Decision Making Response, the highest supporting factor is they discuss the advertising results lower prices, which has a factor loading of 0.812, followed by benefits to the consumer with a factor loading of 0.780, expressing their opinion towards valuable sources of product information which has a factor loading 0.749, try to identify better quality brand has the factor loading 0.723, and finally present a true picture of the product with a factor loading 0.549 also supports this factor. This demonstrates that the customers try to use each aspect to take decision. However in the case of Information Response, the first highest contributing factor is advertising persuades people to buy things that has a factor loading of 0.870 followed by advertising tells me which brand have the features with a factor loading of 0.792. Impact of demographic variables on the brand loyalty An attempt has been made to identify whether there is a difference in the level of purchase and attitudinal loyalty based on various demographic variables. To test this ANOVA is used and the results are shown in Table 3. Table 3, Demographic variables and Brand Loyalty Mean Source Dependent Variable F Sig. Square Purchase Loyalty 8.606 0.354 0.555 Age Attitudinal Loyalty 0.235 12.944 0.001** Purchase Loyalty 0.921 1.200 0.274 Gender Attitudinal Loyalty 0.176 0.287 0.592 Purchase Loyalty 1.503 1.958 0.162 Male Attitudinal Loyalty 0.495 0.806 0.370 Purchase Loyalty 0.067 0.0109 0.741 Female Attitudinal Loyalty 4.988 6.496 0.011* Purchase Loyalty 1.961 2.554 0.196 Occupation Attitudinal Loyalty 0.742 2.530 0.040* Purchase Loyalty 0.204 0.265 0.607 Income Attitudinal Loyalty 2.645 4.310 0.038* Purchase Loyalty 2.417 3.148 0.077 Married Attitudinal Loyalty 0.146 0.238 0.626 Purchase Loyalty 0.020 0.026 0.873 Unmarried Attitudinal Loyalty 0.078 0.127 0.722 Purchase Loyalty 0.004 0.006 0.939 Number of members Attitudinal Loyalty 0.326 0.531 0.467 Purchase Loyalty 0.544 0.708 0.400 Number of children Attitudinal Loyalty 0.590 0.961 0.328 Source: Primary data. Note: * 5% and ** 1% levels of significant From the above table 3, it is found that attitudinal loyalty varies based on age, female, occupation and income significantly loyal, rest of the demographic variables does not loyal. Education Level and Brand Loyalty It is found that attitudinal varies significantly based on educational level. The difference exhibited in the brand loyalty which can be further explained with the mean values in table 4.

70 Table 4, Educational Level and Brand Loyalty Purchase Loyalty Attitudinal Loyalty Educational Level Standard Standard Mean Mean Deviation Deviation School Education 2.822 0.9259 3.489 0.6905 Graduate 2.692 0.8272 3.436 0.8308 Post Graduate 2.627 0.9222 3.348 0.7365 Professional 2.655 0.8388 3.287 0.9706 Source: Primary data. The mean value for purchase loyalty in respect of education varies from Schooling to Professional education. The mean values are 2.822, 2.692, 2.627, and 2.655 respectively. Comparing the mean values of attitudinal loyalty based on education it is found that when the education is higher, they become more attitudinal towards their purchase. This can be substantiated by a mean value, which is the highest (mean = 3.489) for respondent who are in the school education and the least (mean = 3.287) for the education upto professional. Purchase loyalty is less. Income Level and Brand Loyalty It is found that attitudinal loyalty varies significantly based on income level. The difference exhibited in the brand loyalty can be further explained with the mean values in table 5. Table 5, Income Level and Brand Loyalty Purchase Loyalty Attitudinal Loyalty Annual Income (Rs.) Standard Standard Mean Mean Deviation Deviation > 1.5 lakhs 2.741 0.8817 3.605 0.7149 < 1.5 to 3 lakhs 2.651 0.8682 3.287 0.7614 < 3 to 5 lakhs 2.673 0.8722 3.428 0.6735 < 5 lakhs 2.695 0.9356 3.347 0.8768 Source: Primary data. The mean value for attitudinal loyalty in respect of annual income varied from income less than Rs. 1.5 lakhs to more than Rs. 5 lakhs. The mean values were 3.605, 3.287, 3.458, and 3.347 respectively. Comparing the mean values of attitudinal loyalty based on annual income, it was found that when the income is higher in the group below Rs. 1.5 lakhs. Advertisement Response and Brand Loyalty Advertisement response consists of two factors, namely decision making response and informative response. Brand loyalty is divided into two factors, namely, purchase loyalty and attitudinal loyalty. In order to find out of relationship between the brand loyalty and the advertisement response, Karl Pearsons coefficient of correlation is applied and the details are given in table 6.

71 Table 6, Relationship between Advertisement Response and Brand Loyalty Loyalty Type of tests Decision making Informative Pearson Correlation 0.161** 0.152** Purchase Sig. (2-tailed) 0.000 0.001 N 100 100 Pearson Correlation 1 0.136** Attitudinal Sig. (2-tailed) 0.001 0.003 N 100 100 Source: Primary data. Note: * 5% and ** 1% levels of significant From the above table, it is found that there is a significant positive correlation between advertisement response and brand loyalty. While purchase loyalty has a significant positive correlation with both decision making response (r = 0.161) and informative response (r = 0.152) attitudinal loyalty also has positive correlation (r = 0.136) with informative response. As such, it is inferred that advertisement responses are both decision making and informative towards purchase loyalty and informative towards attitudinal loyalty. CONCLUSION In conclusion the empirical result clearly shows that consumers maintain somewhat cautious attitude towards branded products. Large consumers have appreciation for trustworthy branding services. Branded products influence the consumers purchase decision but they seek real benefits from brands. It has been noted that brands with high market share tend to have high levels of repeat purchase among their users (Ehrenberg, Barnard, and Seriven 1997, Ehrenberg, goodhardt, and Barwise 1990). Brand loyalty pattern also shows that consumers exhibit reasonable degree of the loyalty to favorite brand. Influence of demographic factor is mainly found in the attitudinal loyalty. Hence, the marketers must present the product with high attitudinal to induce the purchase. Educationalist was respond with advertisement. The purchase loyalty and attitudinal loyalty play in the creation of brand loyalty. Decision making and informative responses were each directly related to both purchase and attitudinal loyalty. REFERENCE Aaker, David A., (1991), Managing Brand Equity: capitalizing on the value of a Brand Name, New York: The Free Press. Arjun Chaudhuri and Morris B. Holbrook, (2001), The Chain of Effects from Brand Trust and Brand affect to Brand performance: the role of Brand Loyalty. Assael, Henry, (1998), Consumer Behavior and Marketing Action, Cincinnati, OH: South-Western. Dick, Alan S. and Kunal Basu, (1994), Consumer Loyalty: Toward an Integrated Conceptual Framework, Journal of the Academy of Marketing Science, 22(Spring), 99-113. Ehrenberg, Andrew S.C., N. Barnard, and J. Seriven, (1997), Differentiation or salience, Journal Advertising Research, 37, (November /December), 82-91. Ehrenberg, Gerald J. goodhardt, and T. Patric Barwise, ( 1990), Double Jeopardy Revisited, Journal of Marketing, 54 (July), 82-91.

72

SERVICE MARKETING IN BANKING SECTOR


Mrs. S.Punitha Devi, Assistant Professor, Kongunadu Arts & Science College, Coimbatore. Mrs.R. Rajalakshmi, Department of Commerce, Kongunadu Arts & Science College, Coimbatore. INTRODUCTION: The ability of most banks in most developing countries to deliver effective and satisfactory services to their clients remains a challenge as a result of the continued use of traditional approaches in the delivery of banking services. In this regard, such banks were faced with a situation where the functions of their employees and the traditional service delivery functions they offered were no longer their first interest. Indian banking sector historically passed through five stages Pre-independence, Postindependence, Pre- nationalization, Nationalization, Post-liberalization. In all these stages other than the last stage, marketing was always considered not to be a bankers cup of tea. But today, it is considered to be an integral management function in banking sector. BANK MARKETING: Marketing approach in banking sector had taken significance after 1950 in western countries and then after 1980 in Turkey. New banking perceptiveness oriented toward market had influenced banks to create new market. Banks had started to perform marketing and planning techniques in banking in order to be able to offer their new services efficiently. Bank marketing is the aggregate of functions, directed at providing services to satisfy customers financial need and wants, more effectively and efficiently than the competitors keeping in view the organizational objectives of the bank. SERVICE MARKETING CONCEPT: It is a managerial process of managing the services. It is an organized effort for providing a sound foundation for the development of an organization. It is a social process helping an organization to understand the emerging social problems and to take part in the social transformation process to justify its existence in the society. PRINCIPLES OF BANK MARKETING:

73 USERS OF BANKING SERVICES:

Users of banking

General users

Industrial users

General users: Persons having an account in the bank and using the banking facilities at the terms and conditions fixed by a bank is known as general users of the banking services. Generally, they are found small sized customers. Industrial users: The industrialists, entrepreneurs having an account in the bank and uasing the credit facilities and other services for the establishment and expansion of their business are known as industrial users. Generally, they are found large sized. Prospectus: It is also essential to clarify the term, Prospectus! The general or industrial prospectus does not use the banking services at present but they have the potentials to become a customer if induced or motivated in a right fashion. REASONS FOR MARKETING SCOPE OF BANKING: Change in demographic structure: Differentiation of population in the number and composition affect quality and attribute of customer whom benefits from banking services. Intense competition in financial service sector: The competition became intense due to the growing international banking perceptiveness and recently being non limiting for new enterprises in the sector. Increase in liberalization of interest rates has intensified the competition. Banks wish for increasing profit: Banks have to increase their profits to create new markets, to protect and develop their market shares and to survive on the basis of intense competition and demographic chance levels. STAGES OF MARKETING SERVICES IN BANK: The marketing comprehension that is performed by banks since 1950 can be shown as in following five stages: Promotion oriented marketing comprehension; Marketing comprehension based on having close relations for customers; Reformist marketing comprehension; Marketing comprehension that focused on specializing in certain areas; Research, planning and control oriented marketing comprehension. STRUCTURE OF BANK MARKET: Marketing activities of firms begin with determination of the market that they offer their services or goods. Firms must find out the features of the market that it f anging market condition. While marketing manager is arranging the variables under firms control, she/he should also adopt the external variables. We could call the factors that affect banks market as technological developments, legal arrangements and competition.

74 SERVICE: The banks are in a period that they earn money in servicing beyond selling money. The prestige is get as they offer their services to the masses. Like other services, banking services are also intangible. Banking services are about the money in different types and attributes like lending, depositing and transferring procedures. These intangible services are shaped in contracts. The structure of banking services affects the success of institution in long term. Besides the basic attributes like speed, security and ease in banking services, the rights like consultancy for services to be compounded are also preferred. INTERNATIONAL STANDARDS: Introducing internationally followed best practices and observing universally acceptable standards and codes is necessary for strengthening the domestic financial architecture. This includes best practices in the area of corporate governance along with full transparency in disclosures. In todays globalised world, focusing on the observance of standards will help smooth integration with world financial markets. CONCLUSION: Today, marketing services are of great emphasis on both customer and bank. Banks have too many goals which they want to achieve. The face of banking is changing rapidly. For a strong and resilient banking and financial system, therefore, banks need to go beyond peripheral issues and tackle significant issues like improvements in profitability, efficiency and technology, while achieving economies of scale through consolidation and exploring available cost-effective solutions. The quality and quantity of banking products increased and a result of this, recent developments in marketing thoughts in services such as internal marketing, network marketing, data base marketing and relationship marketing became more favorable practices. These are some of the issues that need to be addressed if banks are to succeed, not just survive, in the changing milieu.

75

RURAL MARKETING TRIBULATIONS AND CHALLENGES IN INDIA


Mr.M.Ramesh Kanna, Assistant Professor, CARE School of Management, Trichy Mr.J.Chandrakhanthan, Assistant Professor, M.A.M. B School, Siruganur, Trichy 621 105 INTRODUCTION It is ironic that the census of India defines rural in the context of all that is not urban considering of cities and towns. Infact a major part of the countryside still remains steeped in a life style that is rural, largely dependent on agriculture and allied activated with almost of the country living in 6,00,000 villages. In 1951, the urban population comprised 17.2% of the Indian population. Today half a century later the number stands at 27.8% the result of creeping urbanisation at play. Evolution of Rural Marketing Before the evolution of an urban market for marketing was undertaken there seemed little need to differentiate between needs and wants, with the emergence of urban markets, the very context with in which marketing had to work got redefined. Modern marketing has evolved around meeting demand in urban markets. The urban approach seems inadequate to understand and address the needs of rural India. There is a definite need for a separate set of marketing strategies to tap rural markets and need to redefine strategy based on a whole new set of parameters. A totally unique framework is required to satisfy a rural market that is mere a mind set, rather than a geographical and demographical reality. Occupational Pattern of People in Rural Market The demographic profile of people in a segment naturally affects their buying behavior. The wage earner and salary earner cannot be expected to behave in the same way. A daily wage earner in the rural area has to account for variations in income, whereas a salary earner brings home a assured fixed amount and therefore can plan their buying pattern in a better way. In our country the companies focusing on rural market fails to analyse this factor. of rural household heads cultivators/wage earners. The cultivators disposable income is highly seasonal, with mere disposable income available immediately after the harvesting season. This is therefore the time when he is more inclined to make purchase, especially of durables and high involvement products. The purchases at such times are quite significant, as 40% of the rural population i.e. 50 million families in our country are farmers. Distribution of Households by Occupation of the heads (1999-2000) Distribution of Households Heads Occupation Urban Rural Housewife 0.84 1.01 Cultivator 3.45 40.86 Wage earner 20.93 35.28 Salary earner 40.72 11.28 Professional 3.59 0.73 Artisan 6.90 3.41 Petty shop-keeper 16.05 4.97 Businessman 3.68 0.46 Others 3.85 1.98 Total 100.00 100.00 Source: NCAER 2002

All 0.96 29.99 31.12 19.84 1.56 4.42 8.19 1.40 2.52 100.00

76 The Changing face of Rural Development Over the past five decades between 1950 and 2000, the rural economy in India has graduated from being a barter economy to cash-rich economy. Since 1951, when the first five year plan was introduced, as number of initiatives have been taken by the government to improve the quality of life of rural people. The main pillars of economic planning have to seek growth with equity. The allocation for rural development has increased from Rs.8900 crore in the seventh plan to Rs.34,400 crore, Rs.89000 crore and Rs.1,20,000 crore in the eighth, ninth and tenth plans respectively. Rapid increase in the literacy level (59% by 2001) improvement in health indicators, increase in per-capita expenditure, improvement in housing, decline in poverty levels and increase in life expectancy are factors that have resulted in the improvement of human development indicators in rural India. Population below the Poverty Line (Rural) No. of Person Period % of Persons Poverty Line (Rs.) (Million) 1983 252 46 89.5 1993-94 244 37 206 1999-200 193 27 328 Source: Human Development Report 2001 Incomes & Consumptions in Rural India Rural Income contributes around 57% share of the total incomes in India. The per-capita income for the rural sector has increased from 5783 in 1993-94 to Rs.9481 in 1999-2000. The Urbanrural disparity ratio has declined form 2.45 to 2.04 during the last thirty years. The share of non-farm income has increased rapidly from 32% in 1970-71 to 47% in 1993-94 Source: MART Research on NCAER data, 2002 & Census 2001 Consumer Behaviour in Rural Areas A complex set of factor influence rural consumers behaviour. Social norms, traditions, caste and social customers have great influence on the consumer behaviour in the rural areas than in urban areas. The seasonally of job and professions of rural customer influences the seasonally of rural consumers demand. Given the fact that the landless labours and daily wage earners get their income in installments, their purchase is restricted to small quantities of products at a time, mostly on a daily basis or once in two or three days. Purchase decision processes and preferences also show certain characteristics that have implications for marketers. Exhibitions and road shows act as some of the key triggers for information search behaviour. Opinion leaders and people who are perceived to be knowledgeable play an important role as information providers and advisors. Word of mouth has more significance in purchase decisions of rural consumers. Since the reach of the electronic media and other mass advertising is low in rural areas, dependence on information, advice and suggestions from other people are higher. However, as the exposure to mass media and information technology is increasing, rural consumers are becoming more informed about products and services and their dependence on traditional reference group is gradually waning. Rural consumers tend to be more loyal as brand switching has greater perceived risk. Compared to their urban counterparts, rural consumers have different interpretations of colours, symbols and social activities. Rural consumers show a preference for bold, primary colours red colour connoted happiness and auspiciousness and green colour prosperity. Problems in Rural Marketing The rural market offers a vast untapped potential. The Indian companies opinion towards the operation in Indian market is time consuming, requires high investments in terms of evolving appropriate strategies with a view to tackle the problem.

77 Under developed people and under developed markets The impact of technology is not felt and known uniformly by the people throughout the country. Lack of proper physical communication facilities Nearly 50% of the villages in the country do not have all weather roads where the companies are facing a crucial problem in distributing their materials. Physical communication to these villages is highly expensive. Inadequate media coverage for rural communication A large number of rural families own radios and televisions, there are also community radio and T.V. sets. These have been used to diffuse agricultural technology to rural areas. However, the coverage relating to marketing inadequate using this aid of marketing. Multiple Languages and Dialects The number of languages and dialects vary from state to state and region to region. This type of distribution of population wants appropriate strategies to decide the extent of coverage of rural areas. Challenges faced by the companies in todays Rural Marketing Environment Knowledge Advances in information and communication technology have lastingly altered the peoples mind set by the changing the way information is created, stored, used and shared. The company should make the rural consumers to get an in depth knowledge about their products/services strategies. Diverse group of Peoples A diverse group of peoples refers to two or more groups, each of whose members are identifiable and distinguishable based on demographic or other characteristics like gender, age group, education etc. several barriers in dealing with diversity include stereotyping, chauvinism, ethnocentrism, favouritism, tokenism and gender role types. Responsiveness An organization/company dealing with rural consumers has to be responsive to the challenges and threats that it faces from the internal/external environment. It requires quick responsiveness to meet the challenges and opportunities arising out of these changes. Rapid changes in the market Due to some changes in internal and external environment, rapid changes in the market may occur. The companies have to be flexible to adjust to those changes Check list for the companys strategy over the Rural Marketing Activities. Does our company is having a clear view/mission about the rural customers. What are the key areas to be concentrated in the rural marketing? Do you regularly examine the strength and weakness in rural marketing oriented key areas? What objectives are set for each key area for what period? Is there a regular matching of the companys product against market needs? What about assessing the competitors strength and weaknesses? If identified with what result. CONCLUSION Last but not least, with the fast improving rural infrastructure and higher exposure to city life the sharp divide between urban & rural will get blurred in the coming years. This will lead the rural consumers to consume all type of products which is available in the urban area. The companies may concentrate on this prosperous market to sustain their market share for a greater extent.

78

GREEN MANAGEMENT
J.Shanmuganathan / Associate Professor/ K.S.R. School of Management, Tiruchengode. A.S.Sathishkumar / Assistant Professor / K.S.R. School of Management, Tiruchengode. C.Vinodkumar / Assistant Professor / K.S.R. School of Management, Tiruchengode. S.Thiriveni Sripriya / Assistant Professor/ Janson school of business, Coimbatore ABSTRACT Global warming?? Ozone layer getting diffused? Air pollution, Deficiency in oxygen? Dry Water resource? Poor Agricultural reformation? Like this we have many questions to be answered but we are unanswerable. In a global economy business and trading playing a crucial role in determine and distinguish the national wealth and income like GNI, GDP and FDI. Every country want to encourage and motivate all the business opportunities either internally or externally and also ready to accept and motivate the ideas given by the business people, corporate and individuals. To win & Excel in business we human being were forget all the fundamentals and nature of living which was taken care by our natural resources like Agriculture, Rainfall and Climatic condition. Agriculture needs a good soil, natural fertilizer and water resources. Now a day the natural rainy season is failing due to Global warming. For human living comfort we have started destroying all the natural resources like forest and its dense tree, maximization of transportation which emits carbon di oxide spoiling the air and creating huge air pollution because of this air pollution and Industrialization where yielding lot of waste material and create noise and land pollution. In this circumstance the thermal temperature and sunrays were penetrating the ozone layer and making it very weak. Environment creates lot of business opportunities by providing the well defined resources needed for them. The growth in business feature makes a country economically sound such as an improved standard of living and minimizing the poverty, improvement in literacy, employment opportunities, development and growth in individual income, buying power and growth in technology. In current scenario business is the best source to create wealth maximization. To establish and run a business successfully; the various accessories are required such as place, buildings and infrastructure, human resource, modern machinery and technology, electricity, water, and transportation. All these accessories can be sourced from an environment and available natural resources. Todays business is mainly having the motto to utilize the resources effectively rather than creating or sustaining. Utilizing the natural resource continuously for development of infrastructure, raw materials which is needed for business is increasing rapidly by demolishing the natural resources. This is going create big environment cause and problem to the future generation. This paper analyzing and planning to speak about the Green Management to be maintain or balance for a harmony to run the business continuously without demolishing the natural resources. Every country taking some steps for implementing green business to save their existing natural resources but still developing countries like India, Brazil, Russia are facing lot of problem on various factors. Sustaining and developing the natural resource is a biggest challenge in this competitive environment for developing countries. An effective practice of green management will help for their sustainability. Introduction Globally, every country has its own resources but it differs from the effective utilization of those resources. Resources are vital for creating any type of product and services in the world. As world population are increasing year by year proportionally resources requirements also increasing at higher rate. People in the world want lot of innovative products for satisfying their needs and wants. These products are created with effective technology which makes every business organization to enrich their infrastructure, machinery and equipment for effective and efficient usage of resources. The modern business trend is concentrating more on environmental aspects and organizations environment

79 policies which producing eco friendly nature of products and services. Green management in business helps to understand each process of business with its environmental effects for making exact protection needed for an environment. Green Management what and why? In 21st century, many companies wants to integrate their business practices along with environment and make the society to rethink about their basic requirements. Environment is a source which gives all needed resources such as air, water, land etc., for a society. The resources are used to create various products by undergoing series of process which yield to new product, but at the same time lot of waste materials generated in each process and emission of gases like carbon monoxide, sulpur di oxide, nitrogen di oxide will affects the atmosphere and ozone layer which leads to global warming, climatic changes and volcanic explosion. To avoid this natural changes an effective managing of green environment is needed. This will create eco friendly products with decomposing nature, recycling of waste material, proper maintenance of equipments, reducing the emission of green house gases and energy utilization. Green management reveals that the companies and people should work together for using environmental products and compensate their needs by conserve the resources for future generation. In current scenario, every country are competing each other for developing their economy, this affects normal life cycle of all living beings in the world. Some countries like Finland, Iceland, Japan, Switzerland etc., are taking sever steps in managing the resources with green business management practices, but most of the countries like India, China, United States etc., are struggling hard to maintain their environment without pollution. The inability of those countries is due to various impact factors such as demographic, industrial, technological. Green Environment with Impact factors In the world, developing countries are investing more for their economy growth by changing various policies such as FDI, EXIM, Internal taxation etc. These changes make other countries business organization to start their business with existing companies or expansion of business beyond boundaries which provide an opportunity for increasing their wealth. The developing countries enjoy these benefits as an employment opportunity for their people and revenue for their country. In a country like India, population is a source which attracts most of companies to invest and do business continuously. The government supports foreign investment in all fields with the motto of providing employment opportunity, availability of standardized products and increase revenue for a country. Indian population covers maximum percentage of younger generation with well qualified knowledge and different specialization in various fields. The innovative products available in the market are utilized effectively and efficiently by a customers and industries without knowing their recycling process. Each and every time product variety are changing whereas unknowing of recycling process will result in inventory of existing product. This inventory will not only occupy space at the same time wastage of resources is causing various problems such as land and water pollution. For example shipping companies uses their tank for carrying petroleum products from one place to another after delivering that product they filling half a tank of water for sailing their ships in safety manner, again they mix that water in an ocean which will affect the water animals and increase the level of carbonate in water. The recycling processes of all products are not possible and the companies also not interested to find solution for it. The government is a policy maker for each and every aspects of a economy development. After globalization lot of international standards for environment are amended and make every country, companies and society to follow but country like India following certain rules and regulation on temporary basis and not implementing proper steps for continuous assessment and innovative projects for controlling the pollution. For example, the government has amended rainwater storage system in

80 each and every home in Tamilnadu for the purpose of increasing ground water level but once government changes system all get demolished. CONCLUSION Green management is a step for creating green environment. The awareness of green environment is started up already and executed some projects to control global warming, climate changes and emission of green house gases. As the green management programmes are going on still people and government finding difficulties to implement completely. We discuss about the impact factors happening in realistic environment which influences us to rethink and take necessary steps to manage the green environment. Whether natural or artificial resources are going to sustain in our lifetime, decision is yours???

81

CUSTOMER RELATIONSHIP MANAGEMENT IN HOSPITALS


Mr.R.Thirunavukkarasu, Lecturer, Mr.A.Pughazhendi, Research Scholar, Mr.V.Arun Birla, Student, Muthayammal Engineering College, Rasipuram INTRODUCTION: In todays world the medical sector is finding the need to know more and more about their current and prospective clients. The Health Care sector is now emphasizing on Customer Relationship Management (CRM) in its daily application. CRM Health Care consists of a wide array of software products that help healthcare organizations to maintain excellent relationships with their clients. CRM enables the health care industry to get essential customer information and use it as efficiently as possible. CRM thus enables the health care sector to improve patient health, increase patient loyalty and patient retention and add new services as well. The CRM Health Care Services include strategic planning, communication services, consulting services, CRM for physicians, Campaign management, Database construction, predictive segmentation, and communications strategies. Define of CRM Customer relationship management (CRM) is a protocol or systematic approach for serving customers in such a manner that customer retention and profitability in marketing is ensured. Customer relationship management (CRM) is a broadly recognized, widely-implemented strategy for managing a companys interactions with customers, clients and sales prospects. How can CRM helps in health care sector CRM provides the organization with the chance to acquire and retain customer relationships. It serves to convert almost every customer interaction into a health management opportunity. Its diverse functionality enables employers, customers and employees to access common information. Millions of patients or customers are being contacted daily through phone, e-mail, fax, and face-to-face interactions. All these increase the need for an affective and well-coordinated customer approach CRM Healthcare supports the call centre by providing customer service representatives with essential customer information. This helps the health care sector to access critical information and deliver value to customers. CRM solutions succeed in transforming healthcare organizations into customer-centric efficient providers of health care. The healthcare industry has realized the importance of quality of service. CRM industry leaders now offer customer relationship management solutions to help healthcare organizations deal with customer service issues while delivering excellent health services. Implement Of CRM in Hospital Nowadays CRM is very important for every sector especially in hospital CRM is necessary one to be implement regarding patients because through our behavior only relation may been develop among the customer through customer relationship management is implement in many sector to cover customer to develop their management. Uses of CRM in Hospital Many hospitals are using CRM main process for cover the customer they are giving many facilities like as Give free counseling Free check up for every month Half payment for treatment Given the crucial role played by counseling sessions in healing drug addicts in a speedy manner it is important for you to gather as much information as possible before signing up at any of the drug

82 rehab centers. You have to remember that for a complete drug treatment counseling sessions are a must. Therefore do enquire about the counseling facilities extended by the drug rehab center before spend all your hard earned money. A well informed decision will save you time money as well as effort. Tracking health condition after treatment at regular intervals After treatment the hospital will give regular check up to customer to satisfy their needs and wants, Hospital will call the customer to check about their health condition and how they will enquires their body conditions. Hospital will be take more care about customer health conditions and satisfied their problems faced by them Getting remainders for the date of revisit Hospital management will keep remainders about customer who want to visit the hospital for their regular check up and maintain their health about body for their improvement. For this process the hospital may be maintaining some database about customer regular check-up and hospital may sent this message through telephones, e-mail, message. So for this process hospital keeping special data. Blood storage centre To achieve the objective of providing safe & quality blood to all in need wherever and whenever required, it was felt necessary to establish storage centers which can receive tested and processed blood and blood components from authorized centers. This facility can be used for patients in the hospitals in the area where storage centre is located. The need for establishing such centers were: Many doctors working in the first referral units and other hospitals in the rural areas, especially those working in the vicinity of highways, constantly complained of unavailability of blood. ii. In large cities and towns the number of blood banks has been increasing, as all hospitals small and big were required to establish their own blood banks. This has resulted in unnecessary proliferation of blood banks. iii. For supplying blood to many private nursing homes, small private blood banks have mushroomed. iv. For proper regulation of the system and to maintain quality, it is necessary to reduce the number of blood banks. Location The storage centre can be established at any hospital, government or private. It may be in a rural or urban area. i. Any blood bank presently collecting up to 2000 units of blood annually can be converted into a storage centre provided it can get affiliated to a larger blood bank for regular supply of blood. ii. The storage centre can get affiliated to any government or regional blood bank, which is approved by State Blood Transfusion Council (SBTC) and licensed for the purpose. Private or commercial blood banks should not be given permission to supply blood to storage centers by the SBTC. CONCLUSION: The customer relationship management in the hospital is implemented by giving much training programmmes to the employees in the hospitals, providing more technologies to the service proceedings, society awareness and maintains the very good relationship with the customers (patients).The CRM is very successful in all aspects of business and services, especially in hospitals we want to take much care in implementing this above said/discussed concept to get the customers and retain the customers (patients). Customer delight is the only way/tool which helps to go towards the implementation of Customer relationship management. i.

83

LUXURY MARKETING
Ms. M. Ramya, Ms. B. Susithra Students, Vasavi Vidhya Trust Group of Institutions Luxury marketing involves bringing a product to market that typically targets affluent people who can afford expensive things. INTRODUCTION: The concept of luxury has been present in various forms since the beginning of civilization. Its role was just as important in ancient western and eastern empires as it is in modern societies. With the clear differences between social classes in earlier civilizations, the consumption of luxury was limited to the elite classes. It also meant the definition of luxury was fairly clear. Whatever the poor cannot have and the elite can was identified as luxury. With increasing democratization several new product categories were created within the luxury market which were aptly called accessible luxury or mass luxury. This kind of luxury specifically targeted the middle class (or what is sometimes termed as aspiring class). As luxury penetrated into the masses, defining luxury has become difficult. In contemporary marketing usage, Prof. Bernard Dubois defines luxury as a specific (i.e. higher-priced) tier of offer in almost any product or service category. However, despite the substantial body of knowledge accumulated during the past decades, researchers still havent arrived on a common definition of luxury. Many other attempts have been made to define luxury using the price-quality dimension stating higher priced products in any category is luxury. Similarly, researchers have used the uniqueness aspects of luxury too. Prof. Jean-Noel Kapferer takes an experiential approach and defines luxury as items which provide extra pleasure by flattering all senses at once. Several other researchers focus on exclusivity dimension and argue that luxury evokes a sense of belonging to a certain elite group. There are no differences between luxury marketing and others except who are your targeted customers and what are their value. I highly recommend seeing some marketing tactic, which famous perfume companies did. In a word, it is a pure marketing product, which has 30cent production cost and 100 times profit pargin ratio. It will the best example for luxury marketing, selling your cheap products to high income customers by convincing that your products are well matched with their value. Luxury marketing in India: Glyn Atwal, ESC Rennes School of Business, and Shaziya Khan, JWT Mumbai, examine how luxury brands can best maximise the Indian luxury rupee. PARADISE FOR ANYBODY wanting to stay en vogue is the shopping arcade at the Taj Mahal Palace and Towers Hotel in Mumbai. Being at the cutting edge of fashion comes at a price whether in London, Paris or Mumbai. According to Ledbury Research, the global luxury goods market in 2006 was worth 75 billion, with annual sales growth in double figures. India has been identified as an important source of this growth and is likely to growth at an annual rate of 28% in the next three years. market. Luxury accessibility: The world at your doorstep Luxury brands are now following the Indian consumer, expanding their sales operations not only in Delhi and Mumbai, but to smaller cities or metrocities such as Pune and Hyderabad. Luxury boutiques which were traditionally confined to the secure but often inaccessible surroundings of exclusive hotels have been thrown open to the masses thanks to the shopping mall boom. Market regulation although high import duties on luxury goods continue to prevail, Indias policy of liberalization and deregulation has improved its image as an attractive destination for foreign investment.

84 The changing face of the Indian luxury consumer The luxury market has traditionally been segmented according to two very separate and distinct customer groups namely the affluents and the non-affluents. The transition towards a consumer society has changed the profile of the luxury consumer. Luxury is no longer reserved for the English-speaking elite. Priyanka,a BPO employee, loves shopping, worships brands and is typical of a new generation of luxury consumers the because Im worth it generation. Todays luxury shopper could be a broker, an entrepreneur, and IT specialist or a student. Maximising the Indian luxury rupee Beyond exclusivity Beyond status Beyond westernization Burberry meets Bollywood The following seven guidelines set out to guide high-end brands to capture Indias growing fascination with luxury consumption. 1. Respect. Connect with luxury consumers as a selective target. Luxury brands need to respect this point of difference in all interactions between the brand and the consumer. 2. Segment. Acknowledge luxury consumer subsets. Luxury brands need to identify, differentiate and prioritise the most profitable subsets for targeted strategies. 3. Insight. Identify what is important to the defined target. Motivations could be based on personal and nonpersonal factors. 4. Connect. Assess which brand interactions really matter. For example, respondents cited that friends and family are an important influence on luxury consumption. 5. Experience. Establish emotional connectivity. Deep and meaningful relationships need to be developed in order to win the soul of the luxury consumer. 6. Indianness. Embrace and celebrate the Indianness brand. India has a very powerful and unique identity, and this needs to be leveraged within a luxury brand context. 7. Consistency. Adopt a truly holistic approach, to ensure that all brand interactions, whether advertising or customer service, are consistent with the brand positioning. Jitnee Lambi Chadar ho Utna hee pair failana Chahiye is an Indian proverb that means limit your spending to your earnings. Contemporary Indian society is challenging traditional consumption patterns. The Indian consumer is ready to embrace luxury consumption. The basic problem in luxury marketing One general characteristic of the way consumers are building preferences and choices was named the law of the few, meaning the opinions of 10% of a consumer market is influencing the buying behavior of the other 90% (Lazarsfeld 1944). The marketing model, in which a company employs the services of an advertising agency to create media that will influence the audience directly, is in truth a simplification.

85 The problem about changed consumer attitudes from a marketing perspective is the higher immunity of the discerning and highly sophisticated opinion leaders against traditional marketing channels and mass media. To get access to rich customers in general, and specifically their opinion leaders, different channels have to be employed. This is done with pull-approaches A company's own customers can therefore be targeted more directly than new customers, leading to two different models of luxury marketingcustomer acquisition and customer retention. Modern luxury works on the openclose principle. Too much open is harmful to the brands social function Ralph Laurens success undermined one of the foundations of his success with professionals in Europe: sporting the polo shirt enabled them to be different from Crocodile, the other great casual wear premium brand, from whom Ralph Lauren got his inspiration when he was starting out in the United States. On the other hand, too much closed is too confining and leads to financial suffocation. In practice that meant that the brand became segregationist and forgot all societys democratic principles. In stores, for example, it is necessary subtly to introduce a measure of social segregation: ground floor for some, first floor for others. Armani set up specialist stores for each of his product lines. Advertising and promotion is for all, but public relations are ultra-carefully targeted, like the CRM for the privileged (personal invitations to meet the designer, the brand perfume nose, or the head wine buyer).

86

GREEN MARKETING
S Bhuvaneshwari, Student, Business Administration, Vel Tech Ranga Sanku Arts College ABSTRACT Green marketing refers to the process of selling products or services based on the environmental benefits. Such a product or services may be environmentally friendly itself or produced and packaged in an environmentally friendly way. Now-a-days many of the companies started to market the green products in consideration of the environmental benefits. Where in the customers are also started to buy or change their buying behavior on green products. Green products are those which are eco-friendly in nature. Some of the popular companies like TATA group of companies, Samsung, LG, badarpur thermal power station and barauni refinery of IOC in India have started to concentrate on marketing the green products. There are some needs for the marketers to choose green marketing such as Social responsibility, governmental pressure, competitive pressure, and cost-reductions are some of the reasons. Green marketing has some of the benefits like ensuring profit in long terms, saves money and encourages the employees to feel proud and responsible to be working for an environmentally responsible company. Green marketing also has some of the problems like it can try to increase in selling green products among its customers, wherein it should not confuse its customers. The customers should be given a clear knowledge about the products and the law or any standard for the products if any by the marketers. Energy-efficient light bulbs, energy-efficient cars, paper containing post consumer waste papers can be said as some of the examples for the green products. Finally, it is said that that green marketing can be a solution for solving the environmental problems. INTRODUCTION:Green marketing refers to the process of selling products or services based on the environmental benefits . Such a product or services may be environmentally friendly in itself or produced and packaged in an environmentally friendly way. In this green marketing the consumers will view a product or services with greenness as a benefit and also base their buying decisions accordingly . It is also known as environmental marketing or ecological marketing or eco-marketing . Now-a-days many organizations are becoming interested to produce green products and give benefit for their customers . The customers are also interested to buy green products as it is positive and providing benefit for their environment . Today, companies are getting smeared for over promising health benefits , leaving consumers confused about whats actually true . With the human wants escalating heavily , the resources are decreasing . EXAMPLES OF GREEN MARKETING INDIAN CONTEXT :1) TATA Group of companies : TATA Motors Ltd is setting an eco-friendly showroom using natural material for its flooring and energy efficient lights. The taj chain, is in the process of creating eco-rooms which have energy efficient mini bars, organic bed linen and napkins made up of recycled papers. The room will have CFLs or Leds. Launched a low cost water purifier made up of natural ingredients. Developing Indica EV, an electric car that would run on polymer lithium ion batteries. 2) Recently launched Samsung solar mobile guru. 3) Battery operated LG TV. 4) Introduction of CNG in Delhi. 5) Badarpur thermal power station of NTPC in Delhi is devising ways to utilize coal-ash that has been a major source of air and water pollution. 6) Barauni refinery of IOC is taken steps for restricting air and water pollutants.

87 NEED FOR CHOOSING GREEN MARKETING BY THE MARKETERS:Now-a-days most of the organization started to market green products for the consideration of the benefits of the environment and the consumers .Some of the organization started to choose green marketing for the following reasons like, Social responsibility Government pressure Competitive pressure Cost-reduction PROBLEMS OF GREEN MARKETING:Many organizations want to turn green, as an increasing awareness among customers towards the green product for the benefit of their environment. Where in this should make the consumer to have a clear knowledge about their product and avoid confusion among consumers. So to ensure their consumer confidence, the marketer should be much transparent and made clear law or standard of the products or relating to their products. GREEN PRODUCTS:With green marketing, advertises and focus on environmental benefits to sell products such as bio-degradable diapers, energy efficient light bulbs, and environmentally safe detergents. Examples of environmentally beneficial products and services: Paper containing post-consumers wastepaper. Cereals sold without excess packaging. Shade-grown coffee beans. Cleaning supplies that do not harm humans or environment. Wood harvested from sustainable forests. Energy-efficient light bulbs. Energy-efficient cars. Energy from renewable sources of energy such as wind mills and solar power. CONCLUSION: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. That this latter concern has been ignored throughout most of recorded human history does not mean it will be unimportant in the future. Indeed, there are significant indications that environmental issues will grow in importance over the coming years and will require imaginative and innovative redesign and reengineering of existing marketing efforts on the part of many businesses. Solutions to environmental problems can be characterized into roughly three categories, ethical, legal ,and business (economical and technological).Long-term sustainability of the planet is likely to require some rather distinct changes in the ethical behavior of its human population. Barring a crisis, these changes will probably be a long time coming. Legislation is a useful tool for effecting social change; it has a tremendous advantage over moral persuasion in terms of speed and efficacy of implementation, although its results are not always as intended. 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 un priced environmental goods and services-offer particular promise. Green marketing and the promotion of responsible consumption are part of that solution.

88

SYNTHESIZING SYSTEM WITH CRM IN BANKING INDUSTRY


S.Muralidhar, R.Seranmadevi, S.Piradeep Assistant Professor(s) KSR School of Management, KSR College of Technology, Tiruchengode. ABSTRACT Executing Customer Relationship Management (CRM) for the financial and banking industry involves many issues, including the use of unique processes and solutions. To be successful with CRM, financial and banking organizations must define and develop a business strategy as well as a supporting infrastructure for that strategy. SAS Banking Intelligence Solutions can be used to complete these tasks smoothly and efficiently even by the non-technical banking business user community. With SAS Banking Intelligence Solutions, banking and financial industry business users can quickly learn how to segment, cross-sell, up-sell, and retain customers. Additionally, the users can monitor customer life-cycle trends to aid customer portfolio management with a customer equity assets management focus. INTRODUCTION CRM is a business model that aligns product and sales strategies with customer requirements and preferences. Services are then provided in a timely manner using the channels that are preferred by the customers. Effective CRM starts by focusing on the development of business strategies and by aligning an organization to serve customers. These business strategies are then executed using CRM technology solutions. The most successful business strategies are developed only after an organization learns about customers behavior patterns and attitudes. Behavior studies show what products or services have been purchased in the past and what products or services are currently being bought. Attitudes studies show what customers are thinking and feeling about future buying decisions. INCORPORATING CUSTOMER RELATIONSHIP MANAGEMENT The effective use of CRM principles requires a three-pronged approach. First, all CRM efforts should begin with a well-defined strategy. Second, an infrastructure must be developed to achieve appropriate objectives. Specifically, the infrastructure should align product and sales goals to meet customer needs, according to their preferences, in the most cost-efficient manner. Third, continuous analytic intelligence should be used to determine and modify customer interaction. CUSTOMER RELATIONSHIP MANAGEMENT COMPONENTS There is an evolutionary approach to CRM that focuses heavily on customer equity assets management. This approach begins with business strategy development. Next, a data infrastructure is created that supports customer interactions. Then, a technology infrastructure is designed to produce CRM results. Finally, customer communication channel strategies are created, and strategy execution technology is used to create an on-going dialog with the customers. BUSINESS STRATEGY DEVELOPMENT Customer-focused organizations can benefit most from CRM. These organizations develop business strategies that use CRM to identify the needs and the hurt points of existing customers. It is not that customer-focused organizations ignore potential customers, but they do understand the importance of keeping existing customers, especially during difficult economic times. For example, a customer-focused organization might use CRM to help create incentives that produce more business from existing customers, such as offering priority service, free delivery, and so on.

89 CUSTOMER EQUITY DURING DIFFERENT ECONOMIC CYCLES Customer relationships are an important company asset. A firm can use this customer equity to improve its growth and profitability prospects during economic downturns and upturns. Just as a squirrel buries nuts in anticipation of winter, a smart business will build customer equity during good times in order to produce more business during bad times. Companies should know who their Most Valuable Customers (MVCs) are. More resources should be used to market relevant products and services to these MVCs while fewer resources should be expended on unprofitable customers. The goal is to make the right offer to the right customer at the right time. Such customer knowledge can immediately and significantly reduce total cost while, at the same time, increase sales with individual customers. This strategy enables an organization to anticipate greater returns from its campaigns, a reduction in costs, an increase in conversion rates, and more one-to-one communication initiatives (which will gradually replace the organizations previous dependence on mass marketing tactics). PRODUCT VERSUS CUSTOMER-CENTRIC BUSINESS STRATEGY Traditionally, banking and financial organizations are organized around product-centered and function-centered models rather than a customer-centered model. By becoming truly customercentered, a bank or financial organization can achieve the following benefits: Higher returns on invested capital More profitable customers Lower capital costs (due to the consistency of financial results that comes from those long-term, carefully managed customer relationships) Larger investment opportunities (due to their understanding of customer finances and unmet needs). CHALLENGES TO IMPLEMENTING CUSTOMER EQUITY ASSET MANAGEMENT The following key challenges face those that try to implement customer equity asset management: Limited Scope - Many existing CIS tools are very limited in scope, and do not support customer equity management. Complex Technology - Technology solutions sold by vendors have become very complex to use, expensive to maintain, and contain irrelevant information for data mining. No Pertinent Data - Most of the existing data warehouses lack information on recency, frequency, and monetary values. They also offer information that is insufficient for supporting predictive modeling and predictive scoring. Extended Time to Market - The addition of new capabilities to existing data warehouses is cost prohibitive and takes a long time to bring into production stage capabilities (or even to catch up with the fast-changing dynamic nature of the market place). SAS BANKING INTELLIGENCE SOLUTIONS: AN INNOVATIVE SOLUTIONS SUITE SAS has developed SAS Banking Intelligence Solutions, an innovative solution suite that can be used to efficiently manage customer equity assets. ABOUT THE SAS BANKING INTELLIGENCE SOLUTIONS SUITE The SAS Banking Intelligence Solutions suite provides the industry-specific data management, analytics, and reporting capabilities needed to transform organizational data into actionable intelligence about customers, risk, and operations. The customer analytics capabilities of the solutions optimize the profitability and retention of valued customer relationships. Based on open, extensible banking data architecture, SAS software enables banks and financial organizations to maximize the effectiveness of: Customer segmentation Cross-selling and up-selling Customer retention Marketing automation. SAS software enables managers to analyze data from virtually any source to develop a deep understanding of customer behavior, propensities, and profitability. Organizations can identify their

90 best customers, implement and measure strategies to retain them, cross-sell and up-sell to them, and make the most effective use of all available assets and channels.

SAS Cross Selling

SAS Segmentati

SAS Retention

SAS Marketing
Figure 1 Customer Analytics Components Interactions CONCLUSION CRM technology vendors have oversold the banking and financial industries with solutions. Unfortunately, these industries have quickly learned that effective CRM requires more than just a software application; it requires a business strategy. That business strategy should focus on customer equity assets enable organizational structures to support a customer-centered business model (as well as a product centered or function-centered model) provide a mechanism to develop data that supports the customer-centered model incorporate a technology infrastructure that optimizes customer relationships. The SAS Banking Intelligence Solutions can help organizations achieve an appropriate business strategy. This suite of SAS software enables organizations to develop a deeper understanding of their MVCs (at a group level or at an individual level) through data mining. By understanding MVCs better, the organization can determine when it is best to use product-centered, function-centered, or customercentered approaches to achieve and sustain business. This same customer information can be used to further develop customer-centered programs and align business channels and human resources to support such programs. SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. indicates USA registration. Other brand and product names are trademarks of their respective companies.

91

DYNAMIC SCENARIO OF CUSTOMER RELATIONSHIP MANAGEMENT IN RETAILING


Dr. P. Shyamala M.B.A., M.Phil., Ph.D., Asst. Professor, Dept. of IT & M, Fatima College, Madurai 625018. ABSTRACT CRM (Customer Relationship Management) is an integrated approach to identifying, acquiring, retaining and delighting customers. CRM is very important for the survival of companies in todays competitive environment. For a long time, marketers implemented their 4Ps strategy to attract and satisfy their target customers. But post-liberalization, the highly competitive and dynamic business environment has forced the businesses to think not only to attract but also to retain their customers, especially profitable ones. This approach of businesses to build, and maintain one-to-one life-long relationship with their large number of customers has led to the emergence of a new term CRM, which stands for Customer Relationship Management. CRM helps organizations maximize the value of every customer interaction and drive superior corporate performance. The challenge is to make it easy for customers to do business with the organization any way they want at any time, through any channel, in any language or currency and from any country and to make customers feel that they are dealing with a single, unified organization that recognizes them at every touch point. In fact, the generally accepted purpose of CRM is to enable organization to better manage their customers. With the passage of time, the characteristics and the number of activities in retailing as well as approaches to manage customer relationship in retail sector have changed across the globe, including India. CRM has emerged as the latest buzzword in retailing, especially in organized retail sector, and an important tool to enhance retailer performance. INTRODUCTION Retailers have bought into the CRM concept, but they're not fully implementing their CRM systems. Those who take advantage of customer data collection and analytics, Internet-based customer engagement tools, and the use of technologies to measure the effectiveness of marketing, will be ahead of the game -- as will the technology vendors who serve the retail market. For a long time, marketers implemented their 4Ps strategy to attract and satisfy their target customers. But post-liberalization, the highly competitive and dynamic business environment has forced the businesses to think not only to attract but also to retain their customers, especially profitable ones. This approach of businesses to build, and maintain one-to-one life-long relationship with their large number of customers has led to the emergence of a new term CRM, which stands for Customer Relationship Management. This change in perspective is also supported by research findings that it costs up to 6-8 times more to attract a new customer than to retain an existing customer (Gruen, 1997). Moreover, studies have shown that a small proportion of the customer base (20% or less) accounts for more than 70-80% of firm's revenues and profits. CRM IN RETAILING Levy and Weitz, authors of "Retailing Management", define CRM as, "A business philosophy and set of strategies, programs, and systems that focuses on identifying and building loyalty with a retailer's profitable customers." It is based on the business philosophy that all customers are not profitable in the same way and retailers' can increase their profitability by building relationships with their better customers. The goal is to develop a base of loyal customers who patronize the retailer frequently. CRM is an iterative process that turns customer data into customer loyalty through four sequential activities shown in the CRM Model

92 IMPLEMENTATION OF CRM CRM for Retail must be extremely suited to perform properly since retail selling has a membership comprising many different formats and channels, with a multitude of unique relationships that make up 'operations'. CRM for Retail has been built from the ground up to include features needed for retailing. Retailing ranges from small, sole enterprise operations to large chain stores and includes everything in between, department stores, specialty stores and services, discount, catalog, Internet, independent, restaurants and grocery stores. Retailing depends on partner networks to deliver goods and services to their customers. Services are available to consumers from a variety of sources be it a store, kiosk, the Internet, or catalog. The retailer either manufactures their own product, or maintains a relationship with various suppliers in order to keep an inventory of goods on hand for their customers. The Consumer Goods Industry sees the Retail Industry as a key part of their distribution chain and both parties work together to exchange information and insight on sourcing, marketing and sales opportunities. RETAIL CRM - A MIXED SHOPPING BAG There are a relatively small number of retail leaders who have a fully implemented a CRM program. Most of the others still strongly embrace CRM, but they have failed to maximize the potential. Some use a rewards or a loyalty program, Others use call centers to help customers solve problems. But only a few have a fully integrated approach to CRM. Mainly, they put in a program on an ad hoc basis to address pain points as they emerge." Some retailers have a fully implemented conventional CRM program and have adapted it to new developments such as social networking. Others are comfortable with a traditional program but haven't yet integrated new media and channels. Still others are at various levels of using bits and pieces of conventional CRM programs. While there may be degrees of implementation among retailers in using CRM, it appears that few retailers need to be convinced of the value of using such programs. RETAIL ACTIVITY AND CRM IN RETAILING ARE LISTED AS FOLLOWS: MARKETING AND ANALYSIS * Improve brand image * Increase customer loyalty * Deliver value-added services * Align marketing campaigns with target audience * Personalize campaigns * Deliver on any communications channel * Measure, monitor and refine marketing activities based on campaign performance BUSINESS ANALYSIS & PLANNING * Develop and refine marketing and sales strategies * Use customer analysis tools to profile and understand preferences and buying patterns * Understand product revenue and profitability relationships MEASUREMENT & REPORTING * Measure, manage and track campaign successes * Assess response rates, revenues, return on investment SALES * Enable commission based representatives to collaborate across markets, time zones, etc. * Representatives can manage high value customers * Representatives have access to customer communications, and can personalize contacts

93 RETAIL SERVICES * Retailers can share information across stores and districts * Manage sales in the pipeline Provide after sales service and support E-SERVICES * Online sales services and information capture * Online advice, access to catalogs, price configurations for maximizing sales opportunities * Offer self serve options with multi channel support options available at any time PARTNER RELATIONSHIPS o * Manage vendors and franchise stores/service providers o * Manage virtual sales and services o * Offer self serve options to channel partners to configure, price and order Manage comarketing and co-branding campaigns EMPLOYEE RELATIONSHIP MANAGEMENT o * Manage employee life cycle o * Retain training and performance management o * Share company policy, human resources information o * Product and service supports for employees CONCLUSION The Retail Industry has seen an unprecedented shift in strategy from Product-Centric to Consumer-Centric over the last ten years. It has become imperative to know more about customers for better targeting Merchandise, Price and Promotions, and Shelf Management within the store, in order to attract more customers and sales. Hence, CRM solutions are becoming increasingly important. The aim of CRM implementation was to ensure three principlesavailability, reliability and scalability. This is to conclude that the organized retailing in India is progressing towards a tough competitive environment where only those retailers would survive who can understand their customers and develop a strong bond with them by developing and implementing appropriate CRM strategies and programs effectively. In the time to come, CRM is going to be the most dominant marketing tool to enhance the overall retailer performance. *

94

AN EMPIRICAL INVESTIGATION ON IMPACT OF SUPPLIER-SELECTION, SUPPLY EFFORT MANAGEMENT, LOGISTICS CAPABILITIES AND SUPPLY CHAIN MANAGEMENT STRATEGIES ON FIRM PERFORMANCE
Mrs.M.Meena, Asst.Prof., Michael institute of Management, Madurai, Mr.D.M.Sezhiyan, Asst.Prof., National Institute of Technology, Trichy, ABSTRACT This research examines the direction of relationship among the functions on supplierselection, supply effort management, logistics capabilities on supply chain management strategies and firm performance as well. The various aspects related to study variables which have been addressed in the previous literature were probed and subsequently a measurement framework was initially developed and pragmatically proved the framework through a measurement model. Subsequently, a concept model was developed and seven hypotheses were formulated. A nationwide survey among the supply chain professionals within manufacturing firms was undertaken in India. The concept model was tested using regression analyses. The supply chain management strategy was regressed against supplier-selection, supply effort management and logistics capabilities. Later, firm performance was regressed against supplier-selection, supply effort management, logistics capabilities and supply chain management strategies. The results indicate that the predictive variable has positive and significant effect on supply chain management strategy and firm performance as well and they do not have multicollinearity effects among them. Keywords: firm performance, logistics capability, measurement model, supplier-selection, supply chain strategy 1. Introduction The supply chain management strategies have become a contemporary component of a firms strategy. The success of a firm depends upon its SCM practices and its related strategy (Choi & Hartley, 1996). The globalization of business has had a tremendous impact on the way companies operate and thus it requires the firms to (i) integrate its partner within a supply chain context (Cooper & Ellram, 1993), (ii) integrate the global manufacturing with logistics capabilities (Bowersox.D.J & Closs.D.J, 1996) (iii) expand its supply chain management strategy (SCMS) and philosophy from its traditional internally focused strategies to modern common goal of efficiency, speed and end customer satisfaction (Harwick & Tom, 1997). Thus, this study pays attention to the basic question of whether the SCM practices and logistics capabilities lead to an improvement in SCM strategies, which, in turn, results in an improvement of the firms performance. As our objective is to answer this critical question, this research takes cues from the works of (Kenneth W, McGaughey, & Casey, 2006), (Cho, Oament, & Sink, 2008) (Wisner.J.D, 2003), (Galt, 1991) (Lu & Yang, 2006).This research aims to build a theoretical model for the firms performance in the context of supply chain management and logistics. Data collected from a national sample of Indian manufacturers and supply chain professionals are used for empirical investigation of the theoretical model. A review of the related literature was undertaken to formulate the research propositions. The methodology employed in this study is then presented. A measurement model is developed and proved with various tests of reliability and validity. Finally, five major latent constructs were formulated, namely, supply effort management, supplierselection, logistics capabilities, supply chain management strategies and firm performance. The factor scores of these latent variables were used for further analysis. 2. Literature Review and Research Proposition H1: Supply effort management activities are positively associated to supply chain management strategies. H2: Supply effort management activities are positively associated to the firms performance.

95 Table 1. Summary of literature review on supplier selection criteria Factors Studies Key Points Quality; Price; Delivery (Cardozo & Cagley, 1971); Buyer firms seeking to work proactively (Forker, Mendez, & Hershauer, with their supplier by sharing with them 2006); (Hartley & Choi, 1996); their knowledge, skills, and experience so (Krause & Ellram, 1997); (Shin, as to assist their suppliers to reduce costs Collier, & Wilson, 2000); whilst benefitting in turn through (Tracey & Vonderembse, 2000); improved delivery performance and (Wagner, Ettenson, & Parrish, higher quality products that are 1989). particularly goods delivered further downstream in the supply chain Quality; Price; Delivery; Production facilities and capacities (Bender, Brown, Isaac, & Shapiro, 1985); (Hahn, Pinto, & Bragg, "Just-In-Time Production and Purchasing, 1983); (Treleven, 1987) (Mazurak, Rao, & Scotton, 1985) (Wind & Robinson, 1968); (Yigin, Takin, Cedmoglu, & Topal, 2007) (Hahn, Kim, & Kim, 1986); (Sheth, 1973); (Wind & Robinson, 1968)(Vijayaraghavan & Raju, 2008) (Dempsey W. , 1978); (Dickson, 1966); (Lamberson, Diederich, & Wuori, 1976) In-addition to the requirements for (Quality, Price and Delivery), herein the vender Production facilities and capacity is taken in account for the process of Supplier-selection. This is largely due to the use of computerized vendor selection systems. In-addition to the requirements for (Quality, Price and Delivery), herein the vender technical abilities are considered during the process of Supplier-selection. Herein Technical capacity and Production facilities and capacities in-addtion to the requirements for (Quality, Price and Delivery), herein the vender technical abilities are considered during the process of Supplier-selection. In-addition to the requirements for (Quality; Price; Delivery; Technical capacity; Production facilities and capacities vendor financial position, and Vendor Management and Organization may act as decisive criteria during the process of Supplier-selection.

Quality; Price; Delivery; Technical capacity

Quality; Price; Delivery; Technical capacity; Production facilities and capacities Quality; Price; Delivery; Technical capacity; Financial position; Production facilities and capacities; Management and Organization.

Table 3. Results of measurement model and Reliability alpha Indicator Variables and their underlying Factor tfactor Estimate Value Supplier Selection SS 1: Giving priority on Quality aspect 1.26 17.75 SS 2: Adhering the timely Delivery 1.34 20.12 SS 3: Deciding on Production facilities and 1.35 20.63 capacities SS 4: Decision related to Pricing policy 1.29 19.73 SS 5: Strength of Financial position of the firm 1.24 18.36 SS 6: Possession of Technical capacity of the 1.22 18.40 firm

Error term 0.95 0.64 0.58 0.65 0.80 0.78

R2 0.63 0.74 0.76 0.72 0.66 0.66

Reliability Q .9356

96 SS 7: Background history of Management and 16.92 0.96 0.59 1.17 Organization Firm Performance FP 1: Return on Investment 1.26 19.28 0.89 0.64 FP 2: Return on assets 1.34 22.03 0.47 0.70 FP 3: Return on sales 1.34 21.90 0.49 0.79 FP 4: Overall quality of the product 0.19 2.92 2.15 0.017 FP 5: Overall growth and competitive position 1.31 19.71 0.86 0.067 of the firm FP 6: Customer satisfaction 1.91 14.35 1.82 0.31 FP 7: Delivery Performance 0.05 1.64* 2.32 0.001 FP 8: Network performance 1.08 16.60 1.31 0.47 FP 9: Flexibility of operation and performance 1.02 16.60 1.38 0.43 FP 10: Firm business model 0.39 9.56 2.04 0.070 FP 11: Ability of the firm to adopt to new 0.85 14.65 1.42 0.33 situations FP 12: Corporate governance 0.30 8.18 2.13 0.041 FP 13: Employee satisfaction 0.04 1.21* 2.48 0.0057 Supply Effort Management SEM 1: Supplier long term relationship (x11) 0.69 9.40 1.71 0.22 SEM 2: Supplier Involvement (x12) 0.94 13.51 1.31 0.41 SEM 3: Selection of quality suppliers (x13) 1.07 14.91 1.26 0.47 SEM 4: Leaning supplier base (x14) 1.33 22.26 0.36 0.85 SEM 5: Communication (x15) 1.02 14.24 1.31 0.44 Logistics Capabilities (R2) LC 1: Managing pre and post sales services 1.29 18.87 0.95 0.62 (x21) LC 2: Coverage of distribution network (x22) 1.33 21.70 0.49 0.78 LC 3: Delivery speed and reliability (x23) 1.33 21.47 0.53 0.77 LC 4: Low total cost distribution (x24) 1.30 19.28 0.89 0.65 Supply Chain Management Strategies (S1) SCMS 1: New ways to integrate SCM 0.39 6.13 2.49 0.57 activities (y31) SCMS 2: Share customers future needs (y32) 1.25 18.03 1.06 0.60 SCMS 3: Creating trust in supply chain (y33) 1.34 20.43 0.67 0.73 SCMS 4: Beyond SC of suppliers (y34) 1.30 20.01 0.71 0.71 Table 2. Fit Indices of Measurement Model Index Suggested Value Fit Indices of CFA Model RMSEA e0.10 0.12* Standard root mean square residual e0.10 0.058 Normed Fit Index (NFI) f0.90 0.94 Non-normed fit index (NNFI) f0.90 0.95 Comparative fit index (CFI) f0.90 0.95 Root Mean Square Residual (RMR) e0.08 0.14* * indicated the model is fit at accepted level .9081

.8105

.8998

.8006

97 Table 4. Regression results and Results of Explicit hypotheses Hypothesis Predictor Dependent a b SE b 8 PVariable Variable Intercept Value Value H1 SCMS a SEM -4.197 .624 .042 .622 .000* H2 FP b SEM -2.308 .769 .038 .735 .000* H3 SCMS c SS -5.255 .716 .037 .714 .000* H4 FP d SS -9.802 .869 .029 .856 .000* H5 SCMS e LC -8.715 .658 .038 .677 .000* H6 FP f LC -4.105 .926 .022 .913 .000* H7 FP g SCMS -5.793 .796 .036 .763 .000* a 2 R = .387, bR2 = .540, cR2 = .510, dR2 = .732, eR2 = .459, fR2 = .833, gR2 = .58, P B 0.05*, n=358 Hypothesis Support YES YES YES YES YES YES YES

References Ahire, S., Golhar, D., & Waller, M. (1996). Development and Validation of TQM implementation constructs. Decision Sciences , 27 (1), 23-56. Aiken, L., & West, S. (1991). Multiple regression: Testing and Interpreting interactions. Newbury Park: Sage.

98

INTERACTIVE MARKETING AND SOCIAL MEDIA


Mrs P. ANNAPURANI ,M.A, M.Phil, (Ph.D), Lecturer, Vel Tech Engineering College, Vel Tech Road, Chennai . Mrs. P. R. JAEL PERSIS, M.A., M.Phil, B.Ed.,Lecturer, Vel Tech High Tech Dr. RR and Dr. SR Engineering college ABSTRACT English is the key to businesses and communication is the key to profit and it is the international language for corporate meetings. From Social Networks to online editorials or simply getting ourself around, English language, is basically heading towards a constant dead end street. English has become the international key to countries, has transcended cultures and influenced everything from fashion to traditions to lifestyles. The Social Media Marketing (SMM) is surely the next big thing. SMM is a form of Internet or Online Marketing. It aims to achieve its branding and marketing goals through various social media networks, social web applications and through various other sources like 3D virtual worlds like second life, active worlds, etc. Social Media has become a platform that is easily accessible to anyone with internet access. Increased communication for organizations fosters brand awareness and often, improved customer service. Additionally, social media serves as a relatively inexpensive platform for organizations to implement marketing campaigns. With emergence of channels like Twitter, the barrier to entry in social media is greatly reduced. The Social Media Marketing (SMM) is surely the next big thing. SMM is a form of Internet or Online Marketing. It aims to achieve its branding and marketing goals through various social media networks, social web applications and through various other sources like 3D virtual worlds like second life, active worlds, etc. Research shows that 80% of the amount of Internet web content is in the English language and that content relating to business written in the English language largely comprises this figure. It goes without saying that having a good grasp of business information, data, or terminologies in the English language is very important to have a good understanding of the wealth of business information available on the Internet. Introduction English is the key to businesses and communication is the key to profit and it is the international language for corporate meetings. From Social Networks to online editorials or simply getting ourself around, English language, is basically heading towards a constant dead end street. English has become the international key to countries, has transcended cultures and influenced everything from fashion to traditions to lifestyles. Social media marketing is an addition to personal, small business, corporate, and non-profit organizations integrated marketing communications plans. Andreas Kaplan and Michael Haenlein define social media as "a group of Internet-based applications that build on the ideological and technological foundations and that allow the creation and exchange of user -generated content. Integrated marketing communications is a multifaceted, orchestrated marketing and advertising practice organizations follow to connect with their target markets. Integrated marketing communications coordinates promotional elements: advertising, personal selling, public relations, publicity, direct marketing and sales promotion. Increasingly, viral marketing campaigns are also grouped into integrated marketing communications. In the traditional marketing communications model, the content, frequency, timing, and medium of communications by the organization is in

99 collaboration with an external agent, i.e. advertising agencies, marketing research firms and public relations firms. However, the growth of social media has impacted the way organizations communicate. With the emergence of Web 2.0, the internet provides a set of tools that allow people to build social and business connections, share information and collaborate on projects online. Social media marketing programs usually center on efforts to create content that attracts attention and encourages readers to share it with their social networks. A corporate message spreads from user to user and presumably resonates because it is coming from a trusted, third-party source, as opposed to the brand or company itself. Social Media has become a platform that is easily accessible to anyone with internet access. Increased communication for organizations fosters brand awareness and often, improved customer service. Additionally, social media serves as a relatively inexpensive platform for organizations to implement marketing campaigns. With emergence of channels like Twitter, the barrier to entry in social media is greatly reduced. The Social Media Marketing (SMM) is surely the next big thing. SMM is a form of Internet or Online Marketing. It aims to achieve its branding and marketing goals through various social media networks, social web applications and through various other sources like 3D virtual worlds like second life, active worlds, etc. The reasons why one should also opt for SMM are as follows: o SMM plays an important role of creating brand awareness, increasing visibility, encouraging feedback, online reputation management and also to sell a product or service. o With the introduction of social media consumers started opposing the passive way of receiving communication from marketers, they have now become contributors contributing to brand messaging. Apart from consumers point of view every company has different products with unique features to offer its consumers hence their marketing campaign also differs English language the possibilities of acquiring valuable information are limited. Whether it be for school, for medical research, for job inquiries or basic web surfing, its extremely important to have control in the linguistic process. Tourism is one the most important factors English has revolutionized. Wherever you go, theres always something written in English. Even if you visit some Caribbean island people havent heard about, its beneficial to learn English before you head out because itll be the best language youll communicate in. From brochures to advertisements, English had transformed the way people connect and travel. In todays economy its almost a requirement to dominate the terminology .Upgrade your possibilities and income by feeding your vocabulary a new integration of words. Start today! Be a part of the enlightenment of learning a whole new world of expressions and unlimited communication in English. Research has shown that for the most part, employees are very good at what they do. That's why they are hired, trained, retrained, and promoted. They are all "subject matter" experts.Their problems occur when they attempt to communicate their subject to others. They have had extensive training and experience in performing their jobs, but very little training in effectively presenting their ideas to others. The individuals and corporate should effectively present their ideas in a clear, concise, convincing manner. Around the world, there is an estimated 1 Billion people learning English. Many factors point to the reason why learning English has seen exponential growth in recent years, but it all boils down to

100 the English language being the "global language" of business, politics, international relations, culture, and entertainment for so many countries worldwide. And that is just an understatement as in fact, while English is not an official language in many countries worldwide, it is the language most often taught as a foreign or second language. Tips for Correspondence in Business English Regular Way of Communicating Business Communication In my letter to Mr Shah. In my written communication to Mr Shah. She spoke to me in detail. We had a meeting. I liked her advice. I appreciate her analysis. He has told he will come at 11 am. He is scheduled to arrive at 11 am. Three people had come to inquire about There are three potential customers. our product. Can you speak loudly? I am unable to hear you. Can you speak to Mr Suresh and get Please co-ordinate with Mr. Suresh and ensure that our our PC repaired? computer is up & working Can you tell me your phone number & Can you help me with your phone number & email id? email id? Many non-native English speakers study the subject with the goal of doing businesses with English-speaking countries, or with companies located outside the Anglo sphere but which nonetheless use English as a shared language or lingua franca. Much of the English communication that takes place within business circles all over the world occurs between non-native speakers. In cases such as these, the object of the exercise is efficient and effective communication. The strict rules of grammar are in such cases sometimes ignored, when, for example, a stressed negotiator's only goal is to reach an agreement as quickly as possible.

101

BUYING BEHAVIOR OF CONSUMER TOWARDS KHADI(KVIC) WITH SPECIAL REFERENCE TO MADURAI CITY
Mrs S.Rosary Arul Kavitha Asst.professorMichael Institute of Management Madurai INTRODUCTION Cottage Industries are important particularly in an underdeveloped economy like India. The process of industrialization in such an economy involves the development of not only basic industries but also small and cottage industries. With cottage industries, Khadi and Village industries play a greater role in the development of rural economy. Khadi and village industries means, Any industry located in a rural area, the population of which does not exceed ten thousand or such other figure which the use of power and in which fixed capital investment in plant and machinery and land and building per head of an artisan or a worker does not exceed fifteen thousand rupees In India the growth rates of Khadi and Village industries in terms of employment, production and labour productivity and output elasticity is tremendous. The employment generation in India is significant. Majority of the labour force is employed in this sector. The employment in Khadi and Village industries raised from 9.65 lakh persons in 1956 to 37.89 lakh persons in 1985 and 76.78 lakh persons in 2008. The increment in employment by 2008 over 1956 is 28.4 percent. During the seventh plan period the employment in Khadi sector was 14.14 lakh persons consisting of spinners 12.07 lakh persons, weavers 1.41 lakhs and others 0.66 lakh persons. The production value of Khadi and Village industries in India during the period 1956 to 2008 has increased substantially. The total Khadi and Village industries production value increased by 15.8 per cent between 1956 and 2008. During the year 2007-08 the production of Khadi and Village industries was Rs.10920.43 crores out of which Khadi was Rs.461.54 crores and Village industries was Rs.10458.89 crores. Khadi and Village industries are less capital intensive and more employment intensive. Khadi and Village industries can be started with less capital. Khadi and Village industries play an important role, for achieving rural development and balanced economic growth of various regions such as tribal, hilly, backward and inaccessible areas. Due to their rural location, Khadi and Village industries are crucial for rural industrialization. The gestation period in Khadi and Village industries is much less as compared to medium and large industries. The production in khadi and Village industries starts immediately without long gestation period. They have been found to be of particular help to the weaker sections of the society such as scheduled tribes, scheduled castes, women, children, old and physically handicapped in providing employment in rural areas. Khadi and Village industries provide employment in the off- season in rural areas. They help many households to mitigate their problems when they have no work after the harvest is over. The activities of Khadi and Village industries are organized with leased disturbance to ecology and without any pollution. REVIEW OF PREVIOUS STUDIES J.V.Dhanaraj in his study on The production and sales aspects of the Sarvodaya Sangh soap units at Dindugul, has made an attempt to study production and sales performance. He has also analysed the workings of the unit.

102 H.Ramalingam in his study of Sarvodaya in Tamil Nadu, has analysed the reasons for the slow growth of Sarvodaya and Village industries and has provided some suggestions for the improvement of the same with reference to Tamil Nadu. Shri.I.Udaya Bhaskara Reddy I his study on Small-Scale and Cottage Industries in Project area of Koraput, has highlighted the development of cottage industries. In this article of KVIC in west Bengal Shri.H.K.Ghosal, Chairman of KVIC West Bengal Board, mentions the various constraints faced by the state in the promotion of Cottage and Village industries. C.Harichandran, in his article on Role of KVI in Rural Development, has employed the need for village and cottage industries for the enlistment of village industries during the various plan periods. M.P.Gurusamy, in his article entitled Appropriate Technology for Full Employment, has suggested that our country should evolve and adopt appropriate technology for rural development with the object of achieving full employment. METHODS The study is based on secondary and primary data. Secondary data have been collected from books, journals, newspapers and reports of Madurai District Sarvodaya Sangh. Primary data have been collected by conducting survey among the consumers of the Sangh. The researcher has conducted a survey to study the consumers opinions by using interview schedule. 200 respondents were selected for the study. Convenient sampling was adopted in selecting the respondent while they were buying. OBJECTIVES To study the profile of Madurai District Sarvodaya Sangh and to study the sales performance of major products over a period of 10 years in Maduria District Sarvodaya Sangh. It also analyse the Buyers behavior towards Sarvodaya Sangh products and to analyse the level of satisfaction of consumers towards the sales services of Madurai Sarvodaya Sangh. And to present summary of findings and suggestions for improving satisfaction to buyers of Sarvodaya Sangh products. ANALYSIS OF DATA After the completion of the survey, the researcher had thoroughly verified the data. Afterwards the data were edited and coded. After the processing, the data have been entered on master table. For analysis, the researcher has used the manual process with the help of a calculator. The statistical tool of chi-square test has been used in analysing the significance of relationship between age, education, occupation, family size and Income of buyers and their satisfaction towards the services provided by the Sangh. Arithmetic mean and Standard deviation have been applied for measuring the level of satisfaction of buyers into low, medium and high levels. Percentage analysis is used for analyzing sales performance of Sarvodaya Sangh products and also buyers behaviour towards KVIC products. RESULTS Respondents are classified under demographical percentage Gender Male Female Total Gender of the Respondents Number of Respondents Percentage of Respondents 132 66 68 34 200 100

103 Age Upto 20 years 20 to 40 years 40 to 60 years Above 60 years Total Age-wise Classification of Respondents Number of Respondents Percentage of Respondents 26 63 74 37 200 Educational Qualification of Respondents Educational Status Illiterate Elementary Higher Secondary Graduate Post-graduate Others Total Number of Respondents 6 21 49 63 38 23 200 Percentage of Respondents 3 11 25 31 19 11 100 13 32 37 18 100

Age of the respondents and satisfaction level chi-square test H 0: Age does not influence the level of satisfaction of consumers. H 1: Age influence the level of satisfaction. Cell O E (O-E) (O-E)2 (O-E)2 E R1C1 14 15.580 -1.580 2.4964 0.1602 R1C2 21 19.425 1.575 2.4806 0.1277 R1C3 57 59.630 -2.630 6.9169 0.1160 R2C1 77 74.370 2.630 6.9169 0.0930 R2C2 18 13.795 4.205 17.6820 1.2818 R2C3 13 17.205 -4.205 17.6820 1.0277 Total 2.8064 Educational qualification and level of satisfaction-chi-square test H 0: There is no significant relationship between educational qualification and level of satisfaction. H 1: There is significant relationship between educational qualification and level of satisfaction. Cell O E (O-E) (O-E)2 (O-E)2 E R1C1 10 13.30 -3.30 10.8900 0.8188 R1C2 25 21.70 3.30 10.8900 0.5018 R1C3 55 50.92 4.08 16.6464 0.3269 R2C1 79 83.08 -4.08 16.6464 0.2004 R2C2 11 11.78 -0.78 0.6084 0.0517 R2C3 20 19.22 0.78 0.6084 0.0317 Total 1.9313 Occupation and level of satisfaction chi-square test H 0: Occupation does not influence the level of satisfaction H 1: Occupation influences the level of satisfaction

104 Cell R1C1 R1C1 R3C1 R1C2 R2C2 R3C2 R1C3 R2C3 R3C3 Total O 10 14 11 52 34 48 19 8 4 E 14.175 9.800 11.025 54.270 37.520 42.210 12.55 8.680 9.765 (O-E) -4.175 4.200 -0.025 -2.270 -3.520 5.790 6.445 -0.680 -5.765 (O-E)2 17.4306 17.6400 0.0006 5.1529 12.3904 33.5241 41.5380 0.4624 33.2352 (O-E)2 E 1.2297 1.8000 0.0000 0.0950 0.3302 0.7942 3.3085 0.0533 3.4035 11.0144

Family size and level of satisfaction-chi-square test H 0: Family size does not influence the level of satisfaction of consumers. H 1: Family size influences the level of satisfaction of consumers. Cell O E (O-E) (O-E)2 R1C1 20 21.175 -1.175 1.3806 R1C2 15 13.825 1.175 1.3806 R1C3 82 81.070 0.930 0.8649 R2C1 52 52.930 -0.930 0.8649 R2C2 19 18.755 0.245 0.600 R2C3 12 12.245 -0.245 0.0600 Total

(O-E)2 E 0.0653 0.0999 0.0107 0.0163 0.0032 0.0049 0.2002

Findings: 1. Family size does not influence the level of satisfaction of sangh customer because the calculated value is less than the table value. 2. Occupation influences the level of satisfaction of consumers 3. There is no significant relationship between educational qualification and level of the satisfaction about the services of the sangh. 4. The age of the respondents does not influence the level of the satisfaction of sangh consumers. CONCLUSION: The analysis of consumer satisfaction with the personal parameters of the consumers reveals that excepting occupation of consumers age, education, family size and monthly income of consumers are not significantly related to consumer satisfaction. REFERENCE 1. J.Dhanaraj 1987 The production and sales aspects of the Sarvodaya Sangh soap units at Dindugul unpublished M.Phil dissertation, Madurai Kamaraj University. 2. H.Ramalingam 1990 Sarvodaya in Tamil Nadu unpublished M.Phil dissertation, Madurai Kamaraj University 3. I.Udaya Bhaskara Reddy 1989 Small-Scale and cottage Industries in Project area of Koraput unpublished Ph.D thsis, Gandhigram University, Dindigul. 4. H.K.Ghosal 1990 KVIC in west Bengal Southern Economist, Vol.No 28, pp.1-4 5. C.Harichandran 1989 Role of KVI in Rural Development Southern Economist, Vol.No 22, pp.6-8 6. M.P.Gurusamy 2003 Appropriate Technology for Full Employment Industrial structure of India, New Delhi, Eurasia Publication House, pp 23-27 7. Dr.Ravichandran and K.Thingalaya, Strategies for Rural Development-Some Issues Indian Industrial Economy, New Delhi, pp50-56 8. Mr.Mahabir Prasad 2004, Minister of Small Scale Industries & Agro and Rural industries.

105

A STUDY ON CUSTOMER PREFERENCE AND SATISFACTION TOWARDS RETAIL OUTLETS, CHENNAI


Ms.Janet Glory M C, Lecturer, Department of Management Studies, Rajalakshmi Institute of Technology, Chennai INTRODUCTION Retailing is one of the largest industries. It is in a permanent state of change, and the pace of this change has been accelerating over the last decade. From the marketing perspective, retailers are by definition closer to the consumer than manufacturing companies (Reynolds 200 4b.p.3).Retailers represent the culmination of marketing process and the contact point between consumers and manufacturing products. While retailing has long set buying decisions as its highest priority and was very focused on product assortment, it now follows a more holistic approach to management and marketing and is seizing the opportunity to be consumer oriented ,engage in the personal contact with the customers, gather information on customer behavior and exploit insights into consumer behavior and preferences. What was ones a simple way of doing business is transforming into a highly sophisticated form of management and marketing? Retail marketing consistently features more efficient, more meaningful and more profitable marketing practices (Mulhern 1997, p.103) OBJECTIVES The research objectives were: To determine the demographic profile of the retail store customers in the Chennai city. To identify the customer preference towards the store. To analyze the factors that influences the preference of customers. To find out the satisfaction level of customers. RESEARCH METHODOLOGY Data collection method The data has been collected through primary method of data collection (i.e.) questionnaire. Research Design The research design that has been followed is Descriptive Research. Sampling Technique The sampling technique is Simple Random Sampling. Sample Size The sample size is 50. Statistical Tools Used Cross tabs Regression Chi square

106 DATA ANALYSIS AND INTERPRETATION Determination of demographic profile of the customers gender of respondents * age of respondents Cross tabulation Count age of respondents 18-24 25-31 32-38 39-45 46-52 53-59 Total gender of respondents male 1 8 6 2 3 1 21 female 3 13 5 5 1 2 29 Total 4 21 11 7 4 3 50 From the above table we can see that from 50 samples, 21 respondents (42%) are male and 29 respondents (58%) are female. Majority of the respondents belongs to the age limit of 25-31 and 32-38. From the above table we can see that, 38% of the male respondants and 44% of the female respondants has completed their bachelors degree.2% of male respondants and 4% female respondants has completed their masters degree.2% of male respondants and 10% of female respondants has completed their high school. total household income * gender of respondants Cross tabulation Count gender of respondants male female 2 5 11 7 1 21 15 8 1 29 Total 7 26 15 2 50

total household income 1l-2l 2l-3l 3l-4l 4l-5l Total

From the table we can see that, 22% of male respondants and 30% of female respondants gets the total house hold income of 2lakh-3lakh per annum.14% of male respondants and 16% of female respondants gets the total house hold income of 3lakh to 4lakh per annum.2% of male and female respondants gets total house hold income of 4lakh 5lakh per annum.4% of male respondants and 10% of female respondants gets total house hold income of 1lakh to 2lakh per annum. Identification of customer preference towards the stores Preference based on gender From the table we can see that, 10% of the male respondants and 8% of the female respondants are highly satisfied and prefer to purchase the products from retail outlets.30% of male respondants and 48% of female respondants are satisfied and prefer to purchase the products from retail outlets.2% of male and female respondants are neutral in their preference towards retail outlet.

107 Identification of factors that influence the preference towards retail outlets Coefficientsa Standardized Unstandardized Coefficients Coefficients B Std. Error Beta .061 .586 .162 -.195 .194 -.030 -.059 .061 -.051 .161 .083 -.083 .142 .075 .169 .214 .169 .145 .134 .153 .114 .116 .128 .110 .124 .062 .189 -.201 .257 -.040 -.088 .086 -.088 .254 .097 -.123 .194 .191

Model 1 (Constant) variety of product choice availability of fresh vegatables variety of groceries variety of household cleaning products availability of new items quality of the products price of the products efficiency of service friendliness of staff helpfullness of staff hours of operation counter areas

t .104 .956 -.908 1.145 -.208 -.436 .400 -.444 1.392 .651 -.754 1.149 1.211

Sig. .918 .346 .370 .260 .836 .666 .691 .660 .173 .519 .456 .259 .234

location .016 atmosphere or ambience .102 arrangement of products .328 a. Dependent Variable: preference towards retail

.186 .195 .166

.018 .121 .388

.087 .523 1.972

.931 .604 .057

From the table we can see that, the significant value high for location, variety of cleaning products and quality of the products (0.931, 0.836, and 0.691). So these three are the factors that influence the preference towards retail outlets. Determination of satisfaction of customers based on age Test Statistics satisfaction towards products Chi-Square df Asymp. Sig. 20.440a 2 .000

age of respondants 28.240b 5 .000

Ho = There is no significant difference between the age of the customer and the satisfaction towards retail outlets. H1 = There is significant difference between the age of the customer and the satisfaction towards retail outlets. If the significant value is less than 0.05 then reject the null hypothesis. If the significant level is greater than 0.05 then accept the null hypothesis.

108 From the table we see that the significant value is 0.000 which is less than 0.05(0.000<0.05) So reject the null hypothesis and accept the alternate hypothesis Therefore, there is significant difference between the age of the customer and the satisfaction towards retail outlets. FINDINGS From 50 samples, 21 respondants (42%) are male and 29 respondants (58%) are female. Majority of the respondants belongs to the age limit of 25-31 and 32-38. 22% of male respondants and 30% of female respondants gets the total house hold income of 2lakh-3lakh per annum. 14% of male respondants and 16% of female respondants gets the total house hold income of 3lakh to 4lakh per annum. 2% of male and female respondants gets total house hold income of 4lakh 5lakh per annum. 4% of male respondants and 10% of female respondants gets total house hold income of 1lakh to 2lakh per annum. With respect to customer preference towards the stores, 30% of male respondants and 48% of female respondants are satisfied and prefer to purchase the products from retail outlets. Location, variety of cleaning products and quality of the products are the factors which makes the customers to prefer retail outlets to purchase the products. There is a difference is satisfaction level towards the retail outlets with respect to the age of the customers.

CONCLUSION The study was aimed at customer preference and satisfaction towards retail outlet at Chennai. Based on the research, customers preferences towards various factors were determined. Customers are looking for improved efficiency of service and minimize the duration of time in counter areas. The retailers should try to fulfill the expectations of the customers. So that they can retain the customers. REFERENCES: BOLTON, R.; SHANKAR, V.; MONTOYA, D. (2006): Recent Trends and Emerging Practices in Retailer Pricing, in: KRAFFT, M.; MANTRALA, M. (Eds.): Retailing in the21st Century, Berlinetal., and pp. 255-270. KRAFFT, M.; MANTRALA, M. (2006): Retailinginthe21stCenturyCur Rent and Future Trend, Berlinetal. LEVY, M.; WEITZ, B. (2007): Retailing Management, 6th international ed. Boston etal. ROGERS, D. (1992): A Review of Sales Forecasting Models Most Commonly Applied in Retail Site Evaluation, in: International Journal of Retail&Distri Bution Management, Vol. 20, No. 4, pp. 3-11. SCHMITT, B. (1999): Experiential Marketing: How to Get Customers to Sense, Feel, Think, Act, NewYork.

109

CONSUMERS PERCEPTION ON COMPARING QUALITY OF CELEBRITY AND BRAND FEATURES IN ADVERTISEMENT


K.Kannan M.B.A; M.Phil, B.Satheesh Raja, Assistant Professors RVS Institute of Management Studies P.Vijayakumar, Research Scholar, Karpagam University, Coimbatore. ABSTRACT Celebrities cut through advertising clutter, hold viewer attention, contribute to brand name recognition and transfer positive qualities such as physical attractiveness and like ability to the brand. In overall, the brand features of celebrities help me to remember the brand, creditability of the brand, quality of the brand, advertisement of the brand and price of its products were noticed by the consumers and there was a significant differences among the consumers perception of the consumers about brand features as noticed by them. Since celebrities have the impetus to market the product quickly, they have the advertisers running behind them for various benefits including brand credibility, creating interest; thereby, creating a win- win situation. INTRODUCTION Advertisements of all varieties pop up everywhere on streets, in stores and restaurants, and on public transportation. Each of these advertisements attempts to steal at least a fraction of an unsuspecting person's time to inform him or her of the amazing and different attributes of the product at hand. Because of the constant media saturation that most people experience daily, they eventually become numb to standard advertising. The challenge of the advertiser is to find a hook that will hold the subject's attention and keep them from changing the channel or turning the page. One well-used approach at differentiating advertisements is the use of celebrity endorsements. Using celebrity fame, bought or contrived, has certain advantages and risks. A celebrity-product association can capture a viewer's attention, increase the public's awareness of the product, and cause consumers to purchase the product endorsed. Celebrities cut through advertising clutter, hold viewer attention, contribute to brand name recognition and transfer positive qualities such as physical attractiveness and like ability to the brand (Edward and Bose, 1998; Stephan and Fredrick, 2005). The source credibility model suggests message effectiveness depends on the endorsers perceived credibility. Celebrity combines both expertise and trustworthiness. Through the process of internalization, credible sources influence consumer beliefs, attitudes and or behaviour (Stony, 1990; Orion, 1991). The source of attractiveness model proposes that message effectiveness depends on the similarity between source and receiver, source likeability and source familiarity through repeated media exposure. Information from an attractive source is accepted because of the consumers desire to identify with that source (Rogan, 1999). In the product match-up model, effective advertisement results when the messages conveyed by celebrity image are compatible with product image (Ruddick, 2003). With this background, the present study was attempted to study the comparing of qualities of the celebrity with advertisement, brand image and consumers perception and relationship between matching qualities of celebrity and advertisement in Coimbatore city of Tamil Nadu. RESEARCH METHODOLOGY The Coimbatore city is purposively selected for the present study since it is the Manchester of Tamil Nadu. About 150 respondents were selected by adopting simple random techniques and were interviewed. Information was collected by interviewing the respondents by using a pre-tested, wellstructured interview schedule. The data and information collected pertains to the year 2009-10. The descriptive statistics, frequency analysis and mean score and ranking were carried out. SPEARMANS RANK ORDER CORRELATION In order to identify the relationship between matching qualities of celebrities and advertisement in celebrity endorsement, the Spearmans rank order correlation was worked out and the formula is:

r = 1 (6Ud2)/n (n2-1) Where, d = Difference in Ranks n = Number of Pairs.

110

CHI-SQUARE TEST In order to study the differences between brand features and perception of the consumers, the Chi-Square Test has been employed and the formula is: W2 =U (-E)2/E) Where O = Observed Frequency E = Expected Frequency d.f = Degree of Freedom = (n-1) W2 = Chi Square RESULTS AND DISCUSSION The results indicated that the majority of the consumers (64.16 per cent) were the age group of 21-30 years followed by less than 20 years and 31-40 Years. About 45.80per cent of were married while 79 per cent were males. The majority of consumers (49.17 per cent) were postgraduates and about 30 per cent of consumers were under-graduates. The monthly income of consumers were ranging from Rs. 0-5000(85 per cent) followed by Rs.5000-10000(8.34 percent). About 70.83 per cent of the consumers have a family size of 4-6 members followed by less than 3 members (25.00 percent). The comparing qualities of the celebrity with advertisement were analyzed and the perceptions of the consumers are presented in TABLE:1 Attributes Similarity Identity Worthy Brand Confident Scandal Positive Image Attractiveness Advertising Product match Mean Ranking 0.92 1.20 1.10 0.98 1.34 0.90 0.87 0.86 0.84 0.82 Order of Importance 5 2 3 4 1 9 7 8 10 9

Table-2 The results showed that the Pearson Chi-Square value was 0.0196 and the likelihood ratio was 193.3 indicating that the test statistic was significant at five per cent level of significance thus, there was a significant differences among the consumers perception of the consumers about brand features as noticed by them. CONCLUSION In overall, the brand features of celebrities help me to remember the brand, creditability of the brand, quality of the brand, advertisement of the brand and price of its products were noticed by the consumers and there was a significant differences among the consumers perception of the consumers about brand features as noticed by them. The consumer looks for a variety of aspects from the endorsement like the credibility and likeability of the endorser. The company can heighten the advertising content because that grabs a special place in the mind space of the consumer. Since celebrities have the impetus to market the product quickly, they have the advertisers running behind them for various benefits including brand credibility, creating interest; thereby, creating a win-win situation.

111 REFERENCES Charbonneau, J. and Garland, R. (2005), Talent, Looks or Brains New Zealand Advertising Practitioners' views on Celebrity and Athlete Endorsers, Marketing Bulletin, 16: pp. 1- 10. Dawra, Jogrook and Katyal, (2006), "Brand Celebrity Conformance", The ICFAI Journal of Brand Management, 3(2): p. 6. Dyson, A. and Turco, D (1998), The State of Celebrity Endorsement in Sport, The Cyber Journal of Sport Marketing, 1 (2): pp. 34 - 35. Erdogan (1999), "Celebrity Endorsement: A Literature Review", Journal of Marketing Research, 15: pp. 291-314. Jagdish, A. and Wagner, K.A. (1995), The Economic Worth of Celebrity Endorsers: An Event Study Analysis, Journal of Marketing, 56(3):pp. 56-62. Tripp, C., Jensen, T.D., Carlson, L(1994). "The Effects of Multiple Product Endorsements by Celebrities on Consumers' Attitudes and Intentions". Journal of Consumer Research, 20:pp.535-547. Walker, M.; Langmeyer, L. (1991), Celebrity Endorser: Do You Get What You Pay For?. The Journal of Services Marketing, 6: pp.35-42. Harry Deane Wolfe (2007) Techniques of appraising brand preference And brand consciousness by consumer interviewing, Journal of Marketing Management, Vol.6, No.4, pp.81-87. Jeffrey D. Ford, Elwood A. Ellis (2008) A reexamination of group Influence on members brand preference, Journal of Marketing Research, Vol.17, No.1, pp.125-132. Kenneth E. Miller and James L. Ginter (2009) An investigation of Situational variation in brand preference behaviour and attitude, Journal of Marketing Research, Vol.16,No.1, pp.111- 123.

112

COMPETITIVE ADVANTAGE THROUGH CORPORATE SOCIAL RESPONSIBILITY PRACTICES


Dr. S. Jaya Bharathi, Ms. R. Ananthi and Mr. Y. Babu Vinothkumar Faculty Members Department of Management Studies and Research, Coimbatore Institute of Engineering and Technology "The whole of that wealth is held in trust for the people and used exclusively for their benefit. The cycle is thus complete; what came from the people has gone back to the people many times over." J R D Tata ABSTRACT According to the article, Components of Corporate Social Responsibility, the concept of CSR goes beyond charity or philanthropy and requires the company to act beyond its legal obligations and to integrate social, environmental and ethical concerns into its business process. However, in practice, companies fail to follow ethical practices, and this ultimately affects the society. These companies adopt a green washing effort through philanthropic and charitable initiatives. In some other cases, companies contribute more towards social welfare and employees welfare but face opposition from shareholders as the shareholders think that their wealth in the company is being unnecessarily used for social welfare. According to the European Commission, CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. Hence, companys CSR should focus on multi-stakeholder approach. INTRODUCTION The essence of socially responsible business behavior is the company should strive to balance the benefits of strategic actions to benefit shareholders against any possible adverse impacts on other stakeholders (employees, suppliers, customers, local communities, and society at large) and, further, to proactively mitigate any harmful effects on the environment that its actions and business may have. Social responsibility includes corporate philanthropy and actions to earn the trust and respect of stakeholders for the firms efforts to improve the general well-being of customers employees, local communities, society at large, and the environment. Efforts to employ an ethical strategy and observe ethical principles in operating the business. Making charitable contributions, donating money and the time of company personnel to community service endeavors, supporting various worthy organizational causes, and reaching out to make a difference in the lives of the disadvantaged. Actions to product or enhance the environment and in particular, to minimize or eliminate any adverse impact on the environment stemming from the companys own business. Actions to create a work environment that enhances the quality of life for employees and makes the company a great place to work. Integrating core values such as honesty, trust, respect, and fairness into its business policies Adhering to internal rules and regulations Workplace & Labour relations: Following fair HR practices Improving the workplace environment Providing health and safety at work Maintaining a healthy balance between work and non-work aspects of employees life Supply Chain: Integrating social, environmental, human rights and other aspects into the supply chain Using the supply chain to positively impact the stakeholders

113 Customers: Offering fair price and safe products Focusing on customer satisfaction and loyalty Environment: Finding sustainable solutions for natural resources Reducing adverse impacts on environment Reducing environment-risky pollutants/emissions Producing environment-friendly goods. Community: Providing job opportunity to people in the vicinity of the organisation Addressing issues/risks faced by those living in the company surrounding areas Making positive changes to the lives of the people through funding and other support for community projects implemented by local agencies. THE DRIVERS FOR CSR IN BUSINESS PRACTICES Reliance maintains a strong relationship with its shareholders and employees, however, it does not engage in any active community and environment development initiatives. According to Dhirubhai Ambani, the founder, Reliance group, As an industrialist my job is to produce goods to satisfy the demand. Let us be clear about it. Everyone has to do his job. My commitment is to produce at the cheapest price and the best quality. If you dabble in every thing then you make a mess of things. If we cannot take care of our shareholders and employees and start worrying about the world, then that is hypocrisy. Despite Reliance Groups lack of active involvement in community and environment development activities, the Group had fared considerably well in financial terms. The Mukesh Ambaniled Reliance group overtook the Tata group, known for CSR in India, in market capitalisation stakes. As of 2007, Reliance group has crossed the INR 5.22 trillion mark. Tata Group however has achieved a market capitalisation of INR 3.20 trillion in 2007. This led to the argument on whether CSR initiatives were really worth the effort and does it pay-off in financial terms. In this context, the significant drivers for CSR in business practices can be elaborated as given below: Legal compliance Maintaining a strong relationship with shareholders and other investors Creates new opportunities like new product development, market expansion, access to new consumers, etc. Better corporate reputation which influences the mind set of customers and suppliers and local community Enhanced employee morale and productivity (Competitive recruits want to serve for a company that is socially responsible) Effective control of risks for the survival of the organisation Competitiveness and market positioning CSR, integrated with the business, enables a company to reduce the operating cost Enhanced relations with communities and regulators. CONCLUSION As the size, culture, industry, vision and commitment of leadership differs from one company to another, the business model that integrates CSR initiatives also differs from company to company. The following are some of the key strategies that can be integrated in the business model of a company for effective implementation of CSR.

114 CSR can best be implemented if it is included in the Mission, Vision and Values Statements of a company. This mission and vision statements should be known to all the stakeholders from shareholders to employees. A company should have good corporate governance policies, which include following good ethics, meeting legal requirements like maintaining proper books of accounts, paying taxes and duties to the government, etc. A company should develop a CSR culture in its organisation. It should have a separate CSR department and should frame policies on how to integrate CSR from the stage of procuring raw materials to supplying finished products to the consumers. Procuring raw material from local community in the vicinity area Quality maintenance in the supply chain, manufacturing, etc Providing job opportunities to the local communities, thereby reducing the operations cost and increasing sales Producing environment-friendly goods Having clear pro-active analysis on the impact of its business on the environment. This will help the company to reduce the adverse impacts of business on the environment and avoid public and government protests against its business operations Effective use of employees in CSR implementation Encouraging those employees who perform well in implementing social and community initiatives, with rewards. This will help the company to improve employee morale, loyalty as well as their productivity Companies should audit and maintain their social and environmental reports. This will facilitate awareness among its stakeholders about the companys CSR initiatives

REFERENCES Components of Corporate Social Responsibility, http://www.ficci-sedf.org/compo-csr.htm Research presentation at the first roundtable on Improving Knowledge about CSR European Multi stakeholder forum on CSR, http://ec.europa.eu/enterprise/csr/documents/20030212/warwick_business_school.pdf, February 12th 2003 Baue Bill, Porter and Kramer Framework Melding CSR with Business Strategy Wins Harvard Award, http://www.socialfunds.com/news/article.cgi/2268.html, April 10th 2007

115

A STUDY ON CUSTOMER SATISFACTION ON AYURVEDIC HEALTHCARE SERVICES


Dr.A.Lakshmi Director, School of Management, K.S.Rangasamy College of Technology, Tiruchengode. V.S.Vijaya Chander Assistant Professor and Research Scholar, School of Management, K.S.Rangasamy College of Technology, Tiruchengode. ABSTRACT This paper focused on Ayurvedic health care services offered by Ayurvedic hospitals and expectations of patients. The study helps to identify the determinants of various factors which influence the quality of the service provided by various health care centre and hospitals. The opinions of patients were collected informally at different Ayurvedic hospitals in Erode district. The study also brings to the limelight of new service requirements expected by patients, thus fulfilling the gap between the existing services and patients requirements. Through this paper the study proposes systematic procedures for conceptual analysis on patients perceived and expected service quality in Ayurvedic health care centre and hospitals. The study brings out the factors which will significantly contribute to the satisfaction of the patients. The main finding of the study is that most of the people feel that the Ayurvedic doctor should look neat and clean as well as the personal care taken by doctors towards the patients. Of the different factors studied the respondent gave least important to hospital tangible factor. This might be possible because of the nature fear of the people that sound infrastructure may lead to high treatment cost. Key words: Ayurvedic health care centers, Ayurvedic doctor, hospital tangibility, patient satisfaction INTRODUCTION In competitive world, the service economy grows faster, so marketer need to know more about marketing the service product and they need more professional approach since services are intangible product. The past Indian scenario indicates that, in 1950-51 service contributes about 12.8% to Indian economy, in 1990-91 service contributes to 30.9% and in 2010-11 contributes to 61%. In India specialized hospitals are growing in fast and them trying to differentiate from each other like cardiac surgery, cancer, eye hospitals. Hospitals may be classified in another way based on treatment method as Allopathy, Ayurveda, Siddha, Homeopathy and Unani. Each one is trying to create a unique identity and wands to cater to a specific segment of market. A customer is the most important visitor on our premises. He is not an interruption in our work. He is the purpose of it. He is not the outsider on our business. He is a part of it. We are not doing him a favour buying serving him. He is doing as a favour by giving as an opportunity to do so. Mahatma Gandhi RESEARCH METHODOLOGY SECONDARY RESEARCH The secondary research was conducted to know that the patients are satisfied with the quality of the service provided by Ayurvedic hospitals. The past data indicates that the research was carried in general health care sector but not specifically in Ayurvedic sector. The authors feel that more research should be done in patients satisfaction of Ayurvedic health care sector. The study was conducted from various Ayurvedic hospitals in Erode district, Tamilnadu. The study was carried out between the periods of two months.

116 QUALITY RESEARCH The researcher discussed with the number of Ayurvedic doctors about the entire process and types of data that can be collected from the patients and the way in which, data can be grouped. The discussion helped to group the factors under six categories in structured model i.e., doctors service oriented, hospital tangible, staff tangible, accessibility, process and treatment cost. QUESTIONNAIRE DESIGN A preliminary version of questionnaire was developed in English based on the past research. The scale items were rated on five point likert scale in a structured format. Each item was rated as numerical 1 as strongly dissatisfied and numerical 5 as strongly satisfied. This format was recommended for health care services by the previous researchers. The questionnaire was pretested several times to ensure wording, format, length of questionnaire, sequence of question and scaling techniques. SAMPLING AND DATA COLLECTION The data was collected from 64 patients at five different Ayurvedic hospitals in Erode district, Tamilnadu. The people who are all using the services of Ayurvedic health care centers and hospitals form the population. The researcher collected data by visiting directly to all the Ayurvedic hospitals and interviewing the patients. The sampling method followed by researcher was convenient sampling. The list of public and private hospitals in Erode district is obtained from All India Ayurveda Congress, Tamilnadu Chamber. To ensure that all the hospitals are included in the survey, each hospitals inpatients are given equal chances to be included in the survey. ANALYSIS The researches obtained frequency distribution for each factors to check the data entry errors to obtain mean and standard deviation. The factors are ranked according to their weighted mean to see which factor contributes more to the satisfaction of patients. A regression model of fitted for all level of satisfaction on many dependent factors like doctors service oriented, hospital tangible, staff tangible, accessibility, process and treatment cost. The model is represent by the equation, Satisfaction = constant + b1 (doctors service oriented) + b2 (hospital tangible) + b3 (staff tangible) + b4 (accessibility) + b5 (process) + b6 (treatment cost) To find the factors which are mainly influencing satisfaction level, a revised step wise regression was run and revealed that only to factors i.e., doctors service oriented and hospital tangible were mainly contributes to customer satisfaction. The revised model explained 73% cumulative variation. RESULT DESCRIPTIVE STATISTICS The mean and standard deviation of various factors influencing patient satisfaction are presented in Table 1 and Fig 1. The mean of the satisfaction for the overall patients is 4.21 on five point likert scale, has a positive valence, close to extreme point of 5. The factors tangible staff was rated as high and treatment cost, tangible hospital were rated as low by the patients. This means that the patients are highly satisfied with regards to the appearance and cleanliness of doctors and dissatisfied with regards to the cost of treatment appearance and cleanliness of hospitals.

117 Table 1: Descriptive Statistics of different factors SUMMARY Groups Count Sum Service 64 271.0 Tangible(Hospital) 64 250.2 Tangible(Staff) 64 289.0 Access 64 254.6 Process 64 266.5 Treatment Cost 64 250.8 Fig 1: Chart of Mean Values of different factors

Average 4.234 3.909 4.516 3.979 4.164 3.919

S.D. 0.415 0.772 0.504 0.719 0.724 0.512

C.V. 9.795 19.760 11.155 18.081 17.388 13.075

Mean Values of different factors


4.60 4.50 4.40 4.30 4.20 4.10 4.00 3.90 3.80 3.70 3.60 4.52

Satisfactio Level n

Service
4.23 3.98 4.16 3.91 3.92

Tangible(Hospital) Tangible(Staf f ) Access Process Treatment Cost

Tangible(H ospital)

Factors

ANOVA ANOVA test was conducted to see if there are any variations in average levels of satisfaction of the patients under various factors. The ANOVA analysis is presented in Table 2. ANOVA reveals that there is a significant difference in the satisfaction level of various factors (p = 0). Table 2: ANOVA Table Df MS F 5 3.54 9.12 378 0.39 383

Source of Variation Between Groups Within Groups Total

SS 17.69 146.59 164.27

P-value 3.32E-08

Treatm C ent ost

Tangible(S taff)

P rocess

S ervice

A ccess

F crit 2.24

CONCLUSION The study reveals those customers are highly satisfied with regard to service and staff tangibility. The factors which scored very low on satisfaction level are hospital tangibility and treatment cost. This indicates that the Ayurvedic health care centers have to focus more on updating the infrastructure of hospital and also reduce treatment cost. The Ayurvedic health care centers have to equip with modern equipments and also maintain cleanliness and neatness of the hospitals. If the infrastructure of Ayurvedic health care center is modernised, it may attract more number of patients towards the Ayurvedic treatment. By reducing the cost of the treatment to the possible extent and extending the personal care taken by the doctors towards the patients, the Ayurvedic treatment may be revived to a new height in our country.

118 REFERENCES Aldana MJ.Piechulek H. Sabir AA. 2001. Client satisfaction and quality of health care in rural Bangladesh. Bulletin of World Health Organization 79: 512-6 Andaleeb SS. 2000a. Public and private hospitals in Bangladesh service quality and predictors of hospitals choice, Health Policy and planning 15: 95-102. Oliver RL 1997. Satisfaction: a behavioural perspective on the consumer New York : McGraw-Hill Parasuraman A, Herry LL, Zeithaml VA. 1991. Refinement and reassessment of the SERVQUAL scale. Journal of Retailing 65: 420-50. Parasuraman A, Berry LL, Zeithaml VA. 1991. More on improving service quality measurement. Journal of Retailing 69: 140-7. Rahman MM, Shahidullah M, Shahiduzzaman M, Rashid HA. 2002. Quality of health care from patient perspectives. Bangladesh Medical Research Council Bulletin 28: 87-96. Parasuraman A,Valarie A. Zeithaml, and Leonard.L.Berry. 1988. A multiple-item Scale for measuring consumer perception of service quality, Journal of Retailing Vol.64 Number 1 spring. Pp.343-352. Corin, .,J.J. & Tailor, S,A. 1992. Measuring services quality: A Re-Examination and Extension, Journal of Marketing,56, pp.33-35. Clement Sudhahar J.; Service Quality Gap Models, A Re-examination and Extension, SMART Journal of Business Management Studies, Vol.1, No.2, July-December 2005.pp.4253.

119

ONLINE PURCHASE INTENTIONS A STUDY OF ANTECEDENT VARIABLES


Anu George Viswajyothi College of Engineering and Technology, Vazhakulam, Kerala, S. Ganesan Suguna Spark Business School, Coimbatore M K Ramachandran Nair IMK, University of Kerala, Trivandrum ABSTRACT The Indian Business world has to seek new ways of attracting and retaining its customers. The world of e tailing needs serious attention from researchers to help identify ways and means to entice the causal browser to online shopping. The purpose of this paper is to explore a conceptual model for analysing consumers intentions to purchase online. To the three main constructs of the Theory of Planned Behaviour (TPB) proposed by Ajzen, namely, Attitude, Subjective Norm and Perceived Behavioural Control, an additional external construct, Consumer Demographics was added. They were incorporated keeping in mind the cultural and ethnic values held by the online Indian shopper. An empirical investigation was carried out to test the hypothesis. The sample included 305 online shoppers. Online and offline data collection was employed. Hypothesis was tested using Independent Sample T tests, ANOVA. Multiple Regression analysis was used to measure the relationship between the variables. Findings revealed that Attitude was the biggest positive predictor of online purchase intention. Subjective Norm did not exhibit a strong influence on purchase intention as one would expect in a relatively conservative country like India. Perceived Behavioural control has displayed a positive impact on intention despite popular notions that internet shopping is impractical given the poor infrastructural facilities India offers. The managerial implications of the study are also discussed. The findings of this study help understand which the biggest predictors of online purchase intention are. Therefore efforts should developed by online stores to help develop a positive attitude toward online shopping. This is the first time that TPB has been tested in the Indian online shopping scenario. This paper provides insights into online consumer behaviour and the results have important implications for marketers, academicians interested in E tailing. Key Words Consumer Behaviour, Internet shopping, Intention 1. Introduction Electronic Commerce in India is a relatively young but robust phenomenon in India. Its rapid growth has been widely discussed. According to a study by Ernst and Young E-commerce penetration level in India is 15 percent, which means 15 percent of the internet users are online shoppers. The growth rate of e commerce is growing but the ratio of Indian ecommerce to world levels is dismally low. Given Indias high usage of internet by its younger population it is imperative that the retail sector must give due importance to the concept of E tailing. The online Indian has certain peculiarities and online stores must be aware of it to take the best advantage. Given this paradox of increasing internet usage that does not translate to online sales, it becomes imperative for researchers in online marketing to analyse this lack lustr trend. The study of purchase behaviour commences with a study on need recognition by the consumer. It is the first step to consummation process. This study is an attempt to identify the factors influencing online purchase intention. The theoretical framework of this study is based on the Theory of Planned Behaviour, a seminal work of Ajzen. This theory has been widely used in the study of different kinds of behaviour including online purchase behaviour. However a study of this nature has not been previously undertaken in India. 2. Conceptual Background and hypothesis testing: 2.1 The theory of Planned Behaviour TPB posits that an individuals intentions at any given time are determined by three important factors: internal factors, like the attitude of the individual toward the behaviour; external factors, such as Subjective Norms that govern that behaviour and the factors of time and chance defined as Perceived behavior control beliefs.

120 2.2 Attitude Attitude may be described as a mental state involving beliefs, feelings, values and dispositions that guide an individual to act in a certain way. Attitude has become one of the key variables of IT acceptance; especially in e commerce Attitude towards online shopping has a significantly different impact on the online consumer process than attitude in the offline consumer process Hypothesis 1: Attitude positively influences intention to online purchase. 2.3 Cost Savings Cost savings and time saving may be two of several major determinants to online shopping. Jayawardhena et al found that discerning internet users were prepared to comparison shop using the internet to find the best prices. Watchravesringkan and Shim also noted that although price alone may be a less important motivation to shop online in comparison with convenience, however, the combination of price information and time saving is a major determinant. Hypothesis 2: Cost savings positively influences attitude to online purchase. Hypothesis 3: Time savings positively influences attitude toward online purchasing. Hypothesis 4: Subjective norm positively influences intention to shop. Hypothesis 5: PBC positively influences intention to purchase. Hypothesis 6: Controllability positively influences PBC. Hypothesis 7: Self Efficacy positively influences PBC. Hypothesis 8: Men are positively inclined to online shopping than Women. To explore differences in groups based on the variables of the study, independent sample t-tests were employed for 3. Methodology A sample of 305 respondents was obtained after conducting online and offline surveys. A structured questionnaire comprised of questions pertaining to consumer demographics, internet usage, statements measuring intention and customer satisfaction was used. The scale items were derived from a combination of note worthy researches in both traditional and online research contexts. Participants rated statements based on closed-ended 1-to -7 Likert Scale format. The purpose of employing the 1-to7 Likert scale format was to make the independent variables and the dependent variables continuous in order to conduct a statistical analysis. Prior to the full survey experiment, a pilot study was performed to test the survey website as well as to examine the measurement instrument. Twenty households and ten students participated in the pilot study. Prior to the commencement of data analysis, all the constructs used in this study were subject to the reliability test. Cronbach values for all constructs were well above the acceptable level of 0.70.The responses were suitably studied using descriptive statistics, exploratory and inferential statistics. Consumer demographics and Internet shopping was studied using descriptive statistics and the factors influencing purchase intention and satisfaction was studied using Independent Samples T test, One way ANOVA analysis and Correlation. The relationship between the factors themselves and their influence on the dependent variables was studied using Multiple Regression. All statistical tests were completed on SPSS version 18.0. The level of statistical significance for this study was set at p e .05.

121 3.1 Sample Characteristics: Of the respondents, gender was divided into 184 males (60.3%) and 121 females (39.7%). Most of the respondents were in the age group between 26 and 30 years. This category is closely followed by the upto 25 years and by the group between 31 and 35 years. This confirms findings of other studies that online shoppers are young. Most of the respondents (62.3%) were professionally qualified, this is followed by category of participants who have degrees in Arts and Science streams. 57.4% of the respondents were salaried persons, followed by students with 18.4% and entrepreneurs 10.2%. Majority of the participants drew monthly incomes above Rs. 40000. The internet usage statistics of the sample revealed that most participants use the internet for atleast two hours per day. The purchase frequency statistics revealed that 21.6% of the sample buys more than once in a month. 4.1 Attitude: Attitude was tested against Education levels of the different groups in the sample. The results of the ANOVA and Post Hoc tests reveal that that there are statistically significant differences in the means between the groups Upto Plus 2 and Arts and Science Degree and PG. The mean of the Upto Plus 2 group is M = 5.06 and that of Arts and Science Degree and PG M = 4.79. The favourable attitude of the first group is probably attributed to the fact that they are younger and are most exposed to computers all through school years. Most of the respondents who are professionals agree that it is a good idea to shop online with means at M = 5.23. This group also differs from the group that possess a graduation or Post Graduation in Arts and Science who are neutral to this idea with M = 4.79. It may be assumed that technical and professionally qualified people are more inclined to online shopping as they are more comfortable in using technology and probably more exposed to computers and understanding how the internet works than those with others kinds of educational qualification. The correlation analysis revealed that attitude at r = 0.487 has a significant, positive relationship with purchase intention. This has been supported by most of the studies on the influence of attitude on purchase intention. Therefore the null hypothesis may be rejected. 4.2 Cost Savings: Correlation analysis of cost savings to attitude was conducted. The Pearson r value of Cost savings r = 0.356 shows a positive and significant relationship between reduced costs and attitude to online shopping. 4.3 Time Savings: Correlation analysis was carried out for time savings to purchase intention. In this study, time savings has a significant and positive correlation coefficient at r = 0.352, which means that the subjects agree that time savings is a good enough reason to shop online though not the conclusive reason to choose it over traditional stores. This means that the null hypothesis may be rejected. 4.4 Subjective Norm: The results of the ANOVA and Post Hoc tests reveal that the group that falls in the income bracket of Rs.30001 Rs. 40000 differ significantly (at mean M = 3.92 against the average of M =4.59) from all other groups. The influence of family and friends on all other groups is perceived as neutral, while this group mildly disagrees with the statement that their family and friends think its fine to shop online. This may be because this group is a set of young professionals who think that family is not properly informed to advise them on online shopping and also because they want to be the first in their peer group to shop a product and be the one to advise others. The correlation analysis of Subjective Norm to Purchase Intention reveals a moderate but significant relationship between the two at r = 0.324. This shows that influence of family and friends are not as convincing in the online scenario as one would expect in a relatively conservative country like India. This may be due to the fact that online shoppers being very financially secure and

122 independent and being well qualified do not seek the opinion of others in their shopping. The null hypothesis may be rejected. 4.5 The ANOVA and Post Hoc results of Perceived behavioural control to education reveal certain statistically significant results. The means of the two groups Arts and Science graduates and Post graduates at M = 5.31 and Professional graduates M = 5.74 are significantly different. Perceived Behaviour is the ability with which a person believes a particular task, in this shopping online, to be easy or difficult. Most professionals of this sample agree that they are online shopping is a very easy operation for them. This may be due to the fact that they are familiar with the operating technology, are better equipped to grasp the fast changes and are better educated than the other group in focus i.e. graduates and Post Graduates of Arts and Science streams. Arts students by nature of their education and job profiles do not require highly technical knowledge which is the forte of the other group. The correlation analysis of PBC to Purchase intention reveal a positive but significant relationship between the two variables at r = 0.346. PBC was an important factor in the days when internet shopping was new, but as familiarity increases perhaps shoppers get accustomed to the nuances and know what to expect reducing the importance of PBC with time. Hence the null hypothesis may be rejected 4.6 Self Efficacy and Controllability: The correlation analysis of Controllability to PBC was performed and the coefficient Pearson r value showed a positive coefficient level r = 0.667, this means that the relationship is a very strong one and is a statistically significant one. The results of the correlation analysis for self efficacy to PBC shows a positive and significant at r = 0.703. This implies that self efficacy also strongly influences PBC. Thus the null hypothesis may be rejected 4.7 Consumer Demographics: Among the participants, there were 184 males and 121 females. The results of the Independent Sample T Test analysis indicate that among the independent variables and the dependent variable intention to purchase showed a significant difference between males and females. The independent T test analysis indicated that the 184 males had a mean of 4.84 and the 121 females had a mean of 4.42. The relationship was statistically significant at pe.05 level. The means of the intention to purchase differed significantly at p <.05 levels (p=.039). Therefore there is a 95% probability that these relationships were not produced by chance. This supports the assumption that men are most positively inclined to shop online than women. Multiple regression analysis studies the strength of relationship between the independent variables - attitude, subjective norm, PBC and Consumer Demographics. The R value .534 is the value of the multiple correlation coefficient between the predictors and the outcome. The results of regression analysis have following interpretations. If attitude is varied by 1 unit, intention will vary by .391 showing that it is the biggest predictor of intention. However, in the case of monthly income with one unit variation, intention varies negatively by 0.11 depicting a negative relationship. The Durbin Watson score is the statistic that informs whether the assumption of independent errors is tenable. Its value should be around 2; in this case it is 1.95. ANOVA tests whether this model is significantly better at predicting the outcome than using the mean as a best guess. Specifically, the F ratio represents the ratio of the improvement in prediction that results from fitting the model, relative to the inaccuracy that still exists in the model. If the F value is greater than 1 it is significant then it indicates that the model as a whole has significant ability to predict the outcome. Since the F value is 14.78 it is significant in predicting the outcome. The Beta value depicts the impact of the variable in the model. The Beta value of attitude is the highest with .391, which goes to explain that this factor has the highest impact in the model. This is

123 followed by PBC with a Beta weight of .081 and finally Subjective Norm with .079.Among the demographic variables education has the strongest impact in the model with a Beta weight of .155. The analysis reveals that attitude is the biggest indicator of purchase intention as contended by other studies. The standardised Beta weight is a positive value indicating that the results are significant at the p 0.05level. Table 1: Pearson Correlation Analysis Intention to Purchase Correlations Controllability Time Savings Self Efficacy Cost Savings .216** .000 .356** .000 .334** .000 .348** .000 .386** .000 .369** .000 .322** .000 1 Subjective Norm Intention Attitude

N = 305

Intention purchase Attitude

to Correlation Sig.2-tailed

.487** .000

.324** .000

.311** .000 .526** .000 .386** .000 1 .667** .000 .608** .000 .424** .000 .348** .000

.346** .000 .560** .000 .381** .000 .667** .000 1 .703** .000 .559** .000 .386** .000

PBC

.321** .000 .455** .000 .356** .000 .608** .000 .703** .000 1 .472** .000 .369** .000

.128* .025 .352** .000 .333** .000 .424** .000 .559** .000 .472** .000 1 .322** .000

Correlation .487** 1 .534** Sig.2-tailed .000 .000 Subjective Correlation .324** .534** 1 Norm Sig.2-tailed .000 .000 Controllability Correlation .311** .526** .386** Sig.2-tailed .000 .000 .000 PBC Correlation .346** .560** .381** Sig.2-tailed .000 .000 .000 Self Efficacy Correlation .321** .455** .356** Sig.2-tailed .000 .000 .000 Time Saving Correlation .128* .352** .333** Sig.2-tailed .025 .000 .000 Cost Saving Correlation .216** .356** .334** Sig.2-tailed .000 .000 .000 **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).

Table 2 Multiple Regression Analysis Factors influencing Purchase Intention Coefficientsa Model Unstandardized Standardized 95.0% Confidence Coefficients Coefficients Interval for B Lower Upper B Std. Error Beta t Sig. Bound Bound 1 (Constant) .382 .596 .640 .522 -.791 1.554 Gender -.209 .185 -.060 -1.130 .259 -.573 .155 Age .106 .088 .075 1.208 .228 -.067 .279 Education .394 .132 .155 2.983 .003 .134 .654 Occupation .009 .080 .006 .111 .912 -.148 .165 MonthlyIncome -.011 .064 -.011 -.178 .859 -.138 .115 Attitude .460 .078 .391 5.890 .000 .306 .614 Subjective Norm .088 .065 .079 1.349 .178 -.040 .216 PBC .100 .075 .081 1.341 .181 -.047 .247 a. Dependent Variable: Intention to purchase

124 Table 3 Model Summary Factors influencing Purchase Intention Model Summaryb Change Statistics Adjusted R Std. Error of R Square R Square Square the Estimate Change F Change .285 .266 1.472 .285 14.748 Durbindf1 df2 Sig. F Change Watson 8 296 .000 1.951

R .534a

a. Predictors: (Constant), PBC, Occupation, Education, Gender, Subjective Norm, Age, Monthly Income, Attitude b. Dependent Variable: Intention to purchase 5. Discussion Business need to consider that online shoppers are young, with high incomes, relatively risk averse, mostly male, who are not very price conscious but attracted by a good deal. Men are more inclined to shop online than women, as revealed by the findings with men scoring higher than women on all factors except on Subjective Norm where both genders were tied. These characteristics must be taken into consideration when deciding on a segmentation strategy. Similarly since they are technology savvy, innovating with technology would be a safe bet. Attitude of the consumer is the surefire way to induce purchase intention. Firms should center on attitude building advertising exercises. If different benefits of online shopping are highlighted for different groups general attitude can be improved. Subjective Norm is not such an influential factor in the Indian online shopping scenario. Opinions of family and friends are not taken so seriously by these shoppers who are mainly urban dwellers. Offer a convincing product and they will look no further. This is indeed a boon for online stores in a seemingly traditional society like India. However the group with agriculture as occupation displayed higher influence of family and friends supporting the earlier observation. PBC is also seen to have a positive effect on purchase intention. Online shopping is seen as an easy process by people who have technical education and others report the process to be less easy. So the process of shopping must be kept as simple and convenient as possible, not compromising the security of the transaction. 6. Limitations The limitations of this study were in the fact that respondents answered the questionnaire based on their experiences from different websites. A negative experience from one can offset the advantages he has experienced from many. The ability of the respondent to accurately remember and describe his experience is also disputable. Snow ball sampling also restricts the study in deciding geographic locations.

125

SERVICE QUALITY GAP ANALYSIS IN EDUCATIONAL SERVICE


M.Ramakrishnan M.Tech., MBA., M.Phil, (Ph.D), Assistant Professor, Department of Management Studies, K.S. Rangasamy College of Technology, Tiruchengode 637209 Abstract Education is a service that is geared primarily to the consumer market. Educational institutions in India are facing more demand in service than they could cope with. As the higher education is moving from content to context, the role of educational institutions in providing the quality of service is getting important. Students and faculty satisfaction and their understanding are furthermore important in the present educational system. This paper work identifies the critical service quality dimensions which lead to the Gap between faculty and students by using SERVQUAL instruments. Introduction Education is a service directly affected by the Service provider, and it services may be effective to the requirement or inadequate as the quality of the academic services offered. As colleges continue to become student oriented, understanding students perceptions, services offered are becoming more important. Assessment and the quality of educational services have been the dominant area in the present context of education. Which method can be used? Many authors have suggested that colleges should adopt market driven service quality models to assess student satisfaction with support services. Such models are appropriate for organizations that meet the following criteria: a) the primary product is intangible in nature b) the users participate in the delivery of service c) the service provided are generally produced and consumed simultaneously (Gronroos, 1990, Parasuraman, 1991) SERVICE QUALITY Ghobadian et al. (1994) posit that most of the service quality definitions fall within the customer led category. Juran (1999) elaborates the definition of customer led quality as features of products which meet customers needs and thereby provide customer satisfaction. As service quality relates to meeting customers needs, we will be looking at perceived service quality in order to understand consumers (Arnauld et al., 2002). Grnroos (1984) and Parasuraman et al., (1985) looks at perceived quality of service as the difference between customers expectation and their perceptions of the actual service received. Other researchers look at perceived service quality as an attitude. Arnauld et al., (2002) defined perceived quality whether in reference to a product or service as the consumers evaluative judgment about an entitys overall excellence or superiority in providing desired benefits. Hoffman & Bateson (2001) defines service quality as an attitude formed by a long-term, overall evaluation of a performance. Attitude is defined as a consumers overall, enduring evaluation of a concept or object, such as a person, a brand, or a service. (Arnauld et al, 2002) Service quality as an attitude is consistent with the views of Parasuraman et al., (1988), Cronin & Taylor (1992) & Sureshchandar et al., (2002). Basis of the view is elaborated by the latter: SERVICE QUALITY MEASUREMENT It is difficult to measure service quality as compared to goods quality. The difficulty to measure is due to fewer tangible cues available when consumers purchase services (Parasuraman et al., 1985), fewer search properties, but higher in experience and credence properties (Zeithaml, 1981 in Parasuraman 1985), as compared to goods. It also requires higher consumer involvement in the consumption process (Grnroos, 1984). Researchers operationalized the service quality construct either as a gap between expectation of service and perceived performance of service, or just perceived performance alone (Hurley and Estalami, 1998). On the other hand, service quality dimensions are seen

126 as the criteria to assess service quality (Parasuraman, Zeithaml, and Berry, 1985). Feinburg, and de Ruyter (1995) supported this idea as they postulate that the dimensions are instruments for measuring perceived service quality. They also posit that consumer-perceived service quality is usually seen as a multi-dimensional construct. The earliest research on service quality dimensions was done by Grnroos (1984). He found that the perceived quality of a service is affected by the experience that the consumer went through for a service. Therefore, he encapsulated the perceived quality of a given service as the outcome of an evaluation process; a comparison between the consumer expectations of the service with his perceptions of the service he has received. He also pointed that expectation is influence by traditions, ideology, word-of-mouth communication, and previous experience with the service and the consumers perception of the service itself determines his perceived service. However, he did not discuss the relationship between perception and expectation and how it influences service quality. Dimensions of Service Quality in Educational Services Dimensions of Service Quality Definition Reliability The accuracy and dependability with which a faculty or department or college provides service Responsiveness The demonstration of an eagerness to be of service, and a commitment to act in the best interest of the students Assurance The ability to earn students confidence by performing services in a knowledgeable and professional manner Empathy Being able to communicate care and understanding through the interpersonal skills of the staff and student friendly policies and procedures Tangibles The physical appearance of the department, its staff, and any materials associated with service delivery Research Method Sampling Technique: Convenience Sampling Sample Size: 200 for Students, 200 for Faculty Data Collection Method: Questionnaire, Interview Schedule Tools used for Analysis: SERVQUAL Analysis Instrument used: The instrument used was an adaptation of the SERVQUAL survey that included 22 Likert scale items measuring five postulated dimensions of service quality. The original SERVQUAL survey was specifically designed to assess organizations and businesses in the service sector. Minor changes in wording were used to adopt this studys survey to an academic setting. Students and faculty members were asked to rate the each of 29 factors leading to the service satisfaction. The relative size of the gap between these two ratings was used to identify the areas where students and faculties have difference in perception to the same service quality dimension. Major Findings A gap of 2.20 in staff interest to resolve all the students doubts and a gap of 2.04 between staff and students on getting back to issues and within time. A Gap of 1.78 in Staffs accessible to the students A Negative gap of -1.88 for Staff not willing to help the students. A Gap of 1.92 for Staff unbiased in giving internal marks to students. A gap of 2.01 for trusting staff for any problem. A gap of 1.86 for easy accessibility of various departments.

127 RESULTS This study explored a number of factors that determine student, faculty perceptions of service quality. Though the institutes are lacking behind in many parameters, the significant gap is in the Reliability and Responsiveness parameters. As discussed above, reliability is a measure of the trust the students have on the institutes. Hence effort should be made to increase the faith of the students on the reliability parameter. This paper focuses on demonstrating that the SERVQUAL model which can be used to assess and improve the quality of student. The specific results of this study may be generalized to the institutions different from those used in the study and the model and the process can be adapted to other types of colleges and institutions. SERVQUAL parameters used in the survey Staff members show great interest in solving students doubts related to subjects Staff members are able to resolve all the problems at the first instant Staff members provide the correct answers to all the questions Staff members promises to get back on certain issues and do it within the time The physical facilities should be adequate / pleasant Staff should have utilized the up-to-date teaching tools Staff should be well dressed and appeared professional Staff members are easily accessible to all the students Staff members keep-up their promise Staff members are expected to be sympathetic and reassuring on any students crisis Staff members can be trusted for any kind of problem Staff members should update their records promptly and accurately There is no reason for a staff member to tell students exactly when services would be performed It is not realistic for students to expect prompt service from the staff members Staffs are not willing to help the students Staff members do not find time to respond to the students request promptly Staff should have adequate knowledge to answer student questions Staff members are getting adequate support from the management to do their work Staff members are expected to give individual attention to the students Staff members are expected to know all the requirements of the students Staff members are expected to know the learning needs of the students The college keeps the students regularly informed of various information in advance The college is able to service the requests of students at the earliest Various departments in the college is easily accessible to the students The facilities in the college can be easily located and accessible The facilities in the college are posh and well maintained The course material given to students is relevant and adequate. CONCLUSION This paper work identifies the various service quality parameters in the educational services. The SERVQUAL instrument used in this study is applicable to the educational service quality assessment. Colleges and institutions by using this SERVQUAL survey model, identifies their service quality and can provide the best educational service.

128 REFERENCES 1. 2. 3. 4. 5. Astin, A. Assessment for excellence: The philosophy and practice of assessment and evaluation in higher education. Macmillan Press, 1990. Astin, A. What matters in college? Four critical years revisited, Macmillan Press, 1993 Bennett, W. To reclaim a legacy. Washington, DC: National Endowment for the Humanities, 1984. Boulding, W., Kalra, A., Staelin, R., & Zeithaml, V. A dynamic process model of service quality: From expectations to behavioral intentions. Journal of Marketing Research. 30, February 1993, 7-27. Cuthbert, P. F. Managing Service Quality in Higher Education: Is SERVQUAL the Answer?, Managing Service Quality, Vol. 6, No 3, 1996, 31-35.

129

SERVICES MARKETING AND MANAGEMENT


Mr.G.Nagamanickam Lecturer, Muthayammal Engineering College, Rasipuram. Ms.S.Dhivya II MBA, Muthayammal Engineering College, Rasipuram. ABSTRACT A service is an act or performance offered by one party to another. Although the process may be tied to a physical product, the performance is essentially intangible and does not normally result in ownership of any factor of production. Service is to distinguish between the core and peripheral elements of that service. The core service offering is the necessary outputs of an organization which are intended to provide the intangible benefits customers are looking for. Peripheral services are those which are either indispensable for the execution of the core services or available only to improve the overall quality of the service bundle. The services marketing triangle helps the service provider to get success in their service production. The external, internal and interactive marketing is strives towards the factors such as enabling, setting and delivering the promise respectively. This triangle having inter and intra relationship between the management (company), employees and market (customers, suppliers, etc.). Service management draws insides from business practice and from marketing, operations, human resources, service quality management, organizational theory and economics. Its 5 key facets are drives the service organizations to understand the utility, perceived quality, changes in the minds of the customers from time to time, capacity of the organization, improvement in the capacity and achieving the objectives of an organization. Service management as an overall management perspective gives high priority to the external efficiency of the firm, how customers perceive the quality of the core products and the total performance of a firm, instead of overemphasizing internal efficiency, economies of scale and cost reduction. This combines the overall management perspective of service management with its customer-driven and quality-oriented facets, employee-oriented concerns and its long term perspective. Service management perspective that fits todays competitive situation. This is done through a variety of services and by turning activities such as deliveries, technical service, claims handling, a telephone exchange, invoicing, etc. into customer-oriented, value-adding services. Meaning of Marketing: Identifying and satisfying the needs and wants of consumers by providing market offering to fulfil those needs and wants through exchange process profitable. Meaning of Services: It is an intangible in nature. For e.g. Hotel business, personal care, legal, medical services, banking, insurance, transportation services etc. Definition of service Marketing: A service is any act (or) performance that one party offers to another, which is essentially intangible and does not result in the ownership of anything. Its production may (or) may not be tied to a physical product. -Philip Kotler. Evolution of service sector: Introduction: Liberalization, Privatization, Globalization (LPG) has brought unexpected changes in the economic, trade and industrial scenarios. India is fast moving from a protected economy to an open

130 market economy and becoming integrated with the world economy. LPG environment has exposed variants organizations including the service sector to the challenges of competition, service quality, cost and the competitive environment will help organizations to modernize. Some of those unable to cope with the changes may have to face the consequences and more problems of survival of the off test. 1. The crawling out stage which took place prior to 1980. 2. The scurrying about stage between 1980 and 1986. 3. The walking erect between 1986 and 2000. 4. The galloping stage from 2000 till date. Crawling out stage: In the crawling out stage, discussion centered around the need for a separate body of literate to deal with specific problems of the service sector. Scurrying about stage: In the scurrying about stage between 1980 and 1985 efforts were made to classify services more clearly and attention focused heavily on the crucial issue of managing quality in services operation . walking erect stage: In the walking erect stage since 1986, there has been almost no discussion of whether services are different from goods, but rather the literature has focused on specific marketing problems of services organisation. Galloping stage: In the Galloping stage since 2000, there has been an increase in the growth of the services sector and services are the main contributors to the GDP of the country. Issues of services marketing: The companies are not able to show the tangible clues Time management and expectation cant be predicted within the stipulated period Value identification and creation of belief is not possible without the proper engagement of the service Treatment of customer and fulfilment in the expectation is not properly managed. Proper training and education to the employees and customer not provided at required period of time. Application of available strategies or traditional strategies followed by the organisation in the same sector. Sales are the major part for the consumption of services. Revenue generation and period of drought is properly managed in increasing and decreasing situation respectively. Insufficient of labour with high enthusiastic, acceptable and adjustable to the environment respectively. Reasons for the growth of the services economy: 1. The lag in growth in labour productivity in services compared with the rest of the economy. 2. The growth in intermediate demand from firms. 3. The growth in final demand from consumers. The lag in growth in labour productivity in services. Part of the explanation for the growth of services is attributed to the slower growth of labour productivity, as measured by volume of output per employee. a. A greater decline in hours worked per man in services than in industry. b. A more rapid increasing in the quality of labour in industry than in service.

131 c. A difference in the physical capital per worked available in industry compared with services. d. More rapid technological change in industry than in services: and that industry benefits more from scale economies. The growth in intermediate demand from firms: Another part of the explanation for the growth of services is attributed to the growth of intermediate demand from firms. Business buyers have always used an array of services like accounting, construction, banking, insurance, legal, research, advertising, public relations, training, transport, and shipping and consultancy services. The growth in final demand from consumer:

It includes changed life- style, more leisure time, longer life expectancy and the increasing complexity of life. Technological developments mean more goods- which require specialist service in fields like motor cars, stereophonic equipment, video equipment and home computers. Significance of Services Marketing: Creation and expansion of job opportunities. An optimal utilization of resources. Paving avenues for the formation of capital. Increasing the standard of living. Environment friendly technology. CONCLUSION: Indian Economy is the Worlds fastest growing economy. Our Economy is based upon the Services sector. About 67% of Indian GDP is contributed by Services sector. Services sector has a vast space of opportunities which can be enjoyed by the young population. India is the nation which is having highest density of youngsters living in. So, the employment opportunities are available in abundant.

132

BUSINESS ETHICS AND CORPORATE SOCIAL RESPONSIBILITY


K.Damodaran, Asst.prof, Professional School of Management, N.Aarthy, Asst.prof, Professional School of Management. INTRODUCTION: As recently as a decade ago, many companies viewed business ethics only in terms of administrative compliance with legal standards and adherence to internal rules and regulations. Today the situation is different. Attention to business ethics is on the rise across the world and many companies realize that in order to succeed, they must earn the respect and confidence of their customers. Like never before, corporations are being asked, encouraged and prodded to improve their business practices to emphasize legal and ethical behaviour. Companies, professional firms and individuals alike being held increasingly accountable for their actions, as demand grows for higher standards of corporate social responsibility. Definitions: Corporate: 1. Emanating from or pertaining to a group activity. 2. Emanating from or pertaining to a company constituted legally under a companies act or similar legislation. IN BRIEF: Belonging to an association of employers and employees in a basic industry Social Responsibility: The principle that companies should contribute to the welfare of a society and not be solely devoted to maximizing profits . Ethics: 1. The science of moral obligation; a system of moral principles, quality, or practice. 2. The moral obligation to render to the patient the best possible quality and to maintain an honest relationship with other members of the profession and mankind in general. So in total, corporate social responsibility and refers to ethics, essentially, consist of a set of moral guidelines towards conductance of an appropriate behaviour. Such behaviour conforms to professional standards of conduct. The corporate code of ethics consist of a set of moral principles and values that govern the behaviour of the organization with respect to what is right.... Corporate Social Responsibility (CSR) is a concept which encourages organizations to consider the interests of society by taking responsibility for the impact of the organizations activities on customers, employees, shareholders, communities and the environment in all aspects of its operations. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntary taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large. The four myths of CSR : Deborah Doane, the chair of the Britain based organization CORE Coalition(for Corporate Responsibility), wrote an article for the fall 2005 issue of the Stanford Social Innovation Review where she listed and debunked what she called the four key myths of CSR. Those myths are: 1.The market can deliver both short-term financial returns and long-term social benefits According to Doane , not only are the interests of profit-seeking corporations and broader society often at odds, but socially responsible investments by corporations are particularly unlike to pay off in the two to four year time horizon that public companies, through demands of the stock market, often seem to require.

133 2.The ethical consumer will drive change. Doane writes, Most surveys show that consumers are more concerned about thing like price, taste, or sell-by date than ethics. Wal-marts success certainly is a case in point. 3.There will be a competitive race to the top over ethics amongst businesses. While CSR efforts often offer good PR, which companies of course like, in some cases businesses may be able to capitalize on well-intentioned efforts say by signing the U.N . Global Compact, without necessarily having to actually change their behaviour. 4. In the global economy, countries will compete to have the best ethical practices Although companies often claim that their presence in developing countries will improve health, environmental and labour conditions, Doane counters, : companies often fail to uphold voluntary standards of behaviour in developing countries, arguing instead that they operate within the law of the countries in which they are working. In fact, competitive pressure for foreign investment among developing countries has actually led to government limiting their insistence on stringent compliance with human rights or environmental standards, in order to attract investment. 10 Benefits of Managing Ethics in the Workplace: Many people are used to reading or hearing of the moral benefits of attention to business ethics. However, there are other types of benefits, as well. The following list describes various types of benefits from managing ethics in the workplace. 1. Attention to business ethics has substantially improved society. A matter of decades ago, children in our country worked 16-hours days. Workers limbs were torn off and disabled workers were condemned to poverty and often to starvation. Trusts controlled some markets to the extent that prices were fixed and small business chocked out. Price fixing crippled normal market forces. Employees were terminated based on personalities. Influence was applied through intimidation and harassment. Then society reacted and demanded that business place high value on fairness and equal rights. Anti-trust laws were instituted. Government agencies were established. Unions were organized. Laws and regulations were established. 2. Ethics programs help maintain a moral course in turbulent times. Wallace and pikl explain that attention to business ethics is critical during times of fundamental change- times much like those faced now by business , both non-profit or for-profit. During times of change, there is often no clear moral compass to guide leaders through complex conflicts about what is right or wrong. Continuing attention to ethics in the workplace sensitizes leaders and staff to how they want to act- consistently. 3. Ethics programs cultivate strong teamwork and productivity. Ethics programs align employee behaviours with those top priority ethical values preferred by leaders of the organization. Usually an organization finds surprising disparity between its preferred values and the values actually reflected by behaviours in the workplace. Ongoing attention and dialogue regarding values in the workplace builds openness, integrity and communitycritical ingredients of strong teams in the workplace. Employees feel strong alignment between their values and those of the organization. They react with strong motivation and performance. CONCLUSION: A survey of 138 college students reveals an undergraduate major has a greater influence on corporate social responsibility than business ethics. Business students are no less ethical than non business students. Females are more ethical and socially responsible than males. Age is negatively related to ones Machiavellian orientation and positively related to negative attitudes about corporate efforts at social responsibility. The results suggest a greater need to focus business ethics instruction based on student characteristics.

134

THE PARADIGM SHIFT UNORGANISED TO ORGANISED RETAILING


S. ANITHA, Asst. Prof, Department of Management Studies, Tagore Engineering College, Chennai ABSTRACT Introduction The Indian retail industry is the fifth largest in the world. Comprising of organised and unorganised sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganised, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organised as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crore in 200405 to Rs. 109,000 crore by the year 2011. Retailing is one of the pillars of the economy in India and accounts for 13% of GDP The retail industry is divided into organised and unorganised sectors. Over 12 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in size. Organised retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana outlets, owner manned general stores, paan/beedi outlets, convenience stores, hand cart and pavement vendors, etc. In India, aoutletkeeper of such kind of outlets is usually known as a dukandar. Organised Retailing in India: In late 1990's the retail sector has witnessed a level of transformation. Retailing is being perceived as a beginner and as an attractive commercial business for organised business i.e. the pure retailer is starting to emerge now. Organised retail business in India is very small but has tremendous scope. Organised retailing will grow faster than unorganised sector and the growth speed will be responsible for its high market share, which is expected to be $ 17 billion by 2010-11. Unorganised Retailing in India: In India, the most of the retail sector is unorganised. In India, the retail business contributes around 11 percent of GDP. Of this, the organised retail sector accounts only for about 3 percent share, and the remaining share is contributed by the unorganised sector which is mostly a family owned business in India. The main challenge facing the organised sector is the competition from unorganised sector. Unorganised retailing has been there in India for centuries, theses are named as mom-pop stores. The main advantage in unorganised retailing is consumer familiarity that runs from generation to generation. It is a low cost structure; they are mostly operated by owners, have very low real estate and labor costs and have low taxes to pay. Literature Review India is being seen as a potential goldmine for retail investors from over the world and latest research has rated India as the top destination for retailers for an attractive emerging retail market. Indias vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets. Even though India has well over 5 million retail outlets, the country sorely lacks anything that can resemble a retailing industry in the modern sense of the term. Mohanty& Panda (2008) opines about retailing as a sector of India occupies important place in the socio-economic growth strategy of the country. India is witnessing retailing boom being propelled by increasing urbanisation, rising purchasing power parity (PPP) of ever growing

135 Indias middle class, changing demographic profiles heavily titled young population, technological revolution, intense globalisation drive etc. Sahu (2010) describes that a rise in consumer confidence, improvement in profitability and aggressive expansion plans signal better tidings for listed players in the organised retail space. Moreover, analysts believe listed retailers could attract foreign investments by spinning off their subsidiaries into separate companies which can provide a great opportunity for the improvement of this sector. Gellner (2007) explains in this context that in most retail meetings and/or publications, hardly ever is there any talk on problems that modern retail formats are encountering doing business in India. There is a significant profitability challenge, to deliver the brand promise in terms of quality and geographic spread in line with the growth in consumer demand. Nagesh (2007) describes that Indian retailing will see a sea of change in the next five years, driving consumption boom never seen in the history of any country. From a drout situation we will see a flood of modern retail, So Indian retail will be on a steady ground of sustained growth year after year and thereafter. Akash (2009) says that Retail business in India, as anywhere else in the world, plays a crucial role in an economy. Retail in India has the potential to add value over Rs 2,00,000 crore ($45billion)business by the year 2010 generating employment for some 2.5 million people in various retail operations and over10 million additional workforce in retail support activities including contract production and processing, supply chain and logistics, retail real estate development and management. Gibson, CEO Retail Association 0f India opines (2007) that modern retailing today is growing faster than expected while the current growth rate is around 30 percent, the sector is expected to grow at 4050percent on a year basis. Shivkumar, Executive Director and leader of Retail and Consumer Practices Price Warehouse Co-operatives,(2009)also holds the opinion that retailing is the next sunrise segment of the economic development of the country. Mishra (2008) says, there is a hectic activity in the sector in terms of expansion, entry of international brands and retailers as well as focus on technology, operations, infrastructure and processes. All these present a tremendous opportunity in this high growth industry. Yuvarani (2010) opines that according to a study the size of the Indian Retail market is currently estimated at Rs 704 corers which accounts for a meager 3% of the total retail market. As the market becomes more and more organised the Indian retail industry will gain greater worth. However, the future is promising, the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations. Biyani (2007) describes that we are on the cusp of change wherein a huge, multicultural India is transforming from a socialist economy to a consumption-led, creative economy. The scope and depth of change that is taking place due to the revolutionary retail market with a gigantic opportunity for marketers and retailers, not only in large cities but also in small towns. So retailing can play a significant role in creating the India of tomorrow. Kearney (2007) explains that the retail sector provides a unique platform to India .Government, both central and state, need to engage with the sector and utilise its potential for social development. So the Indian market and its consumers poised for a retail consumption explosion that will continue for future. Indias sunrise retail sector is witnessing a major transformation as traditional markets make way for modern and indigenously development retail formats. Standing on the threshold of a

136 retail revolution and witnessing a fast changing retail landscape. Indian retail is still growing, and growing at an enviable rate. In the new era of liberalisation, there exists immense opportunities for retail business .Progressive policies, economic and political stability ,liberal policies on technology, changing consumers profile and demographic character, increasing urbanisation, improved infrastructure, increasing number of nuclear families ,increasing working women population are new opportunities. Bulging of middle and upper middle classes, whose purchasing power is now substantial and turning Indian economy as the fourth largest economy in the world in terms of purchasing power, are opportunities galore for giving further boost to retail business in India. Objective of the Study This research tries to analyse consumer preference towards organised retailing. In line with this primary objective the other objectives are to have an understanding of why the consumer prefers organised retailing vis-a-vizunorganised retailing, identify the factors influencing the consumers to prefer organised retailing, measure their level of satisfaction and the analyse the distinct features of organised retail outlets. Scope and Significance of the Study This research will help the organised retail outlets to know about their customers and the reputation of their outlet in the market. It can be used to know about the organised retail pattern and helps the customers to know about the benefits in organised retailing. It also tells us about the value of each and every customer who are coming to the outlet with trust and the purpose for which the customers prefer the organised retailing for their purchase. This research will highlight why the consumers prefer organised retail outlets, and individuals attitude towards purchasing from such outlets. Thus based on this research suitable steps can be taken to improve the organised retailing methods and reduce the problems faced due to the defection of customers. Research Methodology The research design followed is Descriptive Research. The research instrument used for the study is a structured questionnaire. Due to time, expenses and practical constraints the sample size was limited to 75 customers. The respondents were selected through a convenience sampling. Analysis Sample Demographics The demographics of the sample have been depicted in the following table. Table 1 Demographics of the respondents Gender Frequency Male 44 Female 31 Age Frequency 15-25 24 26-40 27 41-60 17 Above 60 7 Family expenses p.m. Frequency Rs.5000-10000 14 Rs.10000-15000 27 >Rs.15000 34

Percent 58.7% 41.3% Percent 32 36 22.7 9.3 Percent 18.7 36 45.3

This research includes 58.7% of the respondents who are males and 41.3% females. 32% of the respondents are age group between 15 -25. 36% of the respondents are age group of between 26-40 years. 22.7% of the respondents are in the age group of between 41-60 and 9.6% of the respondents

137 fall in the above 60 years category. 18.7% of the respondents family expense are between Rs.500010000 per month. 36% of the respondents family expenses are between Rs.10000-15000 per month and 45.3% of the respondents family expenses are above Rs.15000 per month. Preference for type of organised retail outlets with reasons for the same Table 2 given below indicates the preference of the respondents with respect to the type of organised retail outlet together with the reasons for the same. It also gives the details of the type of media which has influenced respondents in making the above choice. Table 2 Preference for type of organised retail outlets with reasons for the same Preferred outlet of respondents Frequency Percent Grocery outlets E 17.4 Super market 37 49.3 Departmental stores 25 33.3 Percent Factors Influencing choice of outlet Frequency Service 9 12 Quality 24 32 Discount 11 14.7 Brand image 31 41.3 Percent Type of Media influencing choice Frequency TV 41 54.7 Magazine 11 14.7 Newspaper 23 30.6 17.4% of the respondents are preferring grocery outlets for their purchase. 49.3% of the respondents prefer Super market and 33.3% of the respondents prefer Departmental stores. 12% of the respondents says that the unique character of Big Bazaar is service. 32% of the respondents say product availability. 14.7% of the respondents say discount and 41.3% of the respondents say brand image. 54.7% of the respondents say that TV is the major media influenced them to prefer organised retail outlet for their purchase.14.7% of the respondents say magazine and 30.6% of the respondents say Newspaper respectively. Aspects of organised retail outlets which attract customers Table 3 given below indicates the reasons for respondents to prefer retail outlets, opinion on prices and frequency of visits made. Table 3 Aspects of organised retail outlets which attract Customers Reasons for preferring Organised retail outlets Frequency Percent Usage of credit cards 16 21.3 One time purchase 20 26.7 Product availability 39 52.0 Pricing Strategy Frequency Percent Very high 9 12.0 High 13 17.3 Neutral 14 18.7 Low 39 52.o Influence of location Frequency Percent Yes 55 73.3 No 20 26.7

138 Availability of products Excess In demand Moderate Poor Frequency of visits made Weekly Every month Twice in a month Frequency 26 24 15 10 Frequency 27 31 17 Percent 34.7 32 20 13.3 Percent 36 41.3 22.7

21.3% of the respondents prefer the organised retail outlets for easy usage of credit cards. 26.7% of the respondents prefer for one-time purchase and 52% of the respondents prefer for product availability. 12% of the consumers say that price level is very high in organised retail outlet, 17.3% say that it is high, 18.7% of them were neutral and 52% majority of them say the price level is very low . 73.3% of the respondents say that location acts as a main factor for organised retail outlets and 26.7% of the respondents oppose it. 34.7% of the respondents says that the availability of products is excess. 32% of the respondents say in demand. 20% of the respondents say moderate and 13.3% of the respondents say poor. 36% of the respondents are visiting organised retail outlets every week for their purchase. 41.3% of the respondents are purchasing once in a month and 22.7% of the respondents are purchasing twice in a month. Level of satisfaction The level of satisfaction as given by the respondents is given below : Table 4 Level of satisfaction Satisfaction level Frequency Percent Highly satisfied 23 30.7 Satisfied 31 41.3 Moderate 15 20 Dissatisfied 4 5.3 Highly dissatisfied 2 2.7 30.76% of the respondents are highly satisfied, 41.3% of the respondents are satisfied. 20% of the respondents are in moderate state. 5.3% of the respondents are dissatisfied and 2.7% of the respondents are highly dissatisfied. Gaps in Service Table 4 given below elaborates on additional amenities which respondents would like to enjoy when they visit the organised retail outlets. Table 5 Additional amenities desired by the respondents Gaps in Service Frequency Percent Play station 17 22.7 Food court 52 69.3 Small park 6 8 22.7% of the respondents say that play station should be added has one of the additional feature. 69.3% of the respondents say Food court and 8% of the respondents say Small Park.

139

CUSTOMER RELATIONSHIP MANAGEMENT IN INDIAN INDUSTRIES


Ms. A.Jayanthi MBA, M.Phil, PGDCA, (PH.D, Assistant Professor,Department of Management Sciences, D J Academy for Managerial Excellence,Coimbatore -641032 ABSTRACT CRM stands for customer relationship management and helps the management and customer service staffs cope with customer concerns and issues. CRM involves gathering a lot of data about the customer. The data is then used to facilitate customer service transactions by making the information needed to resolve the issue or concern readily available to those dealing with the customers. This results in more satisfied customers, a more profitable business and more resources available to the support staff. Furthermore, CRM Customer Relationship Management systems are a great help to the management in deciding on the future course of the company. As mentioned, there is much data needed for the CRM system to work. These fields include the customer name, address, date of transactions, pending and finished transactions, issues and complaints, status of order, shipping and fulfillment dates, account information, demographic data and many more. This information is important in providing the customer the answer that he or she needs to resolve the issue without having to wait for a long time and without going to several departments. With just a few mouse clicks, a customer support representative for example can track the location of the customer's package or order. This is infinitely better than the cumbersome process of tracking shipments previously. Furthermore, the customer service representative will also be able to see the previous concerns of the customer. This is a great help especially if the customer is calling about the same issue since he or she will not have to repeat the story all over again. This results in less time in resolving the issue, thus, higher productivity of the support staff.CRM Customer Relationship Management systems are also important to the top management because it provides crucial data like customer satisfaction and efficiency of service by the frontline crews. A piece of customer relationship management software will also be able to generate the needed reports for product development or new concepts. Furthermore, this system will also be a great help for the top management in deciding the company's future course of action, whether it involves phasing out one of the products on the shelves or making adjustments to one of the products sold.The reports generated by CRM systems are also invaluable to your advertising and marketing planners, as they will be able to pinpoint which ideas works and which do not. Because of CRM systems, you will be able to release advertisements or plan marketing campaigns more in tune with your target market. This will also lead to more responses to your advertisement and a more effective marketing campaign. CUSTOMER RELATIONSHIP MANAGEMENT IN INDIAN INDUSTRIES CRM, or Customer relationship management, is a number of strategies and technologies that are used to build stronger relationships between companies and their customers. A company will store information that is related to their customers, and they will spend time analyzing it so that it can be used for this purpose. REVIEW OF LITERATURE: Until recently, most marketers focused on attracting customers from its target segments using the tools and techniques developed for mass marketing in the industrial era. In the information era, this is proving to be highly ineffective in most competitive markets. Slowing growth rates, intensifying competition and technological developments made businesses look for ways to reduce costs and improve their effectiveness. Business process reengineering, automation and downsizing reduced the manpower costs. Financial restructuring and efficient fund management reduced the financial costs. Production and operation costs have been reduced through Total Quality Management (TQM), Just in Time (JIT) inventory, Flexible Manufacturing Systems (FMS), and efficient supply chain management. Studies haves hown that while manufacturing costs declined from 55% to 30% and management costs declined from 25% to 15%, the

140 marketing costs have increased from 20% to 55% (Sheth,1998). The practice of relationship marketing has the potential to improve marketing productivity through improved marketing efficiencies and effectiveness (Sheth and Parvatiyar,1995). Still relationship marketing appears to be an expensive alternative to firms practicing mass marketing due to the relatively high initial investments. Firms would adopt relationship marketing only if it has the potential to benefit them. The benefits come through lower costs of retention and increased profits due to lower defection rates (Reichheld and Sasser, 1990).When customers enter into a relationship with a firm, they are willingly foregoing other options and limiting their choice. Some of the personal motivations to do so result from greater efficiency in decision-making, reduction in information processing, achieving more cognitive consistency in d ecisions and reduction of perceived risks with future decisions (Sheth&Parvatiyar, 1995). In the context of service, relationship marketing has been defined as attracting, maintaining and in multi-service organizations enhancing customer relationships (Berry 1983). Here attracting customers is considered to be an intermediary step in the relationship building process with the ultimate objective of increasing loyalty of profitable customers. This is because of the applicability of the 80-20 rule. According to Market Line Associates, the top20% of typical bank customers produce as much as 150% of overall profit, while the bottom20% of customers drain about 50% from the bank's bottom line and the revenues from therest just meeting their expenses. STATISTICS: In 2003, a Gartner report estimated that more than $1 billion had been spent on software that was not being used. More recent research indicates that the problem, while perhaps less severe, is a long way from being solved. According to CSO Insights, less than 40 percent of 1,275 participating companies had end-user adoption rates above 90 percent]Additionally, many corporations only use CRM systems on a partial or fragmented basis, thus missing opportunities for effective marketing and efficiency.In a 2007 survey from the U.K., four-fifths of senior executives reported that their biggest challenge is getting their staff to use the systems they had installed. Further, 43 percent of respondents said they use less than half the functionality of their existing system; 72 percent indicated they would trade functionality for ease of use; 51 percent cited data synchronization as a major issue; and 67 percent said that finding time to evaluate systems was a major problem. With expenditures expected to exceed $11 billion in 2010, enterprises need to address and overcome persistent adoption challenges. The amount of time needed for the development and implementation of a customer relationship management system can prove costly to the implementation as well. Research indicates that implementation timelines that are greater than 90 days in length run an increased risk in the CRM system failing to yield successful results Rules For Good Customer Service Good customer service is the lifeblood of any business. Good customer service is all about bringing customers back. And about sending them away happy - happy enough to pass positive feedback about your business along to others, who may then try the product or service you offer for themselves and in their turn become repeat customers. 1) Answer your phone. Get call forwarding. Or an answering service.Hire staff if you need to. But make sure that someone is picking up the phone when someone calls your business. (Notice I say "someone". People who call want to talk to a live person, not a fake "recorded robot".) For more on answering the phone, see Phone Answering Tips to Win Business. 2) Don't make promises unless you will keep them. Not plan to keep them. Will keep them. Reliability is one of the keys to any good relationship, and good customer service is no exception. If you say, Your new bedroom furniture will be delivered

141 on Tuesday, make sure it is delivered on Tuesday. Otherwise, don't say it. The same rule applies to client appointments, deadlines, etc.. Think before you give any promise - because nothing annoys customers more than a broken one. 3) Listen to your customers. Is there anything more exasperating than telling someone what you want or what your problem is and then discovering that that person hasn't been paying attention and needs to have it explained again? From a customer's point of view, I doubt it. Can the sales pitches and the product babble. Let your customer talk and show him that you are listening by making the appropriate responses, such as suggesting how to solve the problem. 4) Deal with complaints. No one likes hearing complaints, and many of us have developed a reflex shrug, saying, "You can't please all the people all the time". Maybe not, but if you give the complaint your attention, you may be able to please this one person this one time - and position your business to reap the benefits of good customer service. 5) Be helpful - even if there's no immediate profit in it. The other day I popped into a local watch shop because I had lost the small piece that clips the pieces of my watch band together. When I explained the problem, the proprietor said that he thought he might have one lying around. He found it, attached it to my watch band and charged me nothing! Where do you think I'll go when I need a new watch band or even a new watch? And how many people do you think I've told this story to? CONCLUSION: Every one has his or her own stories about poor customer service and emails sent to companies without hearing a response. Despite several years of experience, Web-based companies still did not fulfill many Christmas orders in 2000 and customers continue to have difficulties returning unwanted or defective products. We can expect that the technologies and methodologies employed to implement the steps shown in Exhibit 1 will improve as they usually do. More companies are recognizing the importance of creating databases and getting creative at capturing customer information. Real-time analyses of customer behavior on the Web for better customer selection and targeting is already here (e.g., Net Perceptions) which permits companies to anticipate what customers are likely to buy. Companies will learn how to develop better communities around their brands giving customers more incentives to identify themselves with those brands and exhibit higher levels of loyalty. One way that some companies are developing an improved focus on CRM is through the establishment or consideration of splitting the marketing manager job into two parts: one for acquisition and one for retention. The kinds of skills that are need for the two tasks are quite different. People skilled in acquisition have experience in the usual tactical aspects of marketing: advertising, sales, etc. However, the skills for retention can be quite different as the job requires a better understanding of the underpinnings of satisfaction and loyalty for the particular product category. In addition, time being a critical scarce resource makes it difficult to do an excellent job on both acquisition and retention. As a result, some companies have appointed a chief customer officer (CCO) whose job focuses only on customer interactions. REFERENCES Gruen, T. W. (1997), Relationship Marketing : The Route to Marketing Efficiency and Effectiveness, Business Horizons, November December, pp. 32-38. Berry, L. L. (1983), Relationship Marketing of Services : Growing Interest, Emerging Perspectives, Journal of the Academy of Marketing Science, Vol. 23, No. 4, pp. 236-245. Parasuraman, A., Zeithaml, V. A., and Berry, L. (1985), "A Conceptual Model of Service Quality and its Implications for Future Research," Journal of Marketing, Fall, pp. 41-50.

142 Payne, A. (2000), Relationship Marketing : The UK Perspective, in Sheth, J. N. and Parvatiyar, A. (eds.) Handbook on Relationship Marketing, Sage Publications, Inc.: New Delhi,pp. 39-68. Reichheld, F. F. and Sasser, W. E. (1990), 'Zero Defections : Quality Comes to Services',Harvard Business Review, September October, pp. 105-111. Sheth, J. N. (1998, June), Creating Value through Relationship Marketing: A New Business Model, Paper presented at the 1998 Conference on Relationship Marketing: Creating Partnerships that Enrich Customer Value and Boost Marketing Productivity, Atlanta, GA. Sheth, J. N. and Parvatiyar, A. (1995) Relationship Marketing in Consumer Markets:

143

BUILDING SUCCESSFUL INDIAN RETAIL BRANDS


Dr.R.Karuppasamy, Director- SNS College of Engineering, Coimbatore Mr.N.Ramesh Kumar MBA., (Ph.D), Research Scholar, Asst. Professor, Nehru College of Management, Coimbatore. ABSTRACT Purchasing power of Indian urban consumer is growing and branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling brands. The focus should be on branding the retail business itself. 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. Building Successful Indian Retail Brands The Global Retail Scenario Large format retail businesses dominate the retail landscape in the United States and across Europe, in terms of retail space, categories, range, brands, and volumes. Indian retail industry cannot hope to learn much by merely looking at the Western success stories in retail. Their scales of operations are very huge, the profit margins that they earn are also much higher and they operate in multiple formats like discount stores, warehouses, supermarkets, departmental stores, hyper-markets, convenience stores and specialty stores.. The economy and lifestyle of the West is not in line with that of India and hence the retailing scene in India has not evolved in the same format as the West nor can we learn valuable lessons from their style of operations. Geographic saturation The end of the nineties has signified a turning tide of retailer power. The limit to retail ambition is geographic saturation. There is already a fear that the U.S is over-malled, that available shopping space exceeds customer demand for products. The retailer logic that if we build new stores they will come, is being belied. Many retailers have started postponing their store expansion plans. The track record of some of their international store expansions is also not promising. Category killer competition The threat of saturation is accompanied by a new competition from the low cost category killers. Specialist competition is eating away at the market share and forcing down the prices and gross margins of the multiple chains. The success of the giant killers in the toys segment Toys R Us and in home furnishings Home Depot, in the are a case in point. Alternative shopping channels. The newest retail format that is showing growth in the U.S., and is more frightening for retailers than for consumers, is the Internet. The potential for on-line shopping which is growing in the U.S. questions retailers investments in more physical sites and stores and makes it imperative that they too explore the new agenda of E-retailing or e-tailing. The Indian Retail Scene India is the country having the most unorganized retail market. Traditionally it is a familys livelihood, with their shop in the front and house at the back, while they run the retail business. More than 99% retailers function in less than 500 square feet of shopping space. Global retail consultants KSA Technopak have estimated that organized retailing in India is expected to touch Rs 35,000 crore in the year 2005-06. The Indian retail sector is estimated at around Rs 900,000 crore, of which the

144 organized sector accounts for a mere 2 per cent indicating a huge potential market opportunity that is lying in the waiting for the consumer-savvy organized retailer. What are the fundamental characteristics of a brand? While a myriad of characteristics have been catalogued by several researchers on this subject, five characteristics deserve mention: (1) Recognizability: A true brand is instantly recognized and identified. The brand name passes into every day use (Nikes Just do it) or becomes satirized (Dont be such a Duracell) or appropriated (Make a Xerox of this document). Indian retailers like Shoppers Stop, the RPG Groups Food World and Music World have already earned national recognition. Subiksha in Tamilnadu and Margin Free supermarkets in Kerala are household names in the two states. (2) Meaning, story, value: This is the second characteristic of a brand. The brand must have a value proposition. It must stand for something and one of the most effective ways is to have a story to transmit those values. Examples abound of effective leaderships that have helped to build corporate brand values in other sectors, but few retailers have succeeded in building a story to carry brand meaning. When they do so, their power will increase. (3) Legitimacy: The meaning of the brand should be obviously appropriated by the target customer group. Legitimacy rests on authority, earned by the brand and granted by the customers. Lessons can be learned from social organizations like Greenpeace, Medicins sans frontiers, CRY and Helpage India. In this case, legitimacy rests on moral authority. In retail businesses it may rest on an emotional authority (a unique shopping experience, a store filled with warmth and friendliness.) (4) Consistency, alignment: A brand story should contain no internal contradictions and should be appear to be consistent over time. It should be applicable across the business and attempt at total brand integration. (5) Proximity: The brand building process should culminate with assuring the brands proximity to the consumer. The brands definition gets expanded by opening stores in a number of locations to make it convenient to the consumer. Motivating the staff to volunteer value: The quality of in-store service is a key factor inDifferentiating the retailer and winning a higher share of customer spend. In one survey, shoppers were asked, would they ask for the same salesperson on their next purchase visit; the yes respondents were found to more likely give the store a 8-10 rating. On theother hand, shoppers unhappy with the salesperson gave the store a very low performanceon overall service and performance. Staff must be trained and motivated to recognize their best customers and to offer them superior service. Successful retailing has always been said to be, about getting the nitty-gritty right of merchandising, forecasting, the supply chain, training and recruitment of high quality personnel and category management. Building retail brands that offer value will, in future, overshadow all these areas, and emerge as the dominant reason for the success of the organized Indian retailer. Indian retailers should also understand that the retail experience has become a popular leisure activity and they are vulnerable to any new competition for customers entertainment. Indian retailers must build their brands with images that seek to entertain and involve their customers. It is the quality and value of theretail brands that they have sought to establish that will determine the loyalty of the retailshopper in future.

145

AN EMPIRICAL ANALYSIS ON FACTOR INFLUENCING THE PURCHASE BEHAVIOUR OF BEVERAGE PRODUCTS BY THE CONSUMERS IN SALEM DT.
P.Arun, Research Scholar, BSMED, Bharathiar university, Coimbatore, Tamilnadu, India ABSTRACT In Tamil nadu purchase pattern of consumer is differed largely depend upon there income level, educational background & cultural background. Many new companies are lunching new products & also well established companies like HUL, ITC companies are also established themselves by lunching new beverage products to capture consumers. The main reason behind is changing consumers behaviour. Economically consumers are influenced largely especially in Tamilnadu. Since if we compare the income level of consumers & price of the beverage products the income level of consumer is constant but price is increasing largely day by day. Due to economic circumstances consumer are also like to purchase products with some offer & discounts etc. Present study helps to get clear picture of purchase pattern of consumers. INTRODUCTION In Tamil nadu purchase pattern of consumer is differed largely depend upon there income level, educational background & cultural background. Many new companies are lunching new products & also well established companies like HUL, ITC companies are also established themselves by lunching new beverage products to capture consumers. The main reason behind is changing consumers behaviour. Economically consumers are influenced largely especially in Tamilnadu. Since if we compare the income level of consumers & price of the beverage products the income level of consumer is constant but price is increasing largely day by day. Due to economic circumstances consumer are also like to purchase products with some offer & discounts etc.Present study helps to get clear picture of purchase pattern of consumers. SCOPE OF STUDY The present study is confined to Salem dt and the following familiar brands have been selected such as Horlicks, Boost, Complane and Bournvita by considering their market share. It is an empirical study which is primarily concerned with factor influence of beverage product consumers. This study also extends to analyze the purchase preference of beverage product consumers and the problems faced by consumers of beverage products. OBJECTIVES OF STUDY 1.To find out factors determining the purchase behaviour of beverage products 2.To measure the significant of demographic variables on shopping behaviour of consumers HYPOTHESIS OF STUDY Hypothesis 1 H0: There is no significant difference between advertisement conscious and influence of Various factors on buyers. Ha: There is a significant difference between advertisement conscious and influence of Various factors on buyers. Hypothesis 2 H0: There is no significant difference between Loyalty conscious and influence of Various factors on buyers. Ha: There is a significant difference between Loyalty conscious influence of Various factors on buyers.

146 Hypothesis 3 H0: There is no significant difference between price conscious and influence of Various factors on buyers. Ha: There is a significant difference between price conscious influence of Various factors on buyers. Hypothesis 4 H0: There is no significant difference between Advice conscious and influence of Various factors on buyers. Ha: There is a significant difference between advice conscious influence of Various factors on buyers. METHODOLOGY OF STUDY Choice of Statistical Analysis Techniques: Factor Analysis: The various variables that denote the product attributes that determine the purchasing decision can be actually factored using factor analysis. This factoring of the variables helps in easily studying the consumer behaviour. Multidiscriminant function analysis: Sources of Information influencing the Purchase Decision a) Advertisement b) Children advice c) Doctor advice d) Retailer face value e) Service quality f) Price AREA AND PERIOD OF THE STUDY The area of the study is confined to Salem District The study was undertaken during the month of June-July 2011 RESEARCH DESIGN Secondary data-Websites, journals, textbook have been studies Primary data-A questionnaire is developed to collect the respondence of consumer Data collection tools Tool which is used for collecting the data are internet, previous journals, books etc Sample design I have chosen sample size of 106 respondence Type of questions Closed end questions are used.5 point scaling technique questions were asked. STATISTICAL TOOLS APPLIED The primary data collected through interview schedule from 104. The statistical tools such as Factor analysis, multi-discriminate function analyses were used which are appropriate to this study. DATA ANALYSIS AND INTERPRETATION Out of 106 respondent 58% are male respondents, female respondents are about 42%. As for as marital status of respondent 19.88% of respondents are single, 79.25% of respondents are married, 0.94% of respondents are widow. As for as Education status of respondent 03.78% of respondents are Doctoral, 51.89% of respondents are post graduate,21.69% of respondents are graduate,11.33% are high school,8.49 are elementary school. As for as occupation of respondents 61.33 % are professional, 04.71% are Worker 30.18% are business person, 0.94% are retired staff,2.83% are hose wife

147 Table demonstrated the summary of sample demographics Demographic Profile of Respondents (n=106) ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ Item number percentage ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ Gender Male 61 58 Female 45 42 Marital status Single 21 19.88 Married 84 79.25 Widow 01 0.94 Educational status Elementary school 09 8.49 High school 12 11.33 Graduate 23 21.69 Post graduate 55 51.89 Doctoral degree 04 03.78 Occupation Professional 65 61.33 Worker 05 04.71 Business 32 30.18 Retired staff 01 0.94 House wife 03 2.83 Place Salem 25 23.59 Omalur 01 0.94 Mecheri 10 09.44 Mettur dam 33 31.33 Kolatur 37 34.91 FACTOR ANALYSIS All 14 items of the questionnaire were factor analysed using principle component extraction with an orthogonal (Varimax) rotation. The number of factors was unconstrained. For the sake of convergent validity, 0.50 was used as a factor loading cut-off point. The factor matrix is a matrix of loading and correlations between the variable and factors. Pure variables have loading of 0.5 and greater or only one factor. Complex variables may have high loading on more than one factor and they make the interpretation of the output difficulty. The researcher rotated the components two times to get the significant variables under four factors. Table no. 1 shows the reliability statistics and proves the data could support 78.6 percentage reliable to do this analysis. Table no. 2 indicates that the Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy in the study is 0.717. This is good result, as it exceeds 0.5 Bartletts Test of Sphericity which is 0.000, meaning that factors that form the variables are adequate.

148 Table 1 REALIABILITY STATISTICS Cronbach's N of Alpha Items 0.786 14 Table 2 KMO and Bartletts Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square Df Sig. .717 430.491 91 .000

TOTAL VARIANCE EXPLAINED Table 3 depicts the total variance explained. Total variance is explained with rotation, the Eigen values are different for factor 1,2,3 & 4. The eigen values for factor 1,2,3 & 4 are 2.531, 2.357, 1.876 and 1.725. Percentage of variance for factors 1,2,3 & 4 are 18077, 16.836, 13.397 and 12.320 respectively. It indicates that four factors extract from 14 factors have cumulative percentage up to 60.630% of the total variance. This is pretty good bargain, because the researcher were able to economize on the number of variables. (From 14 statements, the statements were reduced into 4 underlying factors). Table 3 TOTAL VARIANCE EXPLAINED Initial Eigenvalues Extraction Sums of Rotation Sums of Squared Squared Loadings Loadings Comp Tot % of Cumulati Tot % of Cumulati Tot % of Cumulati o-nent al Varian ve % al Varian ve % al Varian ve % ce ce ce 1 3.88 27.779 27.779 3.88 27.779 27.779 2.53 18.077 18.077 9 9 1 2 1.88 13.442 41.221 1.88 13.442 41.221 2.35 16.836 34.913 2 2 7 3 1.53 10.942 52.163 1.53 10.942 52.163 1.87 13.397 48.310 2 2 6 4 1.18 8.467 60.630 1.18 8.467 60.630 1.72 12.320 60.630 5 5 5 5 .939 6.709 67.339 6 7 8 9 10 11 12 13 14 .806 .756 .647 .573 .502 .439 .361 .302 .187 5.755 5.400 4.620 4.094 3.588 3.137 2.576 2.158 1.333 73.094 78.494 83.114 87.208 90.795 93.933 96.509 98.667 100.000

149 Rotated Component Matrix The rotated component matrix is discussed in the following table. After a factor solution has been obtained, in which all variables have a significant loading on a factor, the researchers attempted to assign some meaning to the pattern of factor loadings. Variables with higher loadings are considered more important and have greater influence on the name or label selected to represent a factor. Researchers examined all the underlined variables for a particular factor and placed greater emphasis on those variables with higher loadings to assign a name or label to a factor that accurately reflected the variables loading on that factor. The names or labels are not derived or assigned by the factor analysis computer programme; rather, the label is intuitively developed by the factor analyst based on its appropriateness for representing the underlying dimension of a particular factor. All four factors have given appropriate names on the basis of the variable represented in each case. Table 4 Rotated Component Matrix Component No. Factors Advertisement Loyalty Price Advice conscious conscious conscious conscious 1 Advertisement .581 2 3 4 5 6 7 8 9 10 11 12 13 14 Children advice Doctors advice Retailer face value Packaging Brand Image Economy Promotion Service quality Offer Discount Refund Rebate Price .551 .695 .871 .782 .674 .570 .797 .744 .507 .718 -.582 .706 .739

The above table shows the rotated component matrix, in which the extracted factors are assigning a new naming related together. a). Factor one is the most important factor which explained 18.077% of the variation. The factors as advertisement (0.581), Promotion (0.570), offer (0.871), Discount (0.782) and Rebate (0.551) are highly correlated with each other. These statements reflect advertisement consciousness of customers using beverage products buying, hence, the researcher names this segment as advertisement consciousness of customers b). The second kind of factor explained 18.836% of the variances. In this segment, the researchers took the four important variables such as Packaging (0.744), Brand image (0.507), Service quality (0.797) and Refund (0.674). These statements reflected consciousness to brand loyalty on the part of the buyer i.e., the researcher names these variable as buyers who were conscious about brand loyalty.

150 c). This factor explained 13.397% of the variations. The statements are Retailer face value (0.582), Economy (0.718) and Price (0.695). These statements show the price consciousness on the part of beverage buyers. Hence, the researchers name this segment as Price conscious Customers. d). The factor explained 12.320% of the variations. The extracted statements are Children advice (0.706), and Doctors advice (0.739) and these statements indicates that the advice consciousness on the part of beverage buyers. Hence, the researcher name this segment as Advice conscious. SUMMARY OF FINDINGS First type of customers were names as advertisement, who were enjoying at the shopping because they thing they advertisement products are having good quality at the shopping place. Second kind of buyers has been names as brand loyalty. These customers feel that they buy the good brand image products at the shopping place. This group also believes that they find items are having good quality at that shopping place. The third category of customers, named as Price conscious customers, feel that products are cheaper than traditional outlets. These consumers do not buy costly products. Finally the fourth category of customers, named as advice conscious customers, feel that they buy the products with related to children expectation and their doctors advice and hence they do buy products with getting opinion from their children and doctor. SUGGESTION: Price is the key factor which affects the consumers so reduction in prices will affect consumers in purchase pattern with respect to beverage products Company & whole sellers should not hide any ting from consumers reg products details, promotion factors etc I helps to increase th perception of consumers LIMITATIONS AND FUTURE RESEARCH This study is conducted in Salem dt only. The sample size is 106.Due to time constrains the sample size restricted to 106 Future research may consider using multiple samples in different places in order to have a better representation of the huge population of Salem dt. CONCLUSION The present study divided beverage product buyers into four categories. First type of customers were names as advertisement, who were enjoying at the shopping because they thing they advertisement products are having good quality at the shopping place. Second kind of buyers has been names as brand loyalty. These customers feel that they buy the good brand image products at the shopping place. This group also believes that they find items are having good quality at that shopping place. The third category of customers, named as Price conscious customers, feel that products are cheaper than traditional outlets. These consumers do not buy costly products. Finally the fourth category of customers, named as advice conscious customers, feel that they buy the products with related to children expectation and their doctors advice and hence they do buy products with getting opinion from their children and doctor. This study helps that the factors such as advertisement, brand loyalty. Price Retailer face value, children, doctors, discount highly influence the consumers as for as beverage purchase pattern of consumers. So it conclude that consumers influenced by various factors at the time of purchasing beverage product REFERENCES nd Dibb S., Simkin L., Pride W.M., Ferrell O.C. (1994): Marketing: Concepts and Strategies. 2 Edition, Houghton Mifflin Co., Boston; ISBN 0-395-66928-6. Foret M. (2003): Marketingov komunikace (Marketing Communication). Computer Press, Brno; ISBN 80-7226-811-2.

151 Sheth J.N.. Mittal B., Newman B.I. (1999): Customer Behavior Consumer Behavior and Beyond. Harcourt Brace College Publishers: The Dryden Press; ISBN 0- 03-098016. SHOPPING MONITOR. INCOMA (19992002). Research and GfK Prague, CD-ROM. Statistical Yearbook of the Czech Republic 2004 (2004). Praha; ISBN 80-250-1080-5. Kotler, Philip (2005) "Marketing Management", Pearson Education (Eleventh Edition). Day, G.S. (1969). A Two-Dimensional Concept of Brand Loyalty, Journal of Consumer Research 2, 4, 241-258. Richard I. Levin, David S Rubin(1997). "Statistics for Management", Prentice Hall of India(seventh edition)

152

FORECASTING IN FASHION MARKETING


Dr.R.Karpagam Associate Professor Professional School of Management Palladam Mr.A.Mohammed Yasser Arafath Ph.D Scholar Dr.NGP Institute of Management Coimbatore INTRODUCTION Fashion Is a general term for currently popular style or practice, especially in clothing, foot wear or accessories is called as Fashion. Fashion is complex phenomenon from psychological, sociological, cultural or commercial point of view. Fashion trends are the styling ideas that major collections have in common. They indicate the direction in which the fashion is moving. Fashion forecasters look for styles they think are prophetic, ideas that capture the mood of the times and signal a new fashion trend. Fashion Marketing The making & selling of apparel and accessories those are desirable to consumers is called as fashion marketing. And a person who does that is called as a Fashion Marketer. A Fashion marketer generates interest in new styles and products, connecting the public with the world of fashion there by ultimately promoting fashion. They also analyse and implement sales strategies, perform inventory control &cost analysis, and stay mindful of profits & losses. Their core strength is being creative and innovative; being a fashion marketer one should recognise good clothing when they see it & they should have the ability to sell the same to the public. Marketing management requires a great deal of fashion sway. Understanding trend cycles, the ability to read numbers, create projection and possessing an affinity with the targeted consumers are basic requirements. Fashion Merchandising The process of planning, buying and selling of apparel and accessories and its related products is called as Fashion Merchandising. Fashion marketers responsibility Attending fashion show and visiting designer outlets Merchandising & Warehousing. Visual merchandising Pricing clothes Coming up with proper and unique ad campaigns and promotions Consulting with fashion designers & consumers. Keeping tabs on profits & losses. Hiring & training new employees. Price rise in the fabric and other items used in production Transportation issues Local Culture and traditions Quality of designers employed etc... Factors Affecting Fashion Marketing Financial factors.(Recession.etc) Current Trend in the movie industry Competition from other firms

153 The direction of fashion change Observation is not enough. If the trend watcher is to take advantage, he needs a framework for explaining how the trend began and its likely path within a social system. The directional theories of fashion change trickle down trickle up and trickle across to make prediction easier by pointing to the likely starting points for a fashion trend, the expected direction that trend will take and how long the trend will last. Some trend watchers visualize the dynamics of fashion as a pyramid of status level. In some theories, fashion trickles down from highly visible elite. In others, fashion trickles up from Street once it is discovered by fashion elite introduced to mainstream audiences in an edited version. If a fashion look is promoted by the media and manufactured rapidly enough, the look can trickle across all levels of the market simultaneously for denim, introduction of an unusual colour range, a modification in a silhouette or detail, a different way to wear an accessory or a mood expressed in a distinctive style. The pattern of acceptance (or rejection) can be mapped in time Fashion responds to whatever is modern i.e., to the spirit of the times or the Zeitgeist .People chooses among competing styles, those that click or connect with the spirit of the times. This collective selection forms a feedback loop between the fashion industry and the consumer, a feedback loop moderated by aesthetic trends and social psychological processes. THE FASHION FORECASTING PROCESS a) Trend forecasting businesses French companies based in Paris have traditionally dominated fashion forecasting. Although a number of larger ones are still based in Paris, many with satellite offices around the world, a number of new niche forecasters have emerged offering their own specialities of product and services. Some better known trend forecasters include: f) Sales forecasting Forecasting is relatively easy, straightforward and accurate for products with long lifetime and steady sales. However, the fashion apparel business is one of the most volatile, because it creates products that are new, highly seasonal or have short lifetimes. In such situations forecasters become increasingly inaccurate. Errors in sales forecasting result in two kinds of losses: Markdown when retailers have unwanted goods remaining at the end of a selling period, such goods then must be sold, even at a loss. Stock outs - merchandise not available in stock at the time when customers request it. g) Cultural indicators In the apparel field, companies need an early system so that specific product categories can be fine tuned to trends within a market segment. While timing is important, an agile and responsive company will be able to capitalize on trends whenever the are spotted; sometimes just a glimmer far in the future and sometimes as a phenomenon in the building stage. Waning trends are another signal. h) Final stage of forecasting The fashion look for the season is therefore the result of a process of developments that combines the evolved views of textiles and products trade show, forecasters, designers, buyers and ready to wear shows. Like collage, the final picture emerges after various layers have come together. The media coverage of the shows is another important dimension in the trend development process, as it highlights fashion trends that fashion editors believe will be strong for the forth coming season. Such authoritative coverage of the media focusing attention on aspects of fashion, including the must have looks, colours and products influences the consumers acceptance of hot trends for a season.

154 CONCLUSION The extensive scale of globalization and liberalization pose a great impact on the Indian fashion industry. Indian exports from the west have also made it easier for Indians to keep a track on the latest fashion clothes and accessories ruling the western men and womens wear market. Thus Indian consumer is evolving and driving retail growth in India and companies in the fashion industry are reacting to this evolution through myriad options. The fashion market in India is witnessing strong growth owing to a young population, an increase in disposable incomes, which are leading to an increase in consumption. It has already strongly established itself in the developed countries especially Europe. Thus potential fashion marketers in developing countries have an untapped market ready to be consumed by the risk taking adventurous youngsters trying to prove themselves to their international counterparts.

155

EMERGING GREEN MARKETING TRENDS


Mrs.C.Indhumathi, Assistant Professor and Ph.D Research Scholar, Department of Commerce, Karpagam University, Coimbatore 21. Dr.P.Palanivelu, Professor, School of Commerce and Management, Karpagam University,Coimbatore21 INTRODUCTION 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 itself 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. 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. Need for 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. Benefits of Green Marketing Companies that develop new and improved products and services with environment inputs in mind give themselves access to new markets, increase their profit sustainability, and enjoy a competitive advantage over the companies which are not concerned for the environment. Adoption of Green Marketing There are basically five reasons for which a marketer should go for the adoption of green marketing. They are Opportunities or competitive advantage Corporate social responsibilities (CSR) Government pressure Competitive pressure Cost or profit issues

156 PRESENT TRENDS IN GREEN MARKETING IN INDIA Organizations are Perceive Environmental marketing as an Opportunity to achieve its objectives. Firms have realized that consumers prefer products that do not harm the natural environment as also the human health. Firms marketing such green products are preferred over the others not doing so and thus develop a competitive advantage, simultaneously meeting their business objectives. Organizations believe they have a moral obligation to be more socially responsible. This is in keeping with the philosophy of CSR which has been successfully adopted by many business houses to improve their corporate image. Firms in this situation can take two approaches: Use the fact that they are environmentally responsible as a marketing tool. Become responsible without prompting this fact. Governmental Bodies are forcing Firms to Become More Responsible. In most cases the government forces the firm to adopt policy which protects the interests of the consumers. It does so in following ways: Reduce production of harmful goods or by products Modify consumer and industry's use and /or consumption of harmful goods; Ensure that all types of consumers have the ability to evaluate the environmental composition of goods. Competitors' Environmental Activities Pressure Firms to change their Environmental Marketing Activities. In order to get even with competitors claim to being environmentally friendly, firms change over to green marketing. Result is green marketing percolates entire industry. Cost Factors Associated With Waste Disposal or Reductions in Material Usage Forces Firms to Modify their Behavior. With cost cutting becoming part of the strategy of the firms it adopts green marketing in relation to these activities. THE FUTURE OF GREEN MARKETING There are many lessons to be learned to be learned to avoid green marketing myopia, the short version of all this is that effective green marketing requires applying good marketing principles to make green products desirable for consumers. The question that remains, however, is, what is green marketing's future? Business scholars have viewed it as a fringe topic, given that environmentalism's acceptance of limits and conservation does not mesh well with marketing's traditional axioms of give customer what they want and sell as much as you can. Evidence indicates that successful green products have avoided green marketing myopia by Following three important principles. Consumer value positioning Calibration of consumer knowledge Credibility of product claim CONCLUSION Now this is the right time to select Green Marketing globally. It will come with drastic change in the world of business if all nations will make strict roles because green marketing is essential to save world from pollution. From the business point of view because a clever marketer is one who not only convinces the consumer, but also involves the consumer in marketing his product. Green marketing should not be considered as just one more approach to marketing, but has to be pursued with much greater vigor, as it has an environmental and social dimension to it. 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. 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. Finally, 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.

157

ROLE OF ADVERTISING IN AUTOMOBILE BRAND SELECTION


N.Krishnaveni MBA., Research Scholar Mother Teresa Womens University, Kodaikanal. INTRODUCTION The essence of being in business by any organization is to produce for sales and profits. In order to remain in business an organization must generate enough sales from its products to cover operating costs and post reasonable profits. Taking a decision on sales is the most difficult tasks facing many business executives. This is because it is difficulty to predict, estimate or determine with accuracy, potential customers demands as they are uncontrollable factors external to an organization. Therefore the importance of sales on business survival and the connection between customers and sales, it is expedient for organizations to engage in programmes that can influence consumers decision to purchase its products. This is where advertising and brand management are relevant. Advertising is a subset of promotion mix which is one of the 4ps in marketing mix i.e product, price, place and promotion. As a promotional mix advertising plays a major tool in creating an awareness in the minds of potential consumer to a eventual decision. Definition of advertising Today advertising has become an integral part of our social and economic structures. An increasing number of companies are spending millions of dollars on advertising in India every year. Advertising is defined as The dissemination of information concerning an idea, service or product to compel action in accordance with the intent of advertiser. American Marketing association defines advertising as any paid form of non-personal presentation of ideas, goods or service by an identified sponsor. Definition of Brand Selection The American Marketing Association defines a brand as a "name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name." The Brand selection is the process of selecting one brand from a set of alternative brands available. Introduction of Brand Selection Consumers buy the brands that seek to separate them from the crowd, by signifying wealth and status. These can justifiably be called very important brand .In todays materialistic society you are what you buy. If someone buys a BMW or uses a Louis Vuittons product or checks time using a Rolex he is trying to distinguish himself from the Ford driving. It is through brands that consumers seek attention from their peers and friends to satisfy their egos. Therefore, brands act as risk reducing devices and have become a way of life and expression. A brand becomes immortal because of its longterm association with the consumers and the emotional appeal it reflects in terms of style, status, and personality of the targeted consumers. Introduction about automobile industry Almost every sector is eying India as a potential investing hub, and automobile sector is no exception. Besides being still a developing country, it shouldnt be a surprising fact that Indian ranks world number 3 in terms of the number of millionaires. This era of development in India has been at its best, despite recession, strong fundamentals of Indian economy have managed to post a decent GDP growth last year. Increase in disposable income of the people has led to a different lifestyle. Now, the mindset of Indian consumer is a lot different. Previously, Indian consumers used to check the prices of everything they bought. Now, the consumer looks at the experience of the company during the buying process. More than price, Quality matters. This paradigm shift has also changed the way companies look at India. Slowly and steadily the luxury car market which was in a very nascent condition in India, is now counting on big revenues from the countrys customers.

158 The Indian automobile industry seems to come a long way since the first car that was manufactured in Mumbai in 1898. The automobile sector today is one of the key sectors of the country contributing majorly to the economy of India. It directly and indirectly provides employment to over 10 million people in the country. The Indian automobile industry has a well established name globally being the second largest two wheeler market in the world, fourth largest commercial vehicle market in the world, and eleventh largest passenger car market in the world and expected to become the third largest automobile market in the world only behind USA and China With a scintillating 2.3 million units produced in 2008 the Indian automobile industry bagged the position of being the ninth largest in the world. Following economic liberalization, Indian domestic automobile companies like Tata Motors Maruti Suzuki and Mahindra and Mahindra expanded their production and export operations in and across the country and since then the industry has only shown signs of growth. A recent research conducted by the global consultancy firm Deloitte says that at least one Indian automobile company will feature among the top six automobile companies that will dominate the car market by 2020. The Indian automobile industry proved to be in good shape last year even after the economic downturn. This was majorly due to the fact of renewed interest shown by global automobile players like Nissan Motors which consider India to be a potential market. INDIAN AUTOMOBILE EXPORT MARKET India is a very favorable market for small cars be it production, sales or export. Since the Indian automobile industry is the largest manufacturer of small cars companies like Hyundai and Nissan Motors export about 2, 40,000 and 2, 50,000 annually. India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The Indian automobile exports registered a 22.30 percent growth in the year 2009. The growth trend was as follows: - Two Wheelers- 32.31 percent, - Commercial Vehicle - 19.10 percent and - Passenger Cars grew by - 19.10 percent. Increase in disposable income of the people has led to a different lifestyle. Now, the mindset of Indian consumer is a lot different. Previously, Indian consumers used to check the prices of everything they bought. Now, the consumer looks at the experience of the company during the buying process. More than price, Quality matters. This paradigm shift has also changed the way companies look at India. Slowly and steadily the luxury car market which was in a very nascent condition in India, is now counting on big revenues from the countrys customers. 2011-12 growth over SEGMENTS 2010-11 (per cent) Passenger cars 16-18% Utility vehicles 12-14% LCV (goods) 18-21% MHCV (goods) 10-12% Commercial vehicles (buses) 8-10% Motorcycles 11-13% Scooters 15-17% Three wheelers (Cargo) 4-6% Three wheelers (passengers) 10-12% Automobile Industry 12-15%

159 Role of Advertising The advertiser primary mission is to reach prospective customers and influence their awareness, attitudes and buying behaviour. They spend a lot of money to keep individual interested in their product. There are different media available for advertising like print media, broadcast media, out door media, internet etc. Each of them has its own advantages and disadvantages. Advertising is an allpervasive facet of most growing communities. It has important consequences for the advertisers who use it and for individuals who are exposed to it. 1. Communication with consumers

Advertising is a major way of establishing communication between manufacturer and other organization providing services or trying to put ideas and other concepts on the one hand and customers, buyers and potential acceptors, on the other. Advertising is a reminder to the existing consumers and it aims at cultivating new prospects as well. Advertising communicates the modification in the existing product. Now we can the new Maruti Swift with different body style, through advertising its is communicated to the consumers. 2. Persuasion

It attempts to persuade prospective buyers to buy a product/service. In modern markets, the producer who is content with advertising that merely identifies or informs may soon find himself in a vulnerable position. 3. Contribution to Economic growth

It helps to expand the market, particularly for a new product, and helping to develop new market segments. A company which invests in research and development in order to develop new product has to depend a great deal on advertising for establishing the market for these product. 4. Catalyst for change

Creativity inherent in advertising leads to the discovery of new relationship that can change the perception of a prospect. Two aspects are of special significance: the originality of the message communicated, and the eventual effect on consumers standards of living. The ability to bring about changes comes from originality, ingenuity, innovation and imagination in advertising. This may be seen in promoting new product and ideas, as well as in the upgrading of products/ brands used by consumers. The contribution of advertising in bringing about a change of special relevance to developing countries CONCLUSION: The advertising message must be strong and appealing enough to persuade and build brand preferences, encourage switching to the companys brand by changing the perception of the consumers of rival brands the product. Comparative advertising, a variant of persuasive advertising, could be useful in this regard as it seeks to establish the superiority of one brand through specific comparison with one or more brands in their product class. The shift in media habits and the importance of technology has enhanced the role of advertising. To, succeed, they need to understand what makes potential customers behave the way they do.

160

GLOBAL PRACTICES IN INDIAN BANKING INDUSTRY


L.Meena, Assistant Professor, Department of Management Studies, Fatima College (Autonomous), Madurai Introduction The Indian Banking sector is rapidly globalizing, making it important for Indian Banks to ensure their practices match with those of the best banks in the world. Indias banking sector is growing rapidly and is expected to enjoy even greater growth opportunities in the future. Several Indian banks are pursuing global strategies, as Indian companies globalize and people of Indian origin increase their investment in India. At the same time, a large number of global banks have stepped up their focus on India, keen to participate in the sectors growth. Today, the question often asked is: how competitive are Indian banks and how do the practices at work in these banks compare against global best practices. Overview of Indian Banking Modern banking in India can be traced back to the establishment of Bank of Bengal (Jan 1809), the first joint-stock bank sponsored by the Government of Bengal and governed by the royal charter of the British India government. Bank of Bombay (Apr 1840) and Bank of Madras (Jul 1843) were the banks that followed. These three banks, known as the Presidency Banks, marked the beginning of the limited liability, joint stock banking in India and were vested with the right of note issue. Following the introduction of the limited liability banking, a few more banks were established, the notable ones being The Allahabad Bank and The Punjab National Bank. The Swadeshi movement that began in the early 1890s gave rise to establishment of indigenous joint stock banking companies such as The Bank of India, The Bank of Baroda, and The Central Bank of India etc. In Jan 1921, the three Presidency Banks were merged to form the Imperial Bank of India, which had multiple roles and responsibilities and that functioned as a commercial bank, a banker to the government and a bankers bank. Following the establishment of Reserve Bank of India in 1935, the central banking responsibilities that the Imperial Bank of India was carrying out came to an end, making it a commercial bank. At the time of Independence, the capital and reserves of the Imperial Bank stood at Rs.118 million, deposits at Rs.2,751 million and advances at Rs.723 million and, while its network included 172 branches and 200 sub-offices spread all over the country. Banking at that time was predominantly based in urban areas. Following the nationalisation of major banks in 1969 and 1980, the banking network spread significantly, particularly in the rural and semi-urban areas to pursue social banking activities primarily aimed at enhancing the well-being of economically disadvantaged sections. Economic reforms followed by the banking sector reforms of 1991 changed the Indian banks functioning, making them more stable and stronger. Structure of Indian Banking (March ended)
Structure of Indian Banking 2002 2003 2004 2005 2006 2007

Number of Commercial banks a. Scheduled Commercial banks Public Sector Private Sector Foreign Banks b. Non-Scheduled Commercial Banks Number of Regional Rural Banks Number of Bank offices Of which: Rural Semi Urban Urban Metropolitan Population per office (Thousands)

297 293 27 30 40 4 196 68195 32503 14962 11328 9402 15

292 288 27 29 36 4 196 68500 32283 15135 11566 9516 16

290 286 27 30 33 5 196 69170 32227 15288 11806 9750 16

289 285 28 29 31 4 196 70373 30790 15325 12419 11839 16

222 218 28 28 29 4 133 71177 30436 15811 13034 12404 16

183 179 28 25 29 4 96 73836 30560 16434 13840 12952 16

161 One of the major outcomes of the banking sector reforms was the strength and soundness it provided to the system, which made banks adopt prudential norms with respect to capital, income recognition, disclosure and transparency standards, profitability and productivity. While technology advancements enabled efficient distribution, competition brought in product innovation and quality customer service. Today, Indian banking displays robust prospects for growth and compares favourably with other major banks. Developments in Indian Banking: This section summarizes the important policy and regulation measures introduced in Indian banking in Financial Year 2007. Monetary Policy The Reserve Bank of India (RBI) constituted a Technical Advisory Committee on Monetary Policy in Jan 2007 to advice on and guides the formulation of monetary policy. The monetary policy formulation during FY07 was based on domestic and global developments with respect to price and financial stability. Legislative amendments in the RBI Act, 1934 and Banking Regulation Act, 1949 that were envisaged to provide the RBI the operational flexibility and maneouverability in its monetary management operations also came into effect. In FY07, the Cash Reserve Ratio was hiked by 100 basis points in four equal phases of 25 basis points each. So far, in FY08, it has been further raised by 150 basis points; while the bank rate remained at 6% since 2003. Credit Delivery The measures that were taken to augment credit delivery included; increased credit flow to agriculture, other priority sectors, distressed farmers and areas stricken by natural calamities; simplification of systems and procedures; permissions for using banking facilitators/ correspondents; application of information technology to address the last mile problem, and provision of greater operational flexibility to regional rural banks. The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 was notified in Oct 2006 and included the services sector within the purview of micro, small and medium enterprises. Financial Inclusion was given further focus and thrust under this Act. A pilot project for 100 percent financial inclusion was launched, under which the convenor banks of State Level Bankers Committees were advised to identify at least one district in each state/Union territory for achieving 100% financial inclusion through a no-frills account and by the issue of a general purpose credit card to the customers. Prudential Regulation RBI issued final guidelines on the revised capital adequacy framework (Basel II) on 27 Apr 2007, which addressed three types of risk-credit, market and operational risk- for a minimum capital requirement. The three pillar requirement structure included a minimum capital requirement as the first pillar, supervisory review as the second and market discipline as the third pillar. Foreign Banks operating in India and Indian banks having operational presence outside India were expected to migrate to the revised framework with effect from 31 Mar 2008 and other banks are encouraged to migrate by 31 Mar 2009. Also, to enable banks to augment their capital levels in the background of Basel II, banks were allowed to issue innovative perpetual debt instruments, the total amount raised under which could not exceed 15% of the Tier I capital. In Oct 2007, banks were also allowed to issue perpetual non-cumulative preference shares as Tier I capital and perpetual cumulative, redeemable non-cumulative and redeemable cumulative preference shares as Upper Tier II capital. Banks were advised to design and implement stress-testing framework, using sensitivity and scenario tests. Guidelines on stress testing were issued by the RBI on 26 Jun 2007. Banks are required to evolve appropriate stress test policies by 30 Sep 2007. The RBI issued a set of disclosure requirements pertaining to appropriation of reserves and segmental reporting. Consequently, from 31 Mar 2008, banks will adopt for public reporting purposes: (a) treasury, (b) corporate/wholesale banking, (c) retail banking, and (d) other banking operations.

162 The RBI also prescribed limits on bank exposures to individual and group borrowers. Accordingly, the aggregate exposure of a bank /consolidated bank to the capital market in all forums could not exceed 40% of its net worth as on 31 Mar of the previous year. Guidelines were also issued for computation of exposure norms for loans and advances against shares. Risk weights for loans to sensitive sectors such as real estate were revised upwards. The RBI constituted an internal group to review the existing guidelines on derivatives and formulate comprehensive guidelines on the same by banks. Prudential norms relating to provisioning were further refined and the guidelines for floating provisions reviewed. The Committee on Financial Sector Assessment (headed by Dr Rakesh Mohan, Deputy Governor, RBI), constituted four Advisory Panels for the assessment of (a) financial stability and stress testing, (b) financial regulation and supervision, (c) institutions and market structures, and (d) transparency standards. Payment Systems The Board for Regulation and Supervision of Payment and Settlement Systems, the apex body for guiding the policy on payment and settlement systems, met four times in FY07 and stepped up information dissemination on Real Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT), and Electronic Clearing Service (ECS). The RBI has taken a number of measures to improve efficiency of both large value and retail payment systems. ECS is now available at 67 centres in India and National Electronic Funds Transfer is offered by 74 banks in 30,000 branches. Technology The RBI has adopted the following steps to help banks expand their range of products and services and these include negotiated dealing system for government securities, real time gross settlement system and the centralised funds management system, structured financial messaging system over the Indian Financial Network (INFINET) and the national electronic funds transfer system. Furthermore, the multi-application smart cards further assisted financial inclusion in the North-east and the Southern regions. IT Governance is being given due focus by the RBI. Global competitive aspects in Indian banking industry: Indian banks are seen to possess the following global aspects in its recent practices. The following facts and trends are likely to influence the evolution of the sector in India. Profitability in retail banking deposits: The profitability of the wholesale banking operations of new private and foreign banks is much higher compared to incumbents ie., public sector and old private banks that mainly rely on their valuable legacy retail franchises. Retail banking deposits is today the biggest driver of retail banking profitability. New private and foreign banks are investing heavily in building large-scale retail franchises. 2. Tailored offering to customers: Customer experience is the biggest driver of value. In India customer experience and tailored offerings will be a big driver of bank profitability as young, affluent customers are more demanding and discerning and are less credit-averse. New private banks have revolutionalised levels of convenience and provide customer with superior service levels. 3. Relative superior talents: Indian banks have historically had access to superior talent relative to other global banks leading to superior organization performance on average. However, it is well known that incumbents suffer from a severe lack of specialist skills and new-age leaders. The extent of the problem is acute and crippling for these banks. They need to act urgently to attract, hire, develop and retain the best available talent to ensure sustained growth in the long term. While new private banks are doing better on this front, they will also have to deal with severe talent shortage issues and will need to devise innovative strategies to continue to attract talent and develop new leaders. 1.

163 Treasury divisions - Profit centres: Treasury is a significant contributor to bank earnings in India. The treasury divisions in Indian banks are integrated profit centres that manage capital market businesses and credit and market risk, it is encouraging to see that several new private banks have leapfrogged on this front and are using sophisticated risk management techniques on par with those implemented by global banks. However, risk management practices in public sector banks are at a nascent stage and simply conform to regulatory and compliance measures. 5. Best-in-class IT capabilities: Indian banks, in particular, new private banks have leveraged the nations IT skills to establish a competitive advantage. IT has now become a distinctive capability that these banks can successfully export to international markets as they globalize. Private Banks with best-in-class IT capabilities are truly the best in the world on account of three factors: the ability to avoid using legacy systems, superior governance practices that often entail direct CEO involvement, and the India advantage. However most public sector banks have largely made investments in technologies such as core banking solutions, but have not fully developed strategies to derive value from these investments, eg., leverage these investments to upgrade their levels of customer service. Conclusion The Indian Banking industry has shown drastic improvements globally. The banking sector revolutionized and follows best global practices as discussed above. The major regulatory practices and policy changes in the Indian market favored banking sector. The challenges that confront banking industry are alarming and banks, especially new private and foreign banks systematically operate and take advantage of such situations. 4.

164

CONTEMPORARY ISSUES IN BANKING


M.Hemasundari, Asst. Professor, STET school of Management, Mannargudi. INTRODUCTION: Today banking industry plays a crucial role in development of Indian economy. Today with the growth of private sector banks public sector banks are also facing intense competition. It is time when banks need to redefine their role. We have taken this project to study contemporary issues in banking sector. We have taken five most recent happening issues in banking sector. Bank at home is an issue where banks will try to reach to our home and will provide personalized service. Under retail business development government banks will try to cross sell products with traditional banking products to generate more revenues. Today with the fear of terrorism money of underworld and money obtained through unauthorized sources can be converted in legal money which is a danger to economy. In cheque truncation RBI Is aiming at fast clearance of cheques with the use of technology. equator principle is a new concept and essential when global warming and such other environmental issues occur. We have studied bank at home model of SBI and proposed RBD plan for SBI and analyzed remaining topics .our study will be helpful to other students ,SBI ,other banks and to every person who is associated with banks. We hope our analysis suggestion will be very useful to above mention entities. Contemporary and Future Issues in Indian Banking : Banking scenario has changed rapidly since 1990s. The decade of 90s has witnessed a sea change in the way banking is done in India. Technology has made tremendous impact in banking. 'Anywhere banking' and 'Anytime banking' have become a reality. The financial sector now operates in a more competitive environment than before and intermediates relatively large volume of international financial flows. In the wake of greater financial deregulation and global financial integration, the biggest challenge before the regulators is of avoiding instability in the financial system. Economic outlook and banking sector's performance: Keeping in mind the impact of real sector shocks on financial stability, any assessment of the banking sector needs to be done in the backdrop of national as well as international economic outlook. During the last couple of years, global growth has been above the forecast in almost every region stimulated by strong monetary and fiscal measures. The domestic economic outlook is also bright with the real GDP growth rate surpassing 8% last year and estimated to be around 7% in the current year. Industrial performance also improved considerably with a strong manufacturing growth for the second consecutive year. Inflation rate has been under control, barring some hiccup for a short period. High capital inflows: an opportunity as well as a challenge As you all know, liquidity position in the financial sector has been quite comfortable in the recent times. The buoyant capital market coupled with an appreciating rupee vis-is US dollar has been attracting large foreign institutional inflows during the last two years. While we have an all time high foreign exchange reserves of more than $130 billion, high capital inflows pose a big challenge to monetary and exchange rate management. In this context, operationalisation of Market Stabilisation Scheme (MSS) has given an additional instrument for liquidity and monetary management.

165 To sum up the challenge, I would like to quote a statement of Dr. Y.V. Reddy, Governor, Reserve Bank of India, which he made at the annual meeting of Bank for International Settlement (BIS) on June 28, 2004. And I quote, "...Special defences need to be put in place for ensuring financial stability in the case of countries like India that are faced with the prospect of volatile capital flows. The issues relating to cross-border supervision of financial intermediaries in the context of greater capital flows are just emerging and need to be addressed." Technology is the key As I mentioned in the beginning of my speech, technology has thrown new challenges in the banking sector and new issues have started cropping up which is going to pose certain problems in the near future. The new entrants in the banking are with computer background. However, over a period of time they would acquire banking experience. Whereas the middle and senior level people have rich banking experience but their computer literacy is at a low level. Therefore, they feel the handicap in this regard since technology has become an indispensable tool in banking. Under WTO India, as you know, is one of the 104 signatories of Financial Services Agreement (FSA) of 1997. This gives India's financial sector including banks an opportunity to expand their business on a quid pro quo basis. Indian Banks at the global stage: A Reality check As per Indian Banks' Association report 'Banking Industry Vision 2010', there would be greater presence of international players in Indian financial system and some of the Indian banks would become global players in the coming years. So, the new mantra for Indian banks is to go global in search of new markets, customers and profits. Let us not forget that the competition is not only on foreign turf but also in the domestic field as well from foreign banks operating in India. Now against these lofty objectives of Indian banks going global, let us see where we stand. Although, Indian banks have also made their presence overseas, yet it is limited. Only twenty Indian banks including private sector banks appear in the list of "Top 1000 World Banks" as listed by the London based magazine "The Banker". What is even more revealing is that State Bank of India, India's largest bank, ranks 82nd amongst the top global banks. Size is increasingly becoming important for the global banks, as it is crucial to improved efficiency. However, India's largest bank, SBI is not even a 10th in size of the 9th largest bank, Sumitomo Mitsui, which has assets of $950 billion as against SBI's assets of $91 billion. Therefore, the notion that SBI or ICICI Bank can compete in the international arena seems far-fetched at the moment. All these factors give Indian banks much needed confidence for overseas operations. But as I said earlier overseas operations is one thing and competing against the global players in the international market is quite another. And Indian banks have a lot of catching up to do before they can emerge as truly global players. Supporting Regulatory Framework Supporting institutional and regulatory framework at home is vital for domestic banks aspiring for global operations. RBI has suitably changed the country's regulatory framework from time to time to support Indian financial institutions to withstand the competitive pressures placed on them by increasing globalization.

166 Proper steps have been taken to guide the banking sector to see that the banks pass through this transition phase by and large successfully. The reforms initiated in the banking sector have now reached a crucial stage. Government's stake in some PSBs is reduced and as a consequence public equity in these PSBs is enlarged. This led to greater responsibility on the bank managements since the level of accountability has increased. Pressures of performance and profitability will keep them on their toes all the time as the public shareholders expect good performance along with good returns on their equity. Many PSBs have already started the exercise of cleaning up of their balance sheets by shedding the excess baggage. Consolidation and move towards Universal Banking We are slowly but surely moving from a regime of "large number of small banks" to "small number of large banks." The new era is going to be one of consolidation around identified core competencies. Mergers and acquisitions in the banking sector are going to be the order of the day. Successful merger of HDFC Bank and Times Bank earlier and Stanchart and ANZ Grindlays three years ago has demonstrated that trend towards consolidation is almost an accepted fact. We are also looking for such signs in respect of a number of old private sector banks, many of which are not able to cushion their NPAs, expand their business and induct technology due to limited capital base. Consolidated accounting and supervisory techniques would have to evolve and appropriate firewalls built to address the risks underlying such large organisations and banking conglomerates. Conclusion Currently, the focus is rightly shifting to legislation, markets, technology and beyond banks to non-banks. It is also evident that reforms can succeed only and only if coordinated efforts are made by RBI, Government of India and banks, themselves. It must, however, be recognized that key to financial sector reform is banking reform; key to banking reform is public sector banking reform; and key to public sector banking sector reform is Government's initiative

167

FINANCIAL MARKETS INTEGRATION IN INDIA


B.Alagarsamy, Asst.Professor, St.Michael College of Engg.& Tech, Kalayarkoil, Sivagangai Dt C.Prabu, Asst.Professor, St.Michael Collegeof Engg & Tech., Kalayarkoil 630 551, Sivagangai Dt. Introduction The last two decades have witnessed the emergence of a vast financial market straddling national boundaries enabling massive cross-broder capital flows from those who have surplus funds and are in search of high returns to those seeking low-cost funding. The phenomenon of borrowers, including governments, in one country accessing the financial markets of another is not new; what is new is the degree of mobility of capital, the global dispersal of the finance industry and enormous diversity of markets and instruments which a firm seeking funding can tap. While opening up of the domestic markets began only around the end of seventies, a truly international financial market had already been born in mid-fifties and gradually grown in size and scope during sixties and seventies. This is the well known Eurocurrencies Market wherein a borrower (investor) from country A could raise (place) fund in currency of country B from (with) financial institution located in country Following the liberalization of international financial markets in the mid 1970s there have been a series of major financial crises, many of which have resulted in substantial losses in real income. The Swedish bank crisis of the early 1990s bequeathed nearly a decade of stagnation, as did the Mexican financial crisis of the early 1980s. More recently, the Asian financial crisis has been associated with large cuts in real income in the region, with particularly severe consequences for Indonesia. The pattern of crises has also assumed a form unfamiliar since the 1930s their origins have been increasingly found within the private sector. For many years after the second world war economic crises were associated with mistakes in government macro-economic policies, and derived from the macro-economic problems such as excessive inflation or current account imbalances, and transmitted through macro-economic variables such as the interest rate, changes in credit controls or taxation, or foreign exchange crises (typically resulting in deflationary policies to maintain fixed exchange rates). This was a significant change from the inter-war world, where crises were typically generated in the private sector failures by institutions such as that of the Credit Anstalt in 1931 reverberated through the financial system to produce a general economic collapse. The removal of the extensive system of domestic and international financial and monetary controls that characterised the post-world war II world before 1971 has resurrected the pre-war origins of crises in micro-economic as well as macroeconomic circumstances. Nonetheless, even where crises have micro-economic origins an important macroeconomic component remains. Rapid expansion of government security market, 12,000 crs in 1991-92 to 99630 cr in 19992000 and 2,00 198 cr in 2006-07 secondary market of gilt edge securities has also been increased to 5,01808 in 2007-08. Prior to 1991 debentures were popular and constituted 70 percent of the funds raised through new issues. Which has now been changed qualitatively as in 2007 the contribution of share capital in total fund raised was 87.6 percent. The instrument of the money market are commercial paper, factoring, bills discounting, call money etc. and the capital market are shares, debentures and loans. Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meagre and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century.

168 MONEY MARKET Market for short-term debt securities, such as bankers acceptances, commercial Paper, bonds, negotiable certificates of deposit, and Treasury Bills with a maturity of one year or less and often 30 days or less. Money market securities are generally very safe investments which return a relatively low interest rate that is most appropriate for temporary cah storage or short-term time horizons. Bid and ask spreads are relatively small due to the large size and high liquidity of the market. Money Market Services Is this right for you? Treasury Group provides you with up to the minute information on market rates, and promptly and efficiently executes buy and sell orders. The wide variety of foreign exchange, money market and risk management products allows you access to a wide range of tools and information from one source. Domestic Money Market We invest money in the Canadian Money Markets. This service provides daily Money Market requirements for both borrowers and investors. Up-to-the-minute information and advice is offered on differentials, Money Market trends and market psychology. Investments include: Government of Canada Treasury Bills Provincial Treasury Bills Provincial Promissory Notes Term Deposit Receipts Banker's Acceptances Canadian Commercial Paper Swap deposits International Money Market The International Money Market offers competitive yields, booking locations in international currencies and the security of dealing with the experience of the Money Desk team. CAPITAL MARKET Capital markets exchange both long-term fixed claim securities and residual/equity claim securities. The main economic role of a capital market is to match players who have excess funds to players who are in need of funds. Capital markets also provide liquidity to financial instruments. In this exchange process, there is a valuation of the instruments done by the market for the specific risk assumed by the investors. The capital gain/loss in buying/selling the security is the trade return from the security. Given the risk return characteristic of the capital market, the expectations of the market participants play a major role in the market price determination of the securities traded. This risk-return characteristic of the instruments necessitates a subdivision of the capital market into debt market and equity market. Growth of Capital Market in India Year 1975-76 No of stock exchange Market value of Capital (Rs cr) Capital issues (Rs cr) Capital raised as percentage of gross domestic saving 8 3273 98 0.7 85-86 14 25302 1745 3.4 97-98 22 560235 34755 9.6 200001 23 625553 49028 10.0 2005-06 22 3022189 78813 7.5 2006-07 21 35,45,041 115818 8.8

169 CAPITAL MARKET AND MONEY MARKET IN INDIA The financial market in India at present is more advanced than many other sectors as it became organized as early as the 19th century with the securities exchanges in Mumbai, Ahmedabad and Kolkata. In the early 1960s, the number of securities exchanges in India became eight - including Mumbai, Ahmedabad and Kolkata. Apart from these three exchanges, there was the Madras, Kanpur, Delhi, Bangalore and Pune exchanges as well. Today there are 23 regional securities exchanges in India. The Indian stock markets till date have remained stagnant due to the rigid economic controls. It was only in 1991, after the liberalization process that the India securities market witnessed a flurry of IPOs serially. The market saw many new companies spanning across different industry segments and business began to flourish. The launch of the NSE (National Stock Exchange) and the OTCEI (Over the Counter Exchange of India) in the mid 1990s helped in regulating a smooth and transparent form of securities trading. The regulatory body for the Indian capital markets was the SEBI (Securities and Exchange Board of India). The capital markets in India experienced turbulence after which the SEBI came into prominence. The market loopholes had to be bridged by taking drastic measures. The India money market is a monetary system that involves the lending and borrowing of short-term funds. India money market has seen exponential growth just after the globalization initiative in 1992. It has been observed that financial institutions do employ money market instruments for financing short-term monetary requirements of various sectors such as agriculture, finance and manufacturing. The performance of the India money market has been outstanding in the past 20 years. Central bank of the country - the Reserve Bank of India (RBI) has always been playing the major role in regulating and controlling the India money market. The intervention of RBI is varied - curbing crisis situations by reducing the cash reserve ratio (CRR) or infusing more money in the economy. India market growth has experienced good times in the recent years which have prospered the economy of the country to a great extent. Since the liberalization of the market since the 1990s, there has been a high growth in the market and various industrial sectors. The positive market growth has also improved the overall standard of living of the people in the country. Rapid expansion of government security market, 12,000 crs in 1991-92 to 99630 cr in 19992000 and 2,00 198 cr in 2006-07 secondary market of gilt edge securities has also been increased to 5,01808 in 2007-08. In 1990-91 total private issue was 364 and the fund raised was just Rs 4321 cr which increased to 2006-07 31,600 cr CONCLUSION The recent liberalisation and globalisation measures in the global financial markets have opened up avenues for newer financial intermediaries like mutual funds, money market instruments, and pension funds, etc. The financial markets are increasingly being called upon to perform the task of financial innovations to meet the changing needs of the disintermediated market place. They are faced with the challenge of developing new financial instruments to help their clients cope with an increasingly volatile and uncertain market place. The Indian capital market has been increasing tremendously during last few year. With the reforms of economy, reforms of industrial policy, reforms of public sector and reforms of financial sector, the economy has been opened up and many developments have been taking place in the Indian money market and capital market. The financial markets play a crucial role in economic development through saving-investment process, also known as capital formation. A vibrant and competitive financial market is necessary concomitant of trade and industrial policy liberalization to sustain the ongoing reforms in the structural aspects of the real economy. The financial sector reforms have been undertaken in the emerging markets to improve the efficiency and stability of the financial system, and to integrate the national economy at the international level.

170

CUSTOMER RELATIONSHIP MANAGEMENT IN BANKING INDUSTRY


Mr.R.Senthil Kumaran, HOD/MBA, Selvam College of Technology, Namakkal Introduction Traditionally, few people changed their banks unless serious problems occurred. In the past there was, to certain extent, a committed, often inherited relationship between a customer and his/her bank. The philosophy, culture and organization of financial institutions were grounded in this assumption and reflected in their marketing policies, which were product and transaction-oriented, reactionary, focused on discrete rather than continuous activities. Today, financial institutions can no longer rely on these committed relationships or established marketing techniques to attract and retain customers. As markets break down into heterogeneous segments, a more precisely targeted marketing technique is required, which creates a dialogue with smaller groups of customers and identifies individual needs. Also, before the Internet revolution, consumers largely selected their banks based on how convenient the location of bank's branches was to their homes or offices. With the advent of new technologies in the business of bank, such as Internet banking and ATMs, now customers can freely chose any bank for their transactions. Thus, the customer base of banks has increased, and so has the choices of customers for selecting the banks. This situation coupled with the pressures of competitive and dynamic markets has contributed to the growth of CRM in the Financial Services Sector. Customer Relationship Management: The Concept Customer Relationship Management is the establishment, development, maintenance and optimization of long-term mutually valuable relationships between consumers and the organizations. Successful customer relationship management focuses on understanding the needs and desires of the customers and is achieved by placing these needs at the heart of the business by integrating them with the organization's strategy, people, technology and business processes. Need of CRM in the Banking Industry A Relationship-based Marketing approach has the following benefits: Over time, retail bank customers tend to increase their holding of the other products from across the range of financial products / services available. Long-term customers are more likely to become a referral source. The longer a relationship continues, the better a bank can understand the customer and his/her needs & preferences, and so greater the opportunity to tailor products and services and crosssell the product / service range. Private Banking and CRM Private Banks have traditionally viewed themselves as exceedingly 'Customer Centric' offering what they believe to be highly personalized services to the High Net Worth Customers. However, changes in the customer behavior and accumulation of wealth are resulting in the needs of HNW customers becoming more diverse and complex in terms of the sorts of products they want, the channels through which they want to access them and the associated range of advice. The wealthier the customers, the more demanding they are - and the clients expect more and more from their banks. Competition for "Supremely elite" is increasing.

171 Customer Experiences The first step towards successfully winning, retaining and growing the profitability of private banking customers is to understand what their wants and needs are, so that the organization can be built around serving those needs. Only when an organization has done this and incorporated this into its strategy can it start to design its value proposition and a customer experience that will enable it to achieve a differentiated competitive position in the private banking market, and more importantly, do so in an economically viable way. The Basic Customer Experience

There is a basic 'generic' customer experience that many private banking customers are seeking. To be a credible player in the market, a private bank must be able to deliver this 'base' experience. This represents a common set of needs that are shared by most HNW customers. Therefore, the private bank must have the capabilities required to meet these needs for the majority of its customer base. All customers, regardless of wealth levels, have similar emotional needs, which drive their need for advice and their purchase of products. Different wealth levels impose different priorities on meeting these needs and open up new avenues for doing so. Take a simple example, HNW customers can afford on it to fund their retirement, so their priorities may be associated with growing wealth, rather than preserving it, allowing them to choose a product option with a higher risk/reward ratio. If this is true, it means all HNW customers start with a basic, common set of what they want and need from a bank, which might include: 1. Personal, long-term relationship 2. Advice combining industry expertise and knowledge of personal circumstances 3. High quality, consistent quality 4. Security, privacy, confidentiality 5. At this basic level, grouping together these core wants and needs produces a set of generic characteristics that an HNW individual seeks from an organization before he or she will even consider placing any of his or her wealth with it. 6. Underlying these generic characteristics is a set of capabilities covering organization, process and technology, which the private bank must process to operate in the high net worth market.

172 The Segment-Specific Experience To build this 'base' experience, private banks also need to consider the segment-specific needs of their target customers. This in itself requires a capability to identify and justify target customers and understand their needs beyond banking, to ensure that their emotional needs are met. It is here that the customer is made to feel like an individual, but it is also at this point that costs and infrastructure spiral, as customers' needs start to diverge.

The segmentation process identifies groups of customers with similar wants and needs, who are seeking a similar experience from the provider. Importantly, from the organizations' viewpoint, this means that they can also be served by similar sets of capabilities. The Organization-Specific Experience Having identified the base and segment specific elements of HNW customer experience, the final step is to identify how the experience that each organization offers its customers is distinct from other banks. Now this would mean that one has to distinctly identify the components of the experience that are not only associated with a particular bank but also be the key differentiator. Conclusion Banking can be mysterious for consumers and how they interact with their finances can be a complex matter. The challenges faced by banks and their customers are many but the trick lies in demystifying complex financial relationships. Technical solutions deployed by banks today are flexible, user-friendly and meant to facilitate specific workflow and requirements in implementation processes. In order to simplify lives, banks have begun to implement end-to-end technologies through all departments with the intention of removing human error from processes. Previously existing manual environments could not have been adequate for future visions, growth plans and strategies. In this day and age, customers enjoy complete luxury in terms of customized technical solutions and banks use the same to cement long-term, mutually-beneficial relationships.

173

A STUDY OF THE PATENTABILITY OF FINANCIAL INNOVATIONS IN INDIA


Dr.S.RADHIKA,M.Com.,M.Phil., Ph.D., Professor, MBA Department, VELTECH Dr.RR & Dr. SR Technical University, Avadi, Chennai. Financial Engineering has been an emerging area of finance since the introduction of derivative instruments. Also it has been the area which poses a lot of challenge to the finance professional with all its depths and intricacies. This area of finance is also the most dynamic of all areas in finance with changes happening every day by the efforts of the investment banks which try to customize the transactions and deals for their clients. In customizing the transactions and deals for their clients, the investment bankers spend a lot of resources in terms of time, money and efforts in bringing out a new financial product or innovation. If such a financial product or innovation generated by one investment bank is replicated by a competing investment bank without having to spend those resources, then the follower bank would be at an advantage while the innovator would be at an absolute disadvantage. If such a process exists, then there would be no motivation for innovation which would make the area of finance stagnant. To prevent such a thing from happening, we need to provide the financial innovators various modes of protecting their innovations at least for a limited period of time thereby help them recover their costs and also make a decent amount of profits thereby motivate them in innovating further in the area of finance. Financial Engineering Leaders of successful businesses build long-term relationships with customers, suppliers, employees, and shareholders. They make farsighted investments to support and develop their core competencies. They act quickly to ensure that short-term obstacles do not disrupt their long-term strategies. In conceiving and implementing corporate strategies, managers have always drawn on the skills of many specialists, from marketers to production experts. Now a small but growing number of senior managers have found that practitioners of a new technical specialtyfinancial engineeringcan help them achieve their companies strategic objectives. They have found that, like other technological breakthroughs such as cheap computing power, financial engineering has the potential not only to reduce the cost of existing activities but also to make possible the development of new products, services, and markets. Financial Engineering is an area of finance that deals with the method of implementing financial innovations to find better solutions to specific financial problems. It would generally be carried out with the diagnosis of a problem, analysis of the possible solutions understanding therewith a possibility a new financial instrument, producing or evolving of a new financial instrument. It also involves the activity of pricing and customizing this new financial instrument when the solution is felt to be relevant to more than one client. It has also been defined as the use of derivatives to manage risk and create customized financial instruments. It involves the design, the development, and the implementation of innovative financial instruments and processes, and the formulation of creative solutions to the problems of finance. Broadly financial engineering is thus, an area which is involved with the analysis of an existing financial problem, designing a financial solution in the form of a financial product or service or system using the various financial tools and techniques including that of financial derivatives, the development of the solution based on the data collected after the implementation of the solution, and then standardizing this solution for future uses.

174 Financial Innovation Financial innovation is not a new phenomenon in the area of finance. Earlier, innovations were carried out using the traditional instruments of debt and equity and customizing them suitably according to the needs of the clients. As early as 1934, there were many such instruments which deviated from the traditional debt and equity models as highlighted by Benjamin Graham. In his seminal work on investing with David Dodd Security Analysis, he includes as an appendix A Partial List of Securities which deviate from the Normal Patterns. In this appendix, they list out 258 different types of securities which do not follow the traditional pattern of either the debt or the equity like zero-coupon bonds, convertible bonds, exotic bonds, inflation-indexed bonds, different types of warrants, voting bonds and others. This area of finance has also elicited the interests of the financial academia. There are a huge bundle of resources on this area of finance. One of the main areas they have concentrated is on financial innovation and security design and I have listed some of them here. Earlier works in the area of financial economics have tried to define financial innovation using the traditional concepts of debt and equity. But in the modern times, the area of financial economics has given rise to securities with such complexities that it becomes a Herculean task to understand it, leave alone defining it. It is only with the basic understanding of the overall complexity that we have to define a financial innovation. According to Websters Collegiate Dictionary, innovate is defined as to introduce as or as if new. It is derived from the Latin word novus which means new. Broadly speaking, financial innovation is the act of creating and then popularizing new financial instruments as well as new financial technologies. Financial innovation refers to any new development in a national financial system or the international financial system that: Who innovates and Why? Having defined and classified the financial innovations, a need was felt to delve into the problem of understanding the parties who undertake the activity of carrying out financial innovation. A lot of research work was found in the area of financial innovations done by the earlier researchers. Most of them concentrated on the organizations which adopted financial innovations, the extent of adoption and the quickness with which they adopt it. But the question that I wanted the answer was to analyze the parties who undertake the activity of carrying out financial innovation. This question revealed a surprising insight into the area of finance and also it questioned the traditional notion that large investment banks carry out a large number of financial innovations. As a hypothesis, I had a notion that the larger firms which have access to the wealth of data, expertise and then markets to sell their innovations. But surveying the literature, it was found that that is not always the case. A review of literature on this area was carried out in Ross and Scherer. Silber for one, suggests that those financial institutions which have the most constraints in terms of costs, talents, markets, etc., or inconvenienced by imperfections, would be the most likely to innovate, as costs of these constraints would have a serious impact on the profitability of these companies. So going by this string of thought, we would be forced to assume that smaller companies which have greater constraints would be forced to innovate more.

175 This was also supported by few of the landmark examples in the world of finance like that of Vanguard and Drexel Burnham Lambert which innovated products like index funds and junk bonds and after these products became popular, these companies grew. So going by such examples, one would be tempted to believe that smaller firms are carrying out the large number of financial innovations. But if we look at the other side of the story, we can find that this might not be the case. Tufano shows that at least in the area of financial securities innovations, larger and more financially secure investment banks have consistently been the leading innovators. The reason he gives for this is that larger investment banks have access to the earlier innovations or they have the muscle power to negotiate the transfer of innovation to them at an affordable price. Motivations for Financial Innovations Since 1970, financial innovation has accelerated markedly. A major motivation was to circumvent discriminatory regulations and tax laws. Another motivation was to deal with increased exchange rate, interest rates and commodity prices volatility after the end of the Bretton Woods fixed exchange rate system. There have been a lot of research materials on this area and Harris and Raviv provide a survey of the literature on this area. Among the researchers who have studied the motivations for financial innovations, we have legends like Miller quoting the major impulse for successful financial innovation has come from a desire to reduce the impact of taxes and regulations. New securities are often designed in response to accounting standards, regulations and tax codes, which are not mundane motives. To quote Tufano, if the world were free of all imperfections such as taxes, regulations, information asymmetries, transaction costs, and moral hazards and if markets were complete in the sense the existing securities spanned all the states of nature, we could arrive at an M&M-like corollary regarding financial innovations. Financial innovations would benefit neither private parties nor society and would simply be neutral mutations. Tax structure in the country: Changing the tax structure motivates innovation. Each successful innovation earns an immediate reward for its adopters in the form of tax money saved. Social economists also criticize this aspect stating that the Governments are in fact subsidizing the process of financial innovation, just as they are subsidizing the development of new seeds or aero planes, but with the important difference that, in financial innovation, the Governments contribution is inadvertent. Changes in the regulatory system of the country: At times innovations arise out of very specific regulatory environments. Some of such innovations are significant in the sense of being permanent even when the original cause for its creation has disappeared. The Eurodollar market, for example, owed its origins to Regulation Q. Increased Volatility in the trading activities: Risk reduction is one of the most important reasons why a person carries an investment decision. When the person who is carrying out the transactions faces a lot of volatility on the exchanges, then he starts looking out for ways and means of reducing the risk to which he is exposed to and thereby mitigate his losses. This is exactly the reason why we have option contracts on various underlying instruments including commodities being traded on the exchanges. Also volatility in the dependant factors of the underlyings such as the prices of the commodities, the interest rates, the share prices and other underlyings have contributed to the advent of the risk-hedging and risk-transfer tools and mechanisms.

176 Breakthrough advances in the financial theories: Scientific breakthroughs in the area of finance such as the Pricing of Options and Corporate Liabilities achieved by Fisher Black and Myron Scholes in the year 1973 has paved the way for a lot of financial innovations which are based on their theories. Also the concept of valuing option contract has motivated the financial institutions in innovating a lot of financial products and services Transaction costs for the intermediaries: Duffie and Rahi quote a very interesting example to substantiate this motive of financial innovation. They state that exchange members would not favor introducing trade in contracts delivering something as obscure as amethysts, if this meant giving up trade in, say, oil, German marks, or US treasury bonds. Neither would they favor trade in something whose price is relatively stable such as salt. Amethysts and salt are unlikely to present significant price risk to consumers or businesses. One theme of the literature, going back at least to Working and evident in the Milgrom and Stokey no-trade theorem, is that an exchange would rarely find it attractive to introduce a security whose sole justification is the opportunity for speculation. Speculators depend for trading opportunities on the existence of hedgers, or as in the financial microstructure literature, on liquidity-traders. It is desirable to strengthen the integration of financial markets to reap the positive benefits of it. But, since the degree of integration is dependent on policy and institutional infrastructure, the ongoing financial reform programme needs to be accelerated to further deepen the degree of convergence between the overseas and domestic markets. But even as efforts are intensified for deepening and broadening financial market segments and for developing a seamless and vibrant market continuum, a policy response to the transition should rely on multiple interventions.

177

DERIVATIVE MARKET IN INDIA A GROWTH PERSPECTIVE


Dr. R. Karuppasamy, M.Com, MPhil, Ph.D, Director Department of Management Studies, SNS College of Technology, Coimbatore Mr. S.Viswanathan, Research Scholar & Assistant Professor, RVS Institute of Management, Coimbatore INTRODUCTION: Risk is a characteristic feature of all commodity and capital markets. Over time, variations in the prices of agricultural and non-agricultural commodities occur as a result of interaction of demand and supply forces. The last two decades have witnessed a many-fold increase in the volume of international trade and business due to the ever growing wave of globalization and liberalization sweeping across the world. As a result, financial markets have experienced rapid variations in interest and exchange rates, stock market prices thus exposing the corporate world to a state of growing financial risk. Increased financial risk causes losses to an otherwise profitable organization. This underlines the importance of risk management to hedge against uncertainty. Derivatives provide an effective solution to the problem of risk caused by uncertainty and volatility in underlying asset. Derivatives are risk management tools that help an organization to effectively transfer risk. Derivatives are instruments which have no independent value. Their value depends upon the underlying asset. The underlying asset may be financial or non-financial. The present study attempts to discuss the genesis of derivatives trading by tracing its historical development, types of traded derivatives products, regulation and policy developments, trend and growth, future prospects and challenges of derivative market in India. Concept of Derivatives: The term derivatives, refers to a broad class of financial instruments which mainly include options and futures. These instruments derive their value from the price and other related variables of the underlying asset. They do not have worth of their own and derive their value from the claim they give to their owners to own some other financial assets or security. A simple example of derivative is butter, which is derivative of milk. The price of butter depends upon price of milk, which in turn depends upon the demand and supply of milk. The general definition of derivatives means to derive something from something else. Some other meanings of word derivatives are: A. derived function: the result of mathematical differentiation; the instantaneous change of one quantity relative to another; B. derivative instrument: a financial instrument whose value is based on another security, (Linguistics) a word that is derived from another word; "`electricity' is a derivative of electric. The asset underlying a derivative may be commodity or a financial asset. Derivatives are those financial instruments that derive their value from the other assets. For example, the price of gold to be delivered after two months will Participants in Derivatives Market 1. Hedgers: They use derivatives markets to reduce or eliminate the risk associated with price of an asset. Majority of the participants in derivatives market belongs to this category. 2. Speculators: They transact futures and options contracts to get extra leverage in betting on future movements in the price of an asset. They can increase both the potential gains and potential losses by usage of derivatives in a speculative venture. 3. Arbitrageurs: Their behavior is guided by the desire to take advantage of a discrepancy between prices of more or less the same assets or competing assets in different markets. If, for example, they see the futures price of an asset getting out of line with the cash price, they will take offsetting positions in the two markets to lock in a profit.

178 Applications of Financial Derivatives Some of the applications of financial derivatives can be enumerated as follows: 1. Management of risk: This is most important function of derivatives. Risk management is not about the elimination of risk rather it is about the management of risk. Financial derivatives provide a powerful tool for limiting risks that individuals and organizations face in the ordinary conduct of their businesses. It requires a thorough understanding of the basic principles that regulate the pricing of financial derivatives. Effective use of derivatives can save cost, and it can increase returns for the organizations. 2. Efficiency in trading: Financial derivatives allow for free trading of risk components and that leads to improving market efficiency. Traders can use a position in one or more financial derivatives as a substitute for a position in the underlying instruments. In many instances, traders find financial derivatives to be a more attractive instrument than the underlying security. This is mainly because of the greater amount of liquidity in the market offered by derivatives as well as the lower transaction costs associated with trading a financial derivative as compared to the costs of trading the underlying instrument in cash market. 3. Speculation: This is not the only use, and probably not the most important use, of financial derivatives. Financial derivatives are considered to be risky. If not used properly, these can leads to financial destruction in an organization like what happened in Barings Plc. However, these instruments act as a powerful instrument for knowledgeable traders to expose themselves to calculated and well understood risks in search of a reward, that is, profit. 4. Price discover: Another important application of derivatives is the price discovery which means revealing information about future cash market prices through the futures market. Derivatives markets provide a mechanism by which diverse and scattered opinions of future are collected into one readily discernible number which provides a consensus of knowledgeable thinking. 5. Price stabilization function: Derivative market helps to keep a stabilizing influence on spot prices by reducing the short-term fluctuations. In other words, derivative reduces both peak and depths and leads to price stabilization effect in the cash market for underlying asset. Classification of Derivatives Broadly derivatives can be classified in to two categories as shown in Fig.1: Commodity derivatives and financial derivatives. In case of commodity derivatives, underlying asset can be commodities like wheat, gold, silver etc., whereas in case of financial derivatives underlying assets are stocks, currencies, bonds and other interest rates bearing securities etc. Since, the scope of this case study is limited to only financial derivatives so we will confine our discussion to financial derivatives only. Forwards A forward contract is a customized contract between two entities, where Settlement takes place on a specific date in the future at todays pre-agreed price. Futures A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts Options: Options are of two types - calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts

179 give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Warrants: Options generally have lives of up to one year; the majority of options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter. Derivatives Market India As mentioned in the preceding discussion, derivatives trading commenced in Indian market in 2000 with the introduction of Index futures at BSE, and subsequently, on National Stock Exchange (NSE). Since then, derivatives market in India has witnessed tremendous growth in terms of trading value and number of traded contracts. Derivatives Products Traded in Derivatives Segment of BSE: The BSE created history on June 9, 2000 when it launched trading in Sensex based futures contract for the first time. It was followed by trading in index options on June 1, 2001; in stock options and single stock futures (31 stocks) on July 9, 2001 and November 9, 2002, respectively. Currently, the number of stocks under single futures and options is 1096. BSE achieved another milestone on September 13, 2004 when it launched Weekly Options, a unique product unparalleled worldwide in the derivatives markets. It permitted trading in the stocks of four leading companies namely; Satyam, State Bank of India, Reliance Industries and TISCO (renamed now Tata Steel). Chhota (mini) SENSEX was launched on January 1, 2008. With a small or 'mini' market lot of 5, it allows for comparatively lower capital outlay, lower trading costs, more precise hedging and flexible trading. Currency futures were introduced on October 1, 2008 to enable participants to hedge their currency risks through trading in the U.S. dollar-rupee future platforms. Derivatives Products Traded in Derivatives Segment of NSE NSE started trading in index futures, based on popular S&P CNX Index, on June 12, 2000 as its first derivatives product. Trading on index options was introduced on June 4, 2001. Futures on individual securities started on November 9, 2001. The futures contracts are available on 2338 securities stipulated by the Securities & Exchange Board of India (SEBI). Trading in options on individual securities commenced from July 2, 2001. The options contracts are American style and cash settled and are available on 233 securities. Trading in interest rate futures was introduced on 24 June 2003 but it was closed subsequently due to pricing problem. The NSE achieved another landmark in product introduction by launching Mini Index Futures & Options with a minimum contract size of Rs 1 lac. NSE crated history by launching currency futures contract on US Dollar-Rupee on August 29, 2008 in Indian Derivatives market.

180 Product wise Number of Contracts Traded during 2009-10 the

CONCLUSION : Innovation of derivatives have redefined and revolutionised the landscape of financial industry across the world and derivatives have earned a well deserved and extremely significant place among all the financial products. Derivatives are risk management tool that help in effective management of risk by various stakeholders. Derivatives provide an opportunity to transfer risk, from the one who wish to avoid it; to one, who wish to accept it. Indias experience with the launch of equity derivatives market has been extremely encouraging and successful. The derivatives turnover on the NSE has surpassed the equity market turnover. Significantly, its growth in the recent years has surpassed the growth of its counterpart globally. The turnover of derivatives on the NSE increased from Rs. 23,654 million (US $ 207 million) in 2000-01 to Rs. 130,904,779 million (US $ 3,275,076 million) in 2007-08. India is one of the most successful developing countries in terms of a vibrant market for exchange-traded derivatives. This reiterates the strengths of the modern development of Indias securities markets, which are based on nationwide market access, anonymous safe and secure electronic trading, and a predominantly retail market. There is an increasing sense that the equity derivatives market is playing a major role in shaping price discovery. Factors like increased volatility in financial asset prices; growing integration of national financial markets with international markets; development of more sophisticated risk management tools; wider choices of risk management strategies to economic agents and innovations in financial engineering, have been driving the growth of financial derivatives worldwide and have also fuelled the growth of derivatives here, in India.

181 BIBLIOGRAPHY 1. J.N. Dhankar, "Capital Market Reforms",paper presented in the conference of 2nd Generation Reforms, pp 1-2, 2001. 2. Ranjan Mukherjee "Derivatives what it is?" the Management Accountant,May 1998, pp 335-37. 3. Sanjive Aggarwal, "Indian Capital Market" 2nd edition. 4. Fred. D. Arditti, Derivatives: A comprehensive Resource for options, futures,Interest Rate Swaps and Mortgage securities, Harward Business School Press. 5. V. K. Bhalla, Financial Derivatives (Risk management 2001, S. Chand & Company Ltd. Publication. 6. A. S. Harish "Potential of Derivatives Market in India", The ICFAI Journal of Applied Finance, Vol. 7, No.5, Nov. 2001, pp 1-24. 7. Andrew Kasapi, Mastering credit derivatives, Financial Times prentice Hall, pp 1-3. 8. Report of the L. C. Gupta Committee on Derivatives and Verma Committee Report on Risk Containment in the Derivatives Market. 9. John C Hull, Options, futures and Other Derivatives, Prentice Hall of India Private Limited, 1997. 10. Websites: Securities and Exchange Board of India (www.sebi.com), National Stock Exchange of India (www.nseindia.com) and Stock Exchange, Mumbai (www.bseindia.org)

182

INTERNATIONAL MONEY MARKET - EUROCURRENCY MARKET


Dr. M.Balamurugan, Asst. Professor, St.Michael College of Engg & Tech., Kalayarkoil A.V.Karthick, Asst. Professor, Dept. of Management Studies, St.Michael College of Engg & Tech., Kalayarkoil Introduction The last two decades have witnessed the emergence of a vast financial market straddling national boundaries enabling massive cross-broder capital flows from those who have surplus funds and are in search of high returns to those seeking low-cost funding. The phenomenon of borrowers, including governments, in one country accessing the financial markets of another is not new; what is new is the degree of mobility of capital, the global dispersal of the finance industry and enormous diversity of markets and instruments which a firm seeking funding can tap. The decade of eighties ushered in a new phase in the evolution of international financial markets and transactions. Major OECD countries had began deregulating and liberalizing their financial markets toward the end of seventies. While the process was far from smooth, the overall trend was in the direction of relaxation of controls which till then had compartmentalized the global financial markets. Exchange and capital controls were gradually removed, non-residents were allowed freer access to national capital markets and foreign banks and financial institutions were permitted to establish their presence in the various national markets. The process of liberalization and integration continued into the 1990s with many of the developing countries carrying out substantive reforms in their economies and opening up their financial markets to non-resident investors. While opening up of the domestic markets began only around the end of seventies, a truly international financial market had already been born in mid-fifties and gradually grown in size and scope during sixties and seventies. This is the well known Eurocurrencies Market wherein a borrower (investor) from country A could raise (place) fund in currency of country B from (with) financial institution located in country C. International markets simply add a number of extra dimensions. And the liberalisation of financial markets also posed major new institutional and policy questions as regulation was dismantled, and the domain of the market now exceeded the jurisdiction of national regulators. Deregulation thus had two components the removal of pre-existing regulations and controls, and the migration of the market out-with national juridical boundaries and hence out-with national controls. The subsequent attempt to recover some regulatory control on an international scale has had only limited success. Thus successful financial regulation, particularly in the attempted management of systemic risk, must be based on a coherent understanding of the relationship between micro-risk, macro-contagion and macroconsequences. In addition, regulation and supervision are important components of macroeconomic policy. To a considerable extent regulatory rules define the relationship between the stock of financial assets and liquidity (the transmission mechanism). The pro-cyclical impact of regulation has been regulated recently, yet despite their potentially major impact regulatory rules have not yet been incorporated in to the fabric of monetary policy. An understanding of the need for regulation, of the impact of regulation, and of the limits of regulation, therefore requires an analysis of the relationship between micro-economic actions and the behaviour of the macro-economy. Yet it is exactly this analysis that appears at the moment to be absent from the discussion of international financial regulation, and to play little role, if any, in considerations of the future of the international financial architecture. In part this is because of the need to concentrate on the micro-economic nuts and bolts of regulation and supervision, but more generally it derives from the lack of a generally accepted, let alone satisfactory, macro-economic theory. An important goal of the CERF project is to establish a macroeconomics that relates financial markers, institutions, and actors, to macro-economic performance in a coherent manner. The Beauty Contest was a beginning. There is much further to go.

183 Money market Definition Market for short-term debt securities, such as bankers acceptances, commercial Paper, bonds, negotiable certificates of deposit, and Treasury Bills with a maturity of one year or less and often 30 days or less. Money market securities are generally very safe investments which return a relatively low interest rate that is most appropriate for temporary cah storage or short-term time horizons. Bid and ask spreads are relatively small due to the large size and high liquidity of the market. Domestic Money Market We invest money in the Canadian Money Markets. This service provides daily Money Market requirements for both borrowers and investors. Up-to-the-minute information and advice is offered on differentials, Money Market trends and market psychology. Investments include: Government of Canada Treasury Bills Provincial Treasury Bills Provincial Promissory Notes Term Deposit Receipts Banker's Acceptances Canadian Commercial Paper Swap deposits International Money Market The International Money Market offers competitive yields, booking locations in international currencies and the security of dealing with the experience of the Money Desk team. International Money Market - Eurocurrency The core of the international money market is the Eurocurrency market. A Eurocurrency is a time deposit of money in an international bank located in a country different form the country that issued the currency. The origin of the Eurocurrency market can be traced back to the 1950s and early 1960s, when the former Soviet Union and Soviet-bloc countries sold gold and commodities to raise hard currency. Because of anti-Soviet sentiment, these Communist countries were afraid of depositing their U.S. dollars in U.S. banks for fear that the deposits could be frozen or taken. Instead they deposited their dollars in a French bank whose telex address was EURO-BANK. Since that time, dollar deposits outside the United States have been called Eurodollars and banks accepting Eurocurrency deposits have been called Eurobanks. EURONOTES Euronotes are short-term notes underwritten by a group of international investment or commercial banks called a facility. A client-borrower makes an agreement with a facility to issue Euronotes in its own name for a period of time, generally 3 to 10 years. Euronotes typically have maturities of from three to six months. Borrowers find Euronotes attractive because the interest expense is usually slightly less typically LIBOR plus 1/8 percent in comparison to syndicated Eurobank loans.
International Currency Rates Short Term Euro Sterling Swiss Franc Canadian Dollar US Dollar Japanese Yen Singapore $ 3 1/32 to 2 31/32 4 29/32 to 4 27/32 1 7/16 to 1 3/8 4 5/16 to 4 9/32 5 9/32 to 5 7/32 5/16 to 9/32 3 3/8 to 3 1/8 7 Days Notice 3 1/32 to 3 4 7/8 to 4 25/32 1 15/32 to 1 3/8 4 5/16 to 4 7/32 5 5/16 to 5 1/4 11/32 to 9/32 3 11/16 to 3 15/32 One Month 3 3/32 to 3 1/16 4 7/8 to 4 13/16 1 9/16 to 1 1/2 4 5/16 to 4 7/32 5 5/16 to 5 1/4 11/32 to 9/32 3 21/32 to 3 17/32 Three Months 3 1/4 to 3 7/32 4 15/16 to 4 29/32 1 23/32 to 1 5/8 4 5/16 to 4 1/4 5 3/8 to 5 5/16 13/32 to 11/32 3 19/32 to 3 1/2 Six Months 3 15/32 to 3 3/8 5 3/32 to 5 1 27/32 to 1 3/4 4 11/32 to 4 1/4 5 7/16 to 5 13/32 7/16 to 3/8 3 5/8 to 3 1/2 One Year 3 21/32 to 3 9/16 5 9/32 to 5 5/32 2 3/32 to 2 4 3/8 to 4 5/16 5 7/16 to 5 13/32 19/32 to 17/32 3 19/32 to 3 1/2

184 Conclusion The recent liberalisation and globalisation measures in the global financial markets have opened up avenues for newer financial intermediaries like mutual funds, money market instruments, and pension funds, etc. The financial markets are increasingly being called upon to perform the task of financial innovations to meet the changing needs of the disintermediated market place. They are faced with the challenge of developing new financial instruments to help their clients cope with an increasingly volatile and uncertain market place. The financial markets play a crucial role in economic development through saving-investment process, also known as capital formation. A vibrant and competitive financial market is necessary concomitant of trade and industrial policy liberalisation to sustain the ongoing reforms in the structural aspects of the real economy. The financial sector reforms have been undertaken in the emerging markets to improve the efficiency and stability of the financial system, and to integrate the national economy at the international level.

185

MOTIVES FOR MERGERS AND ACQUISITIONS IN THE INDIAN BANKING SECTOR A NOTE ON OPPORTUNITIES & IMPERATIVES
Ms.J.Aarthi, MBA, M.Phil, Mr.P.S.Sridharan, MBA, M.Phil, Assistant Professor, Department of Management Studies, Guru Nanak College,Velachery,Chennai-42 Generally speaking a bank is an institution dealing in money. The origin of the word bank is traced to the Italian banca, banc or banque, which means a bench. It is stated that in Middle Ages the European money changers and moneylenders displayed their coins on their benches and conducted their business. Hence the term bank refers to the bench on which the business of money changing and money lending was conducted. Hence, the term banking is defined as accepting for the purpose of lending or investment, of deposits of money from the public repayable on demand or otherwise and withdrawal by cheque, draft, and order or otherwise. In the recent past, the Indian banking system has been undergoing major changes that have affected both its structure and the nature of strategic interaction among banking institutions. Different strategies have been adopted to tackle the demands of this new operating environment, one such strategy having been consolidation via mergers and acquisitions. The Government and the Reserve Bank of India are in favour of this change and consequently arises a desire to study this aspect in detail. Considering the maturity of certain international markets an attempt would be made to obtain certain practices from them as well. However the paper takes cognizance of the fact that Mergers and Acquisitions (M&A) is highly environment dependant and hence there is a constant focus on this aspect while pertaining to practices. It is observed that the banking industry is moving from traditional savings-cum-lending functions to other services as well such as Bank-assurance and securities trading. In recent times, banks have also diversified their activities to cover a wide range of activities. They arrange remittance of funds from one place to an other, they act as agent of their customers in certain activities like payment of subscription, and they also act as guarantors for their customers. Thus banks in India need to change in form and structure so as to adapt to meet these changing scenarios of being a total financial services provider and for this a preferred route ought to be inorganic growth due to time advantages and hence mergers and acquisitions for consolidation. In the recent times, there have been numerous reports in the media on the Indian Banking Industry. The Indian Banking Sector The history of Indian banking can be divided into three main phases 1 : Phase I (1786- 1969) - Initial phase of banking in India when many small banks were set up Phase II (1969- 1991) - Nationalisation, regularisation and growth Phase III (1991 onwards) - Liberalisation and its aftermath With the reforms in Phase III the Indian banking sector, as it stands today, is mature in supply, product range and reach, with banks having clean, strong and transparent balance sheets. The major growth drivers are increase in retail credit demand, proliferation of ATMs and debit-cards, decreasing NPAs due to Securitisation, improved macroeconomic conditions, diversification, interest rate spreads, and regulatory and policy changes (e.g. amendments to the Banking Regulation Act). Certain trends like growing competition, product innovation and branding, focus on strengthening risk management systems, emphasis on technology have emerged in the recent past. In addition, the impact of the Basel II norms is going to be expensive for Indian banks, with the need for additional capital requirement and costly database creation and maintenance processes. Larger banks would have a relative advantage with the incorporation of the norms. This paper is a short note taking holistic approach to compare the rationale behind M&A in India and the international arena. The approach is non-empirical and draws from a mix of recent literature review and interpretations of a few recent observations. Relevant observations have been cited at every stage to reinforce the reasons. While evaluating the various reasons for M&A in the

186 banking sector we have consciously focussed the discussion on the imperative and the opportunistic needs for M&A in the banking sector. M&A in the Indian Banking Sector as an Imperative Multiple reasons force us to believe that M&A in the Indian Banking Sector is an imperative. We list them down below: Stability: Fragmentation poses increasing risk in the Indian Banking Sector. During the financial period 2001-2005, only four banks have been able to cross the market capitalization of Rs. 50 billion included Bank of Baroda, HDFC Bank, ICICI Bank, and State Bank of India. Considerable fragmentation exists in the Banking sector for banks with market capitalization of less than Rs. 50 billion. Moreover the created value is moving away from the top 5 banks thus indicating fragmentation indeed has increased over the period of last five years. Shown below are the deposit shares of the Banks operating in India over the period 2000-2004. Data was drawn from around 45 banks which included state-controlled public sector banks, private sector banks and even foreign banks operating in India. It is observed that the share of the top 5 players has eroded and been consumed by the next fifteen players. Considering that the base of total deposits has been consistently increasing, consequently the value in deposits gained by the next 15 banks has been tremendous (see table below). Year 20Similar trends are observed in profit after tax, borrowings and interest and non interest incomes of the banks, thereby hinting at increased levels of fragmentation in the top 20 banks. Though this could be the sign of a competitive bank market with healthy banks remaining in the market the goal of globally competent banks would be missed. In other words, while a fragmented Indian banking structure may very well be beneficial to the customers (given increased competition due to lower market power of existing players), at the same time this also creates the problem of no player having the critical mass to play the game at the global banking industry level. This has to be looked at significantly from the states long-term strategic perspective. Furthermore, it is observed that in an increasing competitive arena the smaller fragmented banks with no economies of scale, low capabilities to manage risks and poor market power at times end up taking excessive risks resulting in irreparable loss to their depositors. This also results in affecting the state and its regulators i.e., central bank negatively. Take the following cases of trouble in the recent past: a. Global Trust Bank: Significant exposure to high risk mid size corporates and an excessive exposure to capital market operations. b. Madhavpura Mercantile Co-operative Bank: Nineteen customers had unsecured loans of more than Rs. 10 billion. c. South Indian Co-operative Bank: Non Performing Assets (NPAs) from excessive lending to small group of clients d. Nedungadi Bank: This bank based in Southern part of India had significant exposure to plantation industry and had weak credit risk management systems and processes. Further recent cases (in 2005-06) of two banks in India namely United Western Bank and Sangli Bank became attractive targets for acquisition by private sector banks because of their risk profile. The merger with these larger banks is expected to improve the asset profile, NPA management and protect the depositors at the same time offer the acquiring private sector banks further reach in terms of branches and customer base. Managing Bankruptcy Risks Recent studies have established that if merger and acquisitions in banks if allowed in a Controlled manner would significantly reduce the bankruptcy risk of the merged entity. Obviously, mergers would also provide these benefits to banks in India reducing their bankruptcy concerns. Bottom Line Growth: Mergers and Acquisitions or Restructuring may also help banks improve in three other areas as listed below:

187 1. Economies of Scale: An acquirer would have the capabilities to improve the collections, service processes, distribution, infrastructure and IT of the target bank 2. Economies of Scope: An ability to grow products and segments and an opportunity to cross sell would enhance revenue. This could also result in more geographic growth could also be obtained. 3. Synergy Benefits: Treasury performance would be improved as the cost of funds would reduce (hence, improve spread) as it would have a better credit rating. A bank would also be able to leverage scale and improve its trading income. M&A in the Indian Banking Sector as an Opportunity Two prime reasons force us to believe that M&A in the Indian Banking Sector is an opportunity. Creation of a Financial Super Market or a Universal Bank:9, 10, 11 A recent trend is to promote the concept of a financial super market chain, making available all types of credit and non-fund facilities under one roof under one umbrella organization (or through specialized subsidiaries). An example of such a financial supermarket would be the reverse merger of ICICI and ICICI Bank. ICICI Bank today stands as Indias second largest bank offering its clients both in India and overseas a product range as varied us retail banking products to exotic investment banking and treasury solutions. Similarly, IDBI and IDBI Bank treaded the same route. Though one has to state that consolidated accounting and supervisory techniques would have to evolve and appropriate fire walls built to address the risks underlying such large organizations and banking conglomerates. Motives Behind Consolidation Based on the cases, we can narrow down the motives behind M&As to the following : Growth - Organic growth takes time and dynamic firms prefer acquisitions to grow quickly in size and geographical reach. Synergy - The merged entity, in most cases, has better ability in terms of both revenue enhancement and cost reduction. Managerial efficiency - Acquirer can better manage the resources of the target whose value, in turn, rises after the acquisition. Strategic motives - Two banks with complementary business interests can strengthen their positions in the market through merger. Market entry - Cash rich firms use the acquisition route to buyout an established player in a new market and then build upon the existing platform. Tax shields and financial safeguards - Tax concessions act as a catalyst for a strong bank to acquire distressed banks that have accumulated losses and unclaimed depreciation benefits in their books. Regulatory intervention - To protect depositors, and prevent the de-stabilisation of the financial services sector, the RBI steps in to force the merger of a distressed bank. Future of M&A in Indian Banking In 2009, further opening up of the Indian banking sector is forecast to occur due to the changing regulatory environment (proposal for upto 74% ownership by Foreign banks in Indian banks). This will be an opportunity for foreign banks to enter the Indian market as with their huge capital reserves, cutting-edge technology, best international practices and skilled personnel they have a clear competitive advantage over Indian banks. Likely targets of takeover bids will be Yes Bank, Bank of Rajasthan, and IndusInd Bank. However, excessive valuations may act as a deterrent, especially in the post-sub-prime era. Persistent growth in Indian corporate sector and other segments provide further motives for M&As. Banks need to keep pace with the growing industrial and agricultural sectors to serve them effectively. A bigger player can afford to invest in required technology. Consolidation with global

188 players can give the benefit of global opportunities in funds' mobilization, credit disbursal, investments and rendering of financial services. Consolidation can also lower intermediation cost and increase reach to underserved segments. The Narasimhan Committee (II) recommendations are also an important indicator of the future shape of the sector. There would be a movement towards a 3-tier structure in the Indian banking industry: 2-3 large international banks; 8-10 national banks; and a few large local area banks. In addition, M&As in the future are likely to be more market-driven, instead of government-driven. 11 CONCLUSION Mergers and Acquisitions (M&A) have immensely evoked and still continue to capture scholars interests. More so, M&A in the banking sector evokes high interest simply for the fact that after decades of strict regulations, easing of the ownership & control regulations has led to a wave of M&A in banking industry throughout the world . Considering the changed environment conditions, we believe that M&A in the Indian Banking are an important necessity. The reasons include (a) fragmented nature of the Indian banking sector resulting in poor global competitive presence and position; (b) large intermediation costs and consequent probability in increasing its risk profile; and (c) meet the new stringent international regulatory norms. While a fragmented Indian banking structure may very well be beneficial to the customers , at the same time this also creates the problem of not having any critical mass to play the game at the global banking industry level. This has to be looked at significantly from the states long-term strategic perspective. Given that economic power is increasingly used as a tool by nations to defend their position, to signal power, to signal intent, and to establish their supremacy over others hence owning and managing large powerful global banks would be an obvious interest for every country. Additionally, given the recent advances in electronic technology (especially wireless) makes the traditional occupation of land theory redundant, increasing the importance for the state to intervene and create large sized banks using the M&A route. Hence, it is imperative for the state to create a few large sized banks even at the cost of hurting its other stakeholders including customers.

189

INNOVATIVE FINANCIAL INSTRUMENT - CARBON CREDITING & CARBON TRADING


T.Suganthalakshmi, Asst. Prof. School of Management Studies, Anna University of Technology, Coimbatore 47. Dr.C.Muthuvelayutham, Asst.Prof, Directorate of online and distance Education, Anna University of Technology, Coimbatore ABSTRACT Financial tool enables organizations to make a complete financial analysis or discussions with other investors around all types of asset classes, including stocks, bonds, forex and funds. A financial tools helps to maintain IT systems, leading to improved competitiveness and ramp up the market in their businesses. An appropriate financial tool should possess the following. Real-time financial data, information or intelligence on several investment opportunities. Interactive with investors to effectively implement the financial plan Application that facilitates investor to quantitatively assess the viability of new or existing investments. Ability to connect and network with other peer investors to exchange investment analysis tips and advice. Ability to compete with real money and other peer investors to hone their financial investment analysis. A good financial management tool helps an organisation in customer management systems, compliance solutions to prevent money laundering and illegal insider trading, and credit risk management systems to evaluate risks. Also helps in development of complete sales management systems for retail companies, software solutions to review applications in the health insurance industry, and custom development projects. Innovations had shown consistent growth,double digit growth rates and always maintains the leadership position. Therefore just a financial tool is no sufficient, an innovative financial tool is very essential. This paper would elaborately discusses about the various innovations that had merged with financial organizations and made the financial planning a better one. INTRODUCTION: Financial instrument are easily tradable packages of capital, each having their own unique characteristics and structure. It is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The wide array of financial instruments in today's marketplace allows efficient flow of capital amongst the world's investors. CARBON CREDIT Every industry/nation has a maximum fixed carbon emission per year and emissions had to be maintained below that level. If a nation is able to go below the limit, those extra "credits" could be sold to other industries who can't comply with the limit. Selling of these credits is termed as carbon trading. This trading happens not only amongst industries also between nations. Trading carbon credits is a new mechanism designed to allow firms that fail to meet emission standards set by the 1997 Kyoto Protocol, to buy credits from other firms that meet their targets. The advantages of carbon trading are that the seller and intermediary can hedge against price risk and no counterparty risk as the Exchange guarantees the trade. The price discovery on the Exchange platform ensures a fair price for both the buyer and the seller.

190 KOYOTO PROTOCOL: At the 1997 Climate Change Convention in Kyoto, theprimary topic of discussion was the reduction of greenhouse gases (GHG), which arebelieved to be the principal cause of global warming. Kyoto Protocol is a voluntary treatysigned by 141 countries, including the European Union, Japan and Canada for reducing GHGemission by 5.2% below 1990 levels by 2012. The preliminary phase of the Kyoto Protocolends in 2007 while the second phase starts from 2008. The penalty for non-compliance in thefirst phase is Euro 40 per ton of carbon dioxide (CO2) equivalent. In the second phase, thepenalty is hiked to Euro 100 per ton of CO2. THE CLEAN DEVELOPMENT MECHANISM: CDM is an arrangement under the Kyoto Protocol allowing industrialized countries with a greenhouse gas reduction commitment to invest in emission reducing projects in developing countries. Under CDM, a developed country can take up a greenhouse gas reduction project activity in a developing country where the cost of GHG reduction project activities is usually much lower. The developed country would be given credits (Carbon Credits) for meeting its emission reduction targets. DELHI METRO RAIL PROJECT: A must mention project is The Delhi Metro Rail Corporation (DMRC): It has become the first rail project in the world to earn carbon credits because of using regenerative braking system in its rolling stock. DMRC has earned the carbon credits by using regenerative braking system in its trains that reduces 30% electricity consumption. Whenever a train applies regenerative braking system, the released kinetic energy starts a machine known as converter-inverter that acts as an electricity generator, which supplies electrical energy back to the Over Head Electricity (OHE) lines. This regenerated electrical energy that is supplied back to the OHE that is used by other accelerating trains in the same service line. DMRC can now claim 400,000 CERs for a 10-year crediting period beginning December 2007 when the project was registered by the UNFCCC. This translates to Rs 1.2 crore per year for 10 years. India has the highest number of CDM projects registered and supplies the second highest number of Certified Emission Reduction units. Hence, India is already a strong supplier of Carbon Credits and can improve on it CARBON CREDIT MARKET: British Petroleum in UK is emitting GHG more than the accepted norms of UNFCCC. UK has a tie up with Subsidiary in India or China under CDM. The credits arising out of the use of the new technology are sold to counterparts in Europe, thus a carbon credit market is created. There is a great opportunity awaiting India in carbon credit trading which is estimated to go up to $100 billion by 2010. In the new regime, the country could emerge as one of the largest beneficiaries accounting for 25 per cent of the total world carbon trade. The carbon emission reductions market has doubled in volume in the last one year alone but few of its benefits are reaching the developing countries. The countries like the US, Germany, Japan and China are likely to be the biggest buyers of carbon credits. CARBON OFFSETS: The University of Oxford Environmental Change Institute defines a carbon offset as mechanism whereby individuals and corporations pay for reductions elsewhere in order to offset their own emissions The Environment Protection Authority of Victoria (Australia) defines a carbon offset as: a monetary investment in a project or activity elsewhere that abates greenhouse gas (GHG) emissions or sequesters carbon from the atmosphere that is used to compensate for GHG emissions from your own activities. Offsets can be bought by a business or individual in the voluntary market (or within a trading scheme), a carbon offset usually represents one tonne of CO2.There are also many companies that sell

191 carbon credits to commercial and individualcustomers who are interested in lowering their carbon footprint on a voluntary basis. These carbon off setters purchase the credits from an investment fund or a carbon development company that has aggregated the credits from individual projects. The quality of the credits isbased in part on the validation process and sophistication of the fund or developmentcompany that acted as the sponsor to the carbon project. This is reflected in their price.Voluntary units typically have less value than the units sold through the rigorously-validatedClean Development Mechanism. PROCESS OF OFFSETTING: Before choosing to offset, there are other steps that you should take to reduce emissions. The Government recognizes a hierarchy of actions to combat the effects of climate change for both businesses and individuals and encourages you to take action on your carbon footprint in the following order: CALCULATE the first action is always to calculate carbon emissions or the carbon emissions from organization or for an individual. Common emission sources are electricity and gas use and transport. A number of emissions calculators exist the Governments preferred calculator for individuals is the Act on CO2 Carbon Calculators that are available on websites like www.direct.gov.uk/ActOnCO2. For organizations, the Carbon Trust has a carbon calculator available at www.carbontrust.co.uk. Both calculators use the latest conversion factors and provide advice on how to reduce emissions. AVOID Once you know the size of your carbon footprint you can begin to take action on CO2. Many emissions can be avoided in the first place for example by finding alternatives to travelling or turning off equipment when it is not in use. REDUCE Once all reasonable actions have been taken to avoid emissions, you should take action to reduce your remaining emissions through efficiency measures, such as using low-energy light bulbs or installing better insulation. Again, both the Act on CO2 Calculator and the Carbon Trust can advise on avoiding and reducing emissions. OFFSET Many emissions cannot currently be avoided or reduced.. Offset providers will help you to calculate the emissions relating to the particular activities you wish to offset. If youre not sure where to buy your offsets, the Quality Assurance Scheme for carbon offsetting will make it easy for you to identify good quality offsets. If you dont purchase quality assured offsets, then you should take the time to check that the offsets you choose represent real CO2 reductions and have been measured and verified by a competent third party. E.U. MARKET FOR CABON CREDITS: The global carbon market is dominated by the European Union, where companies that emit greenhouse gases are required to cut their emissions or buy pollution allowances or carbon credits from the market, under the European Union Emission Trading Scheme (EU ETS). Europe, which has seen volatile carbon prices due to fluctuations in energy prices and supply and demand, will continue to dominate the global carbon market for another few years, as the U.S. and Chinathe world's top polluters have yet to establish mandatory emission-reduction policies. U.S MAKET FOR CARBON CREDIT: On the whole, the U.S. market remains primarily a voluntary market, but multiple cap and trade regimes are either fully implemented or near-imminent at the regional level. The first mandatory, market based cap and trade program to cut CO2 in the U.S., called the Regional Greenhouse Gas Initiative (RGGI), kicked into gear in Northeastern states in 2009, growing nearly tenfold to $2.5 billion, according to Point Carbon. Western Climate Initiative (WCI) -- a regional capand-trade program including seven western states (California notably among them) and four Canadian

192 provinceshas established a regional target for reducing heat-trapping emissions of 15 percent below 2005 levels by 2020. VOLUNTARY MARKET: PARTICIPANTS: A wide range of participants are involved in the voluntary market, including providers of different types of offsets, developers of quality assurance mechanisms, third party verifiers, and consumers who purchase offsets from domestic or international providers. Suppliers include for-profit companies, governments, colleges and universities, and other organizations. MOTIVATIONS: According to industry analyst Ecosystem Marketplace, the voluntary markets present the opportunity for citizen consumer action, as well as an alternative source of carbon finance and an incubator for carbon market innovation. In their survey of voluntary markets, data has shown that Corporate Social Responsibility and Public Relations/Branding are clearly in first place among motivations for voluntary offset purchases, with evidence indicating that companies seek to offset emissions "for goodwill, both of the general public and their investors." In addition, regarding market composition, research indicates: "Though many analysts perceive pre-compliance buying as a dominant driving force in the voluntary market, the results of our survey have repeatedly indicated that pre-compliance motives remain secondary to those of the pure voluntary market (companies/individuals offsetting their emissions). PRECOMPLIANCES AND TRADING: The other main categories of buyers on the voluntary markets are those engaged in precompliance and/or trading. Those purchasing offsets for pre-compliance purposes are doing so with the expectation, or as a hedge against the possibility, of future mandatory cap and trade regulations. As a mandatory cap would sharply increase the price of offsets, firms, especially those with large carbon footprints and the corresponding financial exposure to regulation makes the decision to acquire offsets in advance at what are expected to be lower prices. The trading market in offsets in general resembles the trade in other commodities markets, with financial professionals including hedge funds and desks at major investment banks, taking positions in the hopes of buying cheap and selling dear, with their motivation typically short or medium term financial gain. RETAIL MARKET: Multiple players in the retail market have offerings that enable consumers and businesses to calculate their carbon footprint, most commonly through a web-based interface including a calculator or questionnaire, and sell them offsets in the amount of that footprint. In addition many companies selling products and services, especially carbon-intensive ones such as airline travel, offer options to bundle a proportional offsetting amount of carbon credits with each transaction. Few voluntary offsets operate under both nonprofit and social enterprise models, or a blended approach sometimes referred to as triple bottom line. Other participants include broader environmentally focused organizations with website subsections or initiatives that enable retail voluntary offset purchases by members, and government created projects such as the UK's Carbon Trust. CONCLUSION: Thus CARBON CREDIT is an innovative combination in both financial as well as environmental aspects that yields considerable profit to the society as well as individuals. A general aware about these kinds of financial aspects has to create amongst todays generation to initiate few more innovations in the finance sectors. Hence appreciation of these kind of financial instrument is very essential to make this earth a exist able planet for the future generation.

193

INVENTION OF IDEAS AND STRATEGIES IN INVESTING


K.Damodaran, Asst.Prof, Professional School of Management. The Risks of Investing In Emerging Markets Investing is always risky business; corporate scandals regularly surface in the news, corporate bonds are frequently downgraded, accounting fraud is often revealed and market imperfections such as the flash crash continuously bring a level of uncertainty. Even the most stable domestic blue chip companies will face times of tremendous volatility. Emerging markets offer numerous benefits to investors such as elevated economic growth rates, higher expected returns and diversification benefits. However, there are a number of important risks to consider before investing in regions outside of the developed world. 1).Foreign Exchange Rate Risk Foreign investments in stocks and bonds will typically produce returns in the local currency of the investment. As a result, investors will have to convert this local currency back into their domestic currency. An American who purchases a Brazilian stock in Brazil will have to buy and sell the security using the Brazilian real. Therefore, currency fluctuations can impact the total return of investment. If, for example, the local value of a held stock increased by 5%, but the real depreciated by 10%, the investor will experience a net loss in terms of total returns when selling and converting back to U.S. dollars. 2) Non-Normal Distribution North American market returns arguably follow a pattern of normal distributions. As a result, financial models can be used to price derivatives and make somewhat accurate economic forecasts about the future of equity prices. Emerging market securities, on the other hand, cannot be valuated using the same type of mean-variance analysis. Also, because emerging markets are undergoing constant changes, it is almost impossible to utilize historical information in order to draw proper correlations between events and returns. 3) Lax Insider Trading Restrictions Although most countries claim to enforce strict laws against insider trading, none have proved to be as rigorous as America in terms of prosecuting unfair trading practices. Insider trading and various forms of market manipulation introduce market inefficiencies, whereby equity prices will significantly deviate from their intrinsic value. Such a system can be subject to extreme speculation, and can also be heavily controlled by those holding privileged information. 4) Less Liquidity Emerging markets are generally less liquid than those found in the developed world. This market imperfection results in higher broker fees and an increased level of price uncertainty. Investors who try to sell stocks in an illiquid market face substantial risks that their orders will not be filled at the current price, and the transactions will only go through at an unfavorable level. Additionally, brokers will charge higher commissions, as they have to make more diligent efforts to find counterparties for trades. Illiquid markets prevent investors realizing the benefits of fast transactions. 5) Difficulty Raising Capital A poorly developed banking system will prevent firms from having the proper access to financing that is required to grow their businesses. Attained capital will usually be issued at a high required rate of return, increasing the company's weighted average cost of capital (WACC). The major concern with having a high WACC is that fewer projects will produce a high enough return to yield a positive net present value. Therefore, financial systems found in developed nations do not allow companies to undertake a higher variety of profit-generating projects.

194 6) Poor Corporate Governance System A solid corporate governance structure within any organization is correlated with positive stock returns. Emerging markets sometimes have weaker corporate governance systems, whereby management, or even the government, has a greater voice in the firm than shareholders. Furthermore, when countries have restrictions on corporate takeovers, management does not have the same level of incentive to perform in order to maintain job security. While corporate governance in the emerging markets has a long road to go before being considered fully effective by North American standards, many countries are showing improvements in this area in order to gain access to cheaper international financing. 7) Increased Chance of Bankruptcy A poor system of checks and balances and weaker accounting audit procedures increase the chance of corporate bankruptcy. Despite that bankruptcy is common in every economy; such risks are most common outside of the developed world. Within emerging markets, firms can more freely cook the book to give an extended picture of profitability. Once the corporation is exposed, it experiences a sudden drop in value. This is not to say that such occurrences do not happen in North America and Europe. Because emerging markets are viewed as being more risky, they will have to issue bonds that pay higher interest rates. The increased debt burden further increases borrowing costs and strengthens the potential for bankruptcy. THE INVESTMENT RISKS How to deal with them? The fact is that you cannot get rich without taking risks. Risks and rewards go hand in hand; and, typically, higher the risk you take, higher the returns you can expect. In fact, the first major Zurich Axiom on risk says: "Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough". Then the minor axiom says: "Always play for meaningful stakes". The secret, in other words, is to take calculated risks, not reckless risks. In financial terms, among other things, it implies the possibility of receiving lower than expected return, or not receiving any return at all, or even not getting your principal amount back. Every investment opportunity carries some risks or the other. In some investments, a certain type of risk may be predominant, and others not so significant. A full understanding of the various important risks is essential for taking calculated risks and making sensible investment decisions. CONCLUSION Investing in emerging markets can produce substantial returns to one's portfolio. However, investors must be aware that all high returns must be judged within the risk and reward framework. The aforementioned risks are some of the most prevalent that must be assessed prior to investing. Unfortunately, however, the premiums associated with these risks can often only be estimated, rather than determined on a concrete basis.

195

AN ANALYSIS OF FINANCIAL BEHAVIOUR OF INVESTORS IN MUTUAL FUND INVESTMENT


S.N.Selvaraj, H.Shamin and C.Dhanya Asst. Profs, Wisdom School of Management, Udumalpet Introduction Mutual Funds came into existence to provide an investment opportunity to such people who do not want to take much risk. The savings of the investors have to be mobilized for a productivity use and this is possible only by certain types of investment. The mutual fund is basically a risk reduction tool is achieved by diversification of the portfolio. It designs, its schemes to meet the needs of different types of investors in terms of nature of investments, dividend distribution and liquidity, etc. The superfluity of schemes provides variety of options to suit the individual objectives whatever their age, financial position, risk tolerance and return expectations. Overview of Literature MF investments bring a new era in the history of investment world. On the one hand it reduces the tax burden of the investors and it gives a considerable amount of return without having a large amount of risk burden. Due to its multiple advantages as an investment avenue, it creates interest in researchers and academicians to do research on it. There have been a less number of studies conducted in India as compared to the developed capital markets. It is obvious that the studies done both in India and abroad regarding the fund selection behavior of individual investors. MF as Investment Portfolio Mutual Funds are wonderful investments for people who have little time or interest in tracking a portfolio of investments themselves. Other benefits of mutual funds include their ability to capitalize on economies of scale and reasonably create a widely diversified portfolio for small investors. An investor who lacks the knowledge to manage their own investment can turn to the mutual fund and let a professional handle all the securities, analysis and questions of when to buy or sell for them. This works so well that better than 95 million people invest in mutual funds, making them the largest financial intermediary in the United States. The investors in mutual funds may be newcomers to investing or they may be experienced investors. Importance of Awareness Awareness belongs to internal characteristics of their investment decision. It is essential for the AMCs to know the level of awareness about MF among investing public. This will enable them to create an external environment that can influence investment decisions of investors. The study measures the general awareness level among individual investors also to find out the result. AMCs should take not of this and follow a segmented approach in marketing the product and in creating awareness. The results of Chi-square test shows the dependency between awareness level and each demographic factor such as age, income and gender separately. Objectives of the Study The present study has the following general objectives: To examine the savings interest among individual investors. To examine the fund/scheme preference of investors. To understand the preferential feature in the savings instrument. To examine mutual fund conceptual awareness among the present investors. Research Methodology In the preliminary stage, we gathered a database of MF investors from different brokers and fixed appointments with them. We have selected 40, 40 and 60 investors in Komarapalayam, Tiruchengode and Namakkal Towns respectively. Out of 140 investors it was restricted to 100 investors due to some difficulties and had personal interview with them. Sampling Design

196 The target respondents include all such individual investors who have invested in MFs and have some knowledge about the basic terminologies of MFs. However, the sampling has turned out be a convenient sampling systematically chosen from blocks of the area conveniently located for the enumerators. Data Collection The enumerators visited the investors according to the appointment fixed with them. They filled up the interviewer administered questionnaire with feedback from the respondents. The data collection went on for 45 days during November 2010- January 2011. Analysis The responses to the different questions have been represented using a pie chart. Ranks have been provided in the tables in respect of the respondents for the different (1) savings instrument preference among individual investors; (2) current attitude of investors towards the fund/scheme preference (3) understanding the preferential features in the savings instrument among investors. Weights in percentage have been assigned to the ranks to scrutinize the analysis. A chi-square test has been done to examine whether there exists any dependency between awareness level and each demographic factor such as age, income and gender separately. Data Analysis Savings Interest among Individual Investors The savings interest of majority of individual investors is to provide for purchase of assets followed by the intention to meet contingencies and tax reduction. Asset Management Companies (AMCs) can attract investors by designing products that ensure a reasonable return and ensure safety of the capital. The tax saving instrument would also provide to be lucrative if marketed effectively. Figure 1: Savings Interest among Individual Investors

17%

22%

To meet contingencies To provide for retirement For tax reduction

24%

16% 21%

For purchase of assets For children's education

Preference for Savings Instruments The investment attitude of investors is highlighted by their asset preference pattern. The study reveals that bank deposits are the most popular savings instrument among investors of Namakkal District, as they are unique financial products which enable an average salaried person to get a balanced proportion of reasonable returns, along with safety of capital and liquidity. (Table:1). The liquidity provided will help investors meet the contingencies, which is one of their primary objectives of saving. This is followed by Life Insurance which again ensures safety of the capital along with reasonable returns and also provides Tax Savings. UTI MF occupies the third position highlighting its

197 growing popularity among retail investors. The other saving instruments are not so popular due to the lack of awareness among investors. Table:1 Savings Instruments Preference % Priority Currency 7.06 IX Bank Deposit 14.72 I Life Insurance 14.26 II Pension and Provident Fund 11.14 IV Shares 9.90 V UTI MF 11.82 III Postal Savings 9.36 VII Chits 2.72 X Real Estate 9.14 VIII Gold 9.88 VI Fund/Scheme Preference among Investors Mutual Funds provide a superfluity of options, ranging from growth schemes to fixed income schemes. Nowadays, investors are not offered just plain vanilla schemes but assorted schemes in tune with their personal preferences. According to Table 2, MF scheme preference for the majority of investors is growth scheme followed by income scheme. The investors are interested in earning higher return rather than regular safe returns. Table:2 Schemes of MF Preference % Priority Growth Fund 23.56 I Balance Fund 17.48 III Income Fund 19.40 II Money Fund 16.20 IV Tax Fund 12.08 V Index Fund 11.28 VI Analysis of scheme preference by nature of operation reveals the popularity of open-ended schemes. In India, majority of the schemes are open-ended as investors can buy or sell units at NAV related prices whenever they wish. The preference for open-ended scheme has also given due importance to liquidity and flexibility to enter and exit at wish, which is given high importance by the investors in selecting an investment avenue. On the other hand, only few of the respondents (6%) have voted for interval schemes which shows lack of awareness with regard to the scheme benefits. Figure 2: Preference for MF Schemes among Investors

6%

Open-ended scheme

34% 60%

Close-ended scheme Interval scheme

Preferential Feature in the Savings Instrument among Individual Investors

198 The Chairman of UTI, has summarized the psyche of a typical Indian investor in three words yield, security and liquidity. Table 3 shows that the investors need for safety is foremost, followed by good return, liquidity, flexibility, tax benefit, capital appreciation, diversification benefits and professional management. Table 3: Preference for Different Features of Mutual Funds Safety 15.86 I Liquidity 14.76 III Flexibility 13.66 IV Good Return 14.86 II Tax Benefit 12.18 V Capital Appreciation 10.04 VI Professional Management 8.70 VIII Diversification Benefit 9.94 VII MF Conceptual Awareness Level of Individual Investors Knowledge about the level of awareness about MFs among the investing public will enable AMCs to create an external environment that can influence investment decisions of investors. The study reveals that the general awareness level among individual investors regarding the concept and functioning of MF is good. Awareness has been measured by collecting the responses to some basic facts related to MFx. Those respondents who have given more than 50% right answers have been categorized as aware and the rest as unaware. Figure 3: Awareness among Mutual Fund Investors

It was found that 72% of the respondents have good awareness level of MFs as shown in Figure 3. This could be attributed to the wide publicity given to the MF industry by the media and investor education programs organized by AMFI from time to time. However it should be noted that this study was based in the towns of Komarapalayam, Tiruchengode and Namakkal of Namakkal District, where the awareness level would be considerably high. The challenge would be to educate the less aware investors about the advantages of investing in MFs companies to the traditional saving instruments in order to encourage investment in mutual funds. We further analyzed the relationship between awareness and the demographic variables like gender, age and income. We formulated three hypotheses to test their independence using the chisquare test. The results are tabulated and interpreted herein. Hypotheses H01: Awareness is independent of gender Awareness is independent of age H02: H03: Awareness is independent of income

199 Gender From chi-square tests (Table 4), it is evident that awareness of investors is independent of gender. The null hypothesis is accepted at significance level of 54%. It is found that awareness of respondents is not dependent in respect of gender. Table 4: Results of Chi-Square Test for Hypothesis H01 Awareness Total 0.00 1.00 Male 21 58 79 Gender Female 7 14 21 Total 28 72 100 Chi-Square Tests Value df Asymp.Sig (2-sided) Pearson Chi-Square 0.375 1 0.540 Age From Table 5, we can infer that the conceptual awareness of investors is significantly dependent on age as we can reject the null hypothesis at significance level of 6.7% or more. In other words, awareness is dependent on age. It is found that respondents belonging to less than 40 age bracket are well aware of the MFs as compared to the respondents of higher than 40 age bracket. This can probably be attributed to the fact that they are risk-averse and are generally inclined towards parking their funds in government securities, bank deposits, LIC, etc. Thus AMCs have a major role in creating awareness amongst the respondents belonging to higher age group which in turn will fetch a considerable amount of investment for the industry. Table 5: Results of Chi-Square Test for Hypothesis H02 Awareness Total 0.00 1.00 Below 30 9 31 40 3140 4 21 25 Age 4150 9 9 18 Above 50 6 11 17 Total 28 72 100 Chi-Square Tests Value df Asymp.Sig (2-sided) Pearson Chi-Square 7.156 3 0.067 Income From Table 6, we can infer that the conceptual awareness of investors is significantly dependent on their level of income. We can reject the null hypothesis at significance level of 11.1% or more. It is found that respondents having monthly income below 300,000 are well aware of the MFs in comparison to the respondents having monthly income more than 300,000. This can probably be attributed to the fact that people belonging to low income group are more cautious about their money. Hence, before parking their hard earned money in different available investment avenues, they always gather as much information possible. But it is just the opposite in the case of the respondents belonging to the higher income bracket, who mostly depend on the brokers and advisors.

200 Table 6: Results of Chi-Square Test for Hypothesis H03 Awareness Total 0.00 1.00 Below 100000 6 10 16 100001-300000 7 37 44 Income 300001-500000 9 17 26 Below 100000 6 8 14 Total 28 72 100 Chi-Square Tests Value df Asymp.Sig (2-sided) Pearson Chi-Square 6.004 3 0.111 Further Suggestions Since the investors preference for liquidity is found to be high, we suggest more of the new schemes to be open-ended. AMCs should endeavour to design suitable schemes to meet the multiple needs of adequate returns, safety and liquidity in a reasonable proportion as these features have rated high by individual investors. Investors can be categorized into various segments such as young families with small or no children looking for high returns, middle-aged people saving for retirement, retired people looking for regular income and suitable products can be designed to meet the preference of each class. Products such as growth and balanced schemes for young families and income schemes with regular and reasonable returns for retired people can be designed and marketed to the right customers. Pension funds are likely to be a big driver for the MF industry in the new future. So they need to design suitable funds and market the same effectively. Negative perceptions and unawareness among investors about MFs could be tackled through appropriate investor education measures. It is suggested that AMFI may set aside a percentage of membership fee that it collects from the AMCs and create a fund for Investor Education Programs. Advisory services are becoming more critical to investors and independent financial advisors and planners are becoming popular. Banks are planning to enter the advisory services in a big way and this would open an extensive distribution channel given the customer base of the banks. An entirely new distribution channel can be created consisting of professional advisors, as in the case of life insurance agents, who will exert substantial influence on what products investors will buy. Electronic sale financial products are gaining volumes with the widespread acceptability of ebuying. Therefore, AMCs should establish friendlier and easily accessible automated response systems to encourage the this type of investments. Conclusion MF industry is India has a large untapped market. There is a great potential for this industry as more people are falling back on professional management of their funds at low cost and minimum risk. This market potential can be tapped by closely scrutinizing investor behaviour to identify their expectations and design products to suit their risk appetite and return expectations. Presently, as more and more funds are entering the industry, strategic marketing decisions of these companies are vital for their survival. Investors have become more alert and choosy. Hence, the success of an MF depends on complete understanding of the psychology of the small investor. Under such a situation, the present exploratory study is an attempt to understand the financial behaviour of MF investors in connection with scheme preference and selection which would help the MFs to gauge the investor expectations and changing perception.

201

CONTEMPORARY ISSUES IN E-BANKING


Mrs.D.Charumathi & Mrs.V.Uma Maheswari, Guru Nanak College INTRODUCTION: Banks use technology to provide quality products and services. For quite a long time banks have been using electronic and telecommunication networks for delivering a wide range of value added products and services. Due to internet revolution and easy access to Internet and World Wide Web (WWW), banks are using Internet as a delivery channel. One of the challenges faced by banks is in delivery of their products and services in efficient manner to their customers. In order to satisfy their customers banks focus on integrated channels like ATMs, Internet Banking, Mobile Banking, Debit Cards, Credit Cards etc. Through these integrated channels banks reaches many customers but still these channels poses challenges to the banks and the customers. Internet Banking: Internet penetration in India has witnessed a dramatic growth in last few years. Now India is in the 5th position worldwide. United States, China, Japan and Germany are in the first four positions respectively. India will soon cross Germany which has a total net population of 50 million. The Internet Banking can be classified into three levels: First Level Banks websites disseminate information on different products and services offered to their customers Second Level - Simple Transactional Websites allows their customers to submit their instructions, applications for different services, queries on their account balances, etc, but do not permit any fund-based transactions on their accounts Third Level - Fully Transactional Websites that allows their customers to operate on their accounts for transfer of funds, payment of different bills, subscribing to other products of the bank and to transact purchase and sale of securities, etc. Findings of Internet & Mobile Association of India shows the most popular online activities undertaken by Internet users in India in 2005 (as a % of respondents): E-mail and IM: 98%, Job search: 51%, Banking: 32%, Bill payment: 18%, Stock trading: 15%, Matrimonial search: 15%. From this it is inferred that banking through Internet is popular among Indians. Opportunities in Internet Banking: Now almost all Indian Banks are giving free internet banking facility. ICICI bank alone conducts around 17,000 online transactions per day. Banks also offer many added features like bill payment, fund transfer, online money order, pre-approved online loans, insurance and telephone payment, online check book request and standing instructions, prepaid mobile recharge, account statement via email, demat services, investments etc. Challenges in Internet Banking: Though Internet Banking is popular in India, it faces challenges such as: Infrastructure, lack of user friendliness, lack of the facility in the current bank etc., Traditional mind setup - There are customers who do not prefer Internet Banking due the factors like security concerns, preference for face-to-face transactions, lack of knowledge about transferring online. India, by comparison, is overwhelmed by weak infrastructure, low PC penetration, developing security protocols and consumer reluctance in rural sector Security Threats in Internet Banking: Phishing: Spyware and Adware

202 Viruses Trojans: Keyloggers Mobile Banking:

Mobile banking (also known as M-Banking, mbanking, SMS Banking) is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile Phone or Personal Digital Assistant (PDA). Mobile banking has often been performed via SMS or the Mobile Web. The growth of IPhone and Androids has led to increasing use of special client programs, in mobile device. Opportunities in Mobile Banking: The potential of mobile banking in India is huge, especially with a large unbanked population. With the increasing mobile penetration in rural areas, mobile banking is seen as a tool to facilitate financial inclusion of the rural population. In the urban environment, it is seen as a tool for convenience as it facilitates faster small-scale transactions. Several leading banks are tying up with telecom operators and handset manufacturers to provide this facility in order to enhance customer service and facilitate branchless banking. Operators and leading banks are partnering to provide a suite of mobile banking services. Recent examples include the State Bank of India (SBI) and ICICI Banks partnerships with Bharti airtel and Vodafone Essar respectively. The service is witnessing increased uptake in urban areas with more consumers availing of mobile banking facilities for paying utility bills, accessing bank account information and making ticket payments. In rural areas, this service is poised to take off with operators focusing on the rural sector to provide services tailored for the rural community. Challenges in Mobile Banking: Some of the challenges faced by Mobile Banking are: Security: Security of financial transactions, being executed from some remote location and transmission of financial information over the air, are the most complicated challenges that need to be addressed jointly by mobile application developers, wireless network service providers and the banks' IT departments. Scalability & Reliability: Another challenge for the banks is to scale-up the mobile banking infrastructure to handle exponential growth of the customer base. With mobile banking, the customer may be sitting in any part of the world (true anytime, anywhere banking) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion. As customers will find mobile banking more and more useful, their expectations from the solution will increase. Banks unable to meet the performance and reliability expectations may lose customer confidence. Application distribution: Due to the nature of the connectivity between bank and its customers, it would be impractical to expect customers to regularly visit banks or connect to a web site for regular upgrade of their mobile banking application. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches (so called "Over The Air" updates). Types of ATMs: Onsite ATM is situated either within the branch premises or in very close proximity of the branch. Offsite ATM is not situated within the branch premises but is located at other places, such as shopping centres, airports, railway and petrol stations

203 Worksite ATM is located within the premises of an organization and is generally meant only for the employees of the organization Cash dispenser allows only cash withdrawal, balance enquiry, and mini statement requests. Unlike an ATM, Cash Dispenser cannot be used for depositing cash or cheques. Mobile ATM refers to an ATM that moves in various areas for the customers. Few private banks have introduced ATM on wheels. Opportunities for ATMs: The ATM market in India has high market potential. The demand for ATM is increasing in non-metros and rural areas. The growth rate is expected to grow by 18 percent by 2013. Banks have specialized machines with bio metric devices for authentication. They also use local language and graphical user interface to attract the rural population. It provides 24 x 7 and 365 days a year service & allows for privacy in transactions. ATM enables cardholders to access cash at any location regardless of where they maintain their accounts. Challenges for ATMs: There are problems in ATM like insufficient funds, server problem, machine problem, nonavailability of challans in the ATM centre. ATM also faces security problem like A layout of the ATM centre does not allow sufficient space for a person to drop a cheque in the drop box without obstructing a person making a cash transaction. The transparency of the glass at the ATM gate gives a full view of the cash transaction. Security guards at ATMs may not be up to the standards of a guard, which acts as a security threat. CONCLUSION: Though Banking Sector faces many challenges the number of opportunities they pose is abound. The major challenge for e-banking is security threat which can be overcome through customer awareness programmes. The bank should take the initiative to conduct as many awareness camp as possible which will not only bring down the security threats but also increase the customer base who has a psychological barriers towards using e-banking.

204 CONTEMPORARY ISSUES & FUTURE OF INDIAN BANKING SECTOR G. Kiruthika, Lecturer, SSM College of Engineering, Komarapalayam, Namakkal Dist Introduction Banking scenario has changed rapidly since 1990s. The decade of 90s has witnessed a sea change in the way banking is done in India. Technology has made tremendous impact in banking. Anywhere banking and Anytime banking have become a reality. The financial sector now operates in a more competitive environment than before and intermediates relatively large volume of international financial flows. In the wake of greater financial deregulation and global financial integration, the biggest challenge before the regulators is of avoiding instability in the financial system. Reforms On 14th August 1991, the Government of India (GOI) appointed a Committee headed by Mr.M.Narashimham (called Narashimham Committee I) to suggest the modus operandi for reforms of the Banking Sector. On 16th November 1991, the said Committee submitted its Repost suggesting downsizing of PSBs through closure of Branches, merger of PSBs, reduction of priority sector lending from the then prevailing 40% to 10% of total advance portfolio, abolition of Banking Service Recruitment Board, granting of more autonomy to PSBs in respect of both financial and administrative matters, to reduce the supervisory and regulatory control of Reserve Bank of India (RBI), the Central Bank of the country, and, to top it all, dilution of Government Holding in PSBs through suitable amendment of relevant legislations. Thereafter, a number of committees, such as Narashimham Committee II, Khan Committee, Verma Committee, S.C.Gupta Committee, Raghuram Rajan Committee, Anwarul Hoda Committee, to name a few, have been appointed to assess the progress in implementation of the Recommendations of the Narashimham Committee I as also to suggest measures for carrying forward the reforms of the Banking Sector further as per dictates of the World Bank-IMF. Following the Recommendations of these Committees, successive Governments have persistently been trying to carry forward the reforms dictated by World Bank-IMF. In the process, law has been amended to pave the way for reduction of Govt. holding of shares in PSBs from 100% to 51% and, in pursuance of such amendment, most of the PSBs (except two major PSBs and two subsidiaries of State Bank of India) have made public issue of shares, thus, reducing Government holding. Instead of filling up more than one-hundred thousand vacant posts through employment, the PSBs have reduced its workforce through Voluntary Retirement Scheme on the one hand, and, on the other outsourcing even the regular and core banking jobs to outside agencies. The role of RBI, as the regulatory and supervisory authority over the Banks, have been redefined and undermined considerably. RRBs have been directed to give more emphasis on conventional Banking and, consequently, its priority lending stands reduced to around 40% (from 70%) of total advances today. Review of Literature Berger & Humphrey (1997) pointed out that out of 130 efficiency analyses of depository financial institutions, covering 21 countries; only about 5% examined the banking sectors of developing countries. They also noted that a vast majority (about 75%) of the researchers focused on the banking markets of well developed countries with particular emphasis on US market. The relatively scant literature on the bank efficiency in emerging markets like India focused mainly on the efficiency differentials among banks with different ownership status and asset size. In India, research on the performance and efficiency of Indian banking industry is limited in the existing literature.

205 Notable among these are Swami and Subrahmanyam (1994), Zaim (1995), Noules and Katkar (1996), Bhattacharya (1997), Das (1997a, 1997b, 2000), Leighter and Lovell (1998), Saha and Ravisankar (2000), Shanmugam and Lakshmansamy (2001), and Mukherjee et al. (2002). Economic outlook and banking sectors performance Keeping in mind the impact of real sector shocks on financial stability, any assessment of the banking sector needs to be done in the backdrop of national as well as international economic outlook. During the last couple of years, global growth has been above the forecast in almost every region stimulated by strong monetary and fiscal measures. The domestic economic outlook is also bright with the real GDP growth rate surpassing 8% last year and estimated to be around 7% in the current year. Industrial performance also improved considerably with a strong manufacturing growth for the second consecutive year. Inflation rate has been under control, barring some hiccup for a short period. Aided by a good macro economic environment, banks bottom line has improved significantly over the last two years. However, let us not forget that a major contributor to the windfall gains has been treasury profits fuelled by a secular decline in interest rates during the three years period from 2008 to 2010 and consequent profit booking on sale of government securities. From the current year, with the hardening of interest rates, this trading component of profits is no longer going to shore up banks profitability. On the contrary, most banks have been required to provide for the decline in the market value of their investments portfolio. Fortunately, one offsetting factor has been the strong pick up in the credit off-take due to buoyant demand in the economy and revival of industrial activity, which have resulted in substantial increase in banks core interest income. Globalization of financial services Growing integration of economies and the markets around the world is making global banking a reality. The surge in globalization of finance has also gained momentum with the technological advancements which have effectively overcome the national borders in the financial services business. Widespread use of internet banking has widened frontiers of global banking, and it is now possible to market financial products and services on a global basis. In the coming years globalization would spread further on account of the likely opening up of financial services under WTO. India is one of the 104 signatories of Financial Services Agreement (FSA) of 1997. This gives Indias financial sector including banks an opportunity to expand their business on a quid pro quo basis. Indian Banks at the global stage: A Reality check As per Indian Banks' Association report Banking Industry Vision 2020, there would be greater presence of international players in Indian financial system and some of the Indian banks would become global players in the coming years. So, the new mantra for Indian banks is to go global in search of new markets, customers and profits. Everyone should not forget that the competition is not only on foreign turf but also in the domestic field as well from foreign banks operating in India. Now against these lofty objectives of Indian banks going global, we have to see where we stand. Although, Indian banks have also made their presence overseas, yet it is limited. Only twenty Indian banks including private sector banks appear in the list of Top 1000 World Banks as listed by the London based magazine The Banker. What is even more revealing is that State Bank of India, Indias largest bank, ranks 57th amongst the top global banks. Size is increasingly becoming important for the global banks as it is crucial to improved efficiency. Consolidation and move towards Universal Banking We are slowly but surely moving from a regime of large number of small banks to small number of large banks. The new era is going to be one of consolidation around identified core competencies. Mergers and acquisitions in the banking sector are going to be the order of the day. Successful merger of HDFC Bank and Times Bank earlier and Stanchart and ANZ Grindlays three years ago has demonstrated that trend towards consolidation is almost an accepted fact. We are also looking for such signs in respect of a number of old private sector banks, many of which are not able to cushion their NPAs, expand their business and induct technology due to limited capital base.

206 Coming times may usher in large banking institutions, if the development financial institutions opt for conversion into commercial banking in line with the recommendation of Narasimhan (II). In India, one of the largest financial institutions, ICICI, took the lead towards universal banking with its reverse merger with ICICI Bank coming through a couple of years ago. Another mega financial institution, IDBI has also adopted the same strategy, and has already transformed itself into a universal bank. Now the process of its progeny IDBI Bank merging itself with the parent IDBI is underway, and is likely to be completed soon. This trend may lead logically to promoting the concept of financial super market chain, making available all types of credit and non-fund facilities under one roof or specialized subsidiaries under one umbrella organisation. Consolidated accounting and supervisory techniques would have to evolve and appropriate fire walls built to address the risks underlying such large organisations and banking conglomerates. Will the stable conditions continue for the banks? The big question we have to ponder is whether these stable conditions marked by all round improvement in banks performance can continue into 2005 onward in the light of potentially dramatic changes that include, among others, a sliding dollar, rising interest rates, introduction of Basel II accord and international accounting standards, and the possible flattening of consumer lending boom. Hopefully, the banking industry in tandem with the regulatory authorities will rise to the occasion, and collectively face the challenges and opportunities that lie ahead.

207

THE INITIATIVES AND IMPACT OF INDIAN BANKING SECTOR ON FINANCIAL INCLUSION


S.Vijay Mallik Raj, Assistant Professor, OAA MAVMM School of Management, Kidaripatti Post, Madurai INTRODUCTION: Policymakers across the world have begun to pay closer attention to increasing financial inclusion. Research in the last decade leads us to believe that a well-functioning and inclusive financial system is linked to faster and equitable growth (Honohan, 2004). Millions of households and individuals are affected by serious levels of financial exclusion and insecurity. This is one of the greatest public policy challenges currently facing society and if policymakers, industry, consumer advocates, and other stakeholders dont work together to develop solutions, millions of individual consumers will be condemned to bleak financial futures. Financial inclusion denotes delivery of financial services at an affordable cost to the vast sections of the disadvantaged and low-income groups. The various financial services include credit, savings, insurance and payments and remittance facilities Financial inclusion has become a buzzword internationally even in developed financial markets there are concerns about those excluded from the banking system. The barriers to access to formal banking system have been identified as relating to culture, education (especially financial literacy), gender, income and assets, proof of identity, remoteness of residence, and so on. Efforts are being made by the authorities- especially banking regulators to improve access to affordable financial services through financial education, leveraging technology and generating awareness in order to create enabling conditions such that markets become more open, more competitive, affordable and inclusive Unavailability of financial services to a vast section of the population hinders the prospects of the entire Indian economy. The objective of financial inclusion is to extend the scope of activities of the organized financial system to include within its ambit people with low incomes. As banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of the public policy. The Indian Banking industry has shown tremendous growth in volume and made significant improvements in all the areas relating to financial viability, profitability and competitiveness. But vast segment of the population, especially the underprivileged sections of the society are still out of banks fold. The financially excluded people should be made a part of the formal banking system so that they may have the benefit which is used by other segments of people. When they become financially inclusive, their financial situation is more stable and they also enjoy a basic service such as banking. Financial Inclusion does not merely mean access to credit for the poor, but also other financial services such as Insurance. Financial Inclusion therefore, is delivery of not only banking, but also other financial services like insurance, pension, remittance, mutual funds, etc. delivered at affordable, though market driven costs .Once the first step of safety of savings is achieved, the poor require access to schemes and products which allow their savings to grow at rates which provide them growth beyond mere inflation protection

208

Figure 1: Scope of financial Inclusion Source: Rural planning and credit department, Reserve Bank of India CAUSES FOR EXCLUSION: Financial Exclusion is a state where individuals cannot access the financial products and services that they need. People experiencing financial exclusion typically exhibit one or more of the following characteristics: A lack of key financial products such as a bank account, insurance, savings products and pensions and the financial services that come with them A reliance on alternative forms of credit such as doorstep lenders and pawnbrokers The major barriers for poor to access appropriate financial services include socio-economic factors (e.g., education, gender and age, low and irregular income and geography), regulatory factors (e.g. provision of identity documentation) and product design factors (e.g., minimum account balances). People who are excluded includes Marginal Farmers, Landless Labourers, Oral lessees, Self employed and unorganized sector enterprises, Urban slum dwellers, Migrants / ethnic minorities & socially excluded groups, Senior Citizens and Women According to National Sample Survey Organisation (NSSO) data 45.9 million farmer households in the country (51.4%), out of a total of 89.3 million households do not access credit, either from institutional or noninstitutional sources. Further, despite the vast network of bank branches, only 27% of total farm households are indebted to formal sources (of which one-third also borrow from informal sources). Farm households not accessing credit from formal sources as a proportion to total farm households is especially high at 95.91%, 81.26% and 77.59% in the North Eastern, Eastern and Central Regions respectively. Thus, apart from the fact that exclusion in general is large, it also varies widely across regions, social groups and asset holdings. The poorer the group, the greater is the exclusion. INDIAN SCENARIO: Limited access to affordable financial services such as savings, loan, remittance and insurance services by the vast majority of the population in the rural areas and unorganized sector is a constraint to the growth impetus in the Primary and Small and Medium Enterprises sector. With a huge rural population, that is economically challenged, the Government in India has rolled out many initiatives and policy measures.

209 The Eleventh Five Year Plan (2007-12) envisions inclusive growth as a key objective. The Plan document notes that the economic growth has failed to be sufficiently inclusive particularly after the mid-1990s. The Indian economy, though achieved a high growth momentum during 2003-04 to 2007-08, could not bring down unemployment and poverty to tolerable levels. To augment the growth further, a committee on Financial Inclusion (FI) was also formed in June 2006, with Dr. C Rangarajan as Chairman to recommend a strategy to achieve a higher Financial Inclusion in the country.The committee came out with the following recommendations a) Setting up of a National Rural Financial Inclusion Plan with a target of providing access to financial services to at least 50 per cent (50.77 mn) of excluded rural households by 2012 and the remaining by 2015 b) Encouraging Self Help Groups (SHGs) in excluded regions, measures for urban micro-finance and separate category of Micro Finance Institutions (MFIs) c) Regional rural banks (RRBs) to extend banking services to unbanked areas In order to deepen the financial system and widen the reach of financial inclusion it is crucial for both accelerating growth and for equitable distribution, given the present stage of Indian economy. Hence a nationwide programme on financial inclusion, Swabhimaan was launched in February, 2011 by the Government, which is focused on bringing the deprived sections of the society in banking network to ensure that the benefits of economic growth reach everyone at all levels. This campaign promises to bring basic banking services to 73,000 unbanked villages with a population of 2,000 and above by March, 2012 and at least 5 crore new accounts will be opened. The facilities provided through banking outlets will enhance social security by facilitating the availability of allied services in course of time like micro insurance, access to mutual funds, pensions, etc. Banking facilities like Savings Bank, recurring Deposits, Fixed deposits, Remittances, Overdraft facility, Kisan Credit Card (KCCs), General Credit Cards (GCC) and collection of cheques will be provided With a view to enhance the financial inclusion the Reserve Bank of India (RBI) urged banks to review their existing practices to align them with the objective of financial inclusion. The various measures taken by the RBI includes 1. Simplify KYC (Know Your Customer) norms. 2. Opening of No Frill accounts. 3. Introduction of General Purpose Credit Cards. 4. State Level Banking Committee {SLBC) project of 100% Financial Inclusion. 5. Engaging Business Correspondents/ Facilitators. 6. Financial Inclusion Fund / Financial Inclusion Technology Fund. 7. Financial Literacy- Credit Counselling Centres. INITIATIVES BY THE BANKS: The major steps taken by the banks in India towards financial inclusion are listed below a) UNITED BANK OF INDIA: The bank has 1452 branches of which 851 branches are located in the rural and semi urban areas. The bank sponsors 3 Regional Rural banks in north east and I in west Bengal. Till now the bank has opened around 10 lakh United Basic Savings account which is a No Frills Zero balance account. The Bank has linkage with 81001 Self Help groups and extended credit to 74991 groups amounting to rs 158 crores.The bank has extended credit to 78737 new farmers to the tune of 54.83 crores under the schemes of United Bhumiheen Kisan credit card, United Gramin sahaj credit card, United Sahaj Rin Yojana, United Mahajan Mukti Yojana.

210 b) STATE BANK OF INDIA (SBI): The latest initiative in this front is the Bank on Bike initiative by SBI. Under this scheme, the business correspondents will go to up to 3 villages for a couple of hours and conduct the banking transactions. The business correspondents could be SBI employees, government servants, school teachers or even kirana owners. The timing and duration of banking in each area would be fixed. State Bank of India (SBI), and India post are coming together to organize a basic banking services platform on the doorstep of the millions of people in rural areas, who are still deprived of the banking facilities. SBI will use Indian post's wide network in its financial inclusion initiative. After this tie-up, the postmen will act as banking correspondents for SBI in over 12,000 villages. They are supposed to collect deposits and offer small credit and remittance facility to the people living in far-flung areas. SBI currently has around 5,000 branches in the rural or semi-urban areas, and it hopes to cover 12,492 villages by 2012 under its financial inclusion outreach. Hindustan Unilever (HUL), Indias leading consumer goods company, has joined hands with SBI to promote financial inclusion in the rural areas through 'Shakti Ammas', HUL's network of selfhelp groups. HUL, through its self-help groups, distribute FMCG products in remote villages with a population of 2,000 and less. Now, with the help of SBI, the HUL groups will open bank accounts for rural people. The two entities have started a pilot project of financial inclusion in the States of Maharashtra and Karnataka. As customer service providers, 12 Shakti Ammas have opened around 1,000 accounts so far. Their plan is to take the project across the country by the end this financial year 2011-12. A total of 43,000 Shakti Ammas have been enrolled with HUL. Over 30 lakh bank accounts are expected to be opened this fiscal. Going by this numbers, each Shakti Amma is expected to open at least 70 accounts in this period. SBI and Bharti Airtel announced that they have entered into a Joint Venture (JV) agreement to make available banking services to Indias unbanked millions. The JV as Business Correspondent will engage Airtels retailers as Customer Service Points (CSP) all over India in a phased manner. With this, existing and new Airtel mobile customers will be able to visit these outlets and open new SBI bank accounts and avail of other banking products and services available at the CSPs. Additionally, existing SBI customers will also get serviced at these outlets. SYNDICATE BANK: Syndicate Bank has opened more than 20 branches in villages. The bank has a target of providing banking facilities in 1620 villages by March 2012. Syndicate Banks plan is to expand in Tier-III, IV and V areas to tap semi-urban and rural population in under banked areas. The bank opened its first such branch at Bhojpur in Punjab. The second one was in Palladam in Tamil Nadu. The banks third branch under this initiative was inaugurated in Rajula town of Gujarat. ICICI BANK: ICICI Bank has merged with Bank of Rajasthan which has about 40% of its branches in rural and semi-urban areas. The bank has formed IFMR Finance Foundation whose research priorities is to understand the needs and behaviours of low-income individuals, households and small enterprises that have traditionally been underserved by the formal financial market. Once equipped with insight about these underserved populations, IFMR Finance Foundation supports the development of high quality financial services that meet their needs. UNION BANK OF INDIA: Union Bank of India under its UnionInclusion programme launched five FI schemes which includes opening up of eleven specialized FI branches, biometric card-to-card remittance facility for migrant labour, Mobile Van Banking to extend banking reach to unbanked villages in Odisha on specified days, comic book series for spreading financial literacy among rural masses.

211 BANK OF BARODA: The Bank has 1,171 rural and 832 semi-urban branches. It opened 157 new branches in rural and semi-urban areas during 2010-11. Under its flagship agriculture loan product Baroda Kisan Credit Card, the Bank issued as many as 2,44,558 Credit Cards during this year to provide credit to farmers. As a part of its microfinance initiatives, the Bank credit-linked 19,257 Self Help Groups with an amount of Rs 164 crore. CANARA BANK: The bank brought 1639 villages across the country under Total Financial inclusion plan. It Covered 24.13 lakh persons under FI .The Bank has installed Bio Metric Voice enabled ATM in sixteen semi urban locations all over the country. Bank has provided 35 vehicles in 35 potential districts to facilitate the branches to reach the rural poor and the excluded families by using the vehicle called 'Canara Gramina Vikas Vahini'. IDBI BANK: The Bank has launched the FI drive, Aarthik Vikas Kee Ore in unbanked villages of Maharashtra.The bank also launched the Urban Financial Inclusion program at Ambedkar Nagar, Cuffe Parade in Mumbai. IDBI Ltd has launched its no frills 'Sabka' savings account, the average balance requirement has been considerably reduced to Rs. 250 in rural/ semi-urban branches enabling the customers to access IDBI ATMs and branches and give them the comfort of banking 24 x 7 through phone banking and mobile banking. With a view to providing impetus for rural growth and financial inclusion IDBI launched a Mobile Branch, the first of its kind in Maharashtra, at Satara. The Mobile Branch consists of a Kisan ATM operated on a biometric system AXIS BANK: The Bank did a full production rollout of its Urban FI Initiative in Bangalore with possibility of future scalability in the other Urban Centers of the country. Janalakshmi a well known name in Microfinance has been appointed as the Business Correspondent to cater to the unbanked and under banked population in the urban areas through its field executives acting as mobile Customer Service Points (CSPs). The Point of Sale (POS) model has been used wherein the CSPs are equipped with POS machines on which customers can carry out cash deposit and withdrawal transactions through swipe of a debit card. The bank has joined hands with IDEA Cellular for mobile based branchless banking initiative where the mobile platform is being used to facilitate basic banking and remittance transactions and Ideas retail outlets are being used as CSPs The retail outlets of IDEA act as transaction points for the customers, where he deposits cash with the retailer and transfers the remittance amount into the No Frills Savings account of the recipient through a mobile phone. The transaction is authenticated through an M-PIN number provided to the customer HDFC BANK: The Bank has approximately 33% of its branches in rural and underbanked Locations. Till date the Bank has lent to over 45,000 self help groups covering approximately 7 lakh households supporting their income generation activities. The Bank works with these groups either by appointing business correspondents or through its own branch network. To this effect the Bank has opened 27 branches catering exclusively to this target segment. The Bank provides various loans to farmers through its suite of specifically designed products such as the Kisan Gold Card. The Bank also extends loans to Microfinance Institutions for on-lending to financially excluded households or in many cases to them through self help groups. This program is currently spread across the country covering 18 states with tie-ups with 110 accredited Microfinance institutions. As on March 31, 2010 with a micro lending book of over Rs. 1,400 crores the Banks micro lending initiative has reached approximately 2 million households

212 CHALLENGES: The banks are faced with high operating cost in extending the financial services to the remote areas. High maintenance cost of these accounts as well as small ticket size of the transactions is also adding to the problem. Reaching out to the illiterate people or people who can handle only the regional languages is also difficult without developing a suitable communication mode. CONCLUSION: Informal access to financial services and credit are highly costlier, riskier and less reliable. Hence, making formal and affordable financial services available for the unbanked would definitely have positive consequences on the lives of these people. Banks should pioneer new models for delivering financial services, to customize products that meet the needs of rural customers, to bridge gaps wherever there are missing markets and to support the development of new technologies that enable more Indians to participate in and benefit from Indias growth. In order to achieve that banks should work with key stakeholders including agri-based industries, government authorities and existing rural financial intermediaries. The banks should develop a comprehensive programme for those who are financially excluded in the urban areas. The banking technology initiatives meant for financial inclusion should be collaborative and innovative with an objective to reduce the transaction costs. Coupling government assistance with formal banking system may increase financial inclusion better than just offering people accounts While banks are not reaching the unbanked half of the worlds population with traditional distribution channels of branches and ATMs, mobile phones are penetrating to the unserved. But to fully exploit it, Mobile operators banks, and technology providers must enhance their understanding of how unbanked (potential) consumers behave. Analyzing the needs of the unbanked can shine a light on more effective marketing, pricing that recognizes the variable income of low-income people, the critical nature of building out a network of cash-handling agents, and demand for service offerings beyond remittances.

213 MERGERS AND ACQUISITION KATHIRVEL. Assistant Professor, Department of Commerce(UG), Kongunadu Arts & Science College, K SOUNDARYAN.P, Deparrtment of Commerce(UG), Kongunadu Arts & Science College, Coimbatore INTRODUCTION OF THE STUDY Mergers and acquisitions (M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can aid, finance, or help an enterprise grow rapidly in its sector or location of origin or a new field or new location without creating a subsidiary, other child entity or using a joint venture. Distinction between Mergers and Acquisitions New company stock is issued in its place. For example, both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler, was created. Although they are often uttered in the same breath and used as though they were synonymous, the terms merger and acquisition mean slightly different things When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded. In the pure sense of the term, a merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals." Both companies' stocks are surrendered and In practice, however, actual mergers of equals don't happen very often. Usually, one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals, even if it's technically an acquisition. Being bought out often carries negative connotations, therefore, by describing the deal as a merger, deal makers and top managers try to make the takeover more palatable. A purchase deal will also be called a merger when both CEOs agree that joining together is in the best interest of both of their companies. But when the deal is unfriendly - that is, when the target company does not want to be purchased - it is always regarded as an acquisition. Whether a purchase is considered a merger or an acquisition really depends on whether the purchase is friendly or hostile and how it is announced. In other words, the real difference lies in how the purchase is communicated to and received by the target company's board of directors, employees and shareholders. Regardless of their category or structure, all mergers and acquisitions have one common goal: they are all meant to create synergy that makes the value of the combined companies greater than the sum of the two parts. The success of a merger or acquisition depends on whether this synergy is achieved.

MAJOR M&A: Rank 1 2 3 4 5 6 7 8 9 10 Year 2000 2000 2004 2006 2001 2009 2000 2002 2004 2008

214 Top 10 M&A deals worldwide by value (in mil. USD) from 2000 to 2010 Transaction value Purchaser Purchased (in mil. USD) Fusion: America Online Inc. (AOL) Glaxo Wellcome Plc. Royal Dutch Petroleum Co. AT&T Inc. Comcast Corporation Pfizer Inc. Spin-off: Nortel Networks Corporation Pfizer Inc. JP Morgan Chase & Co Inbev Inc. Pharmacia Corporation Bank One Corp Anheuser-Busch Companies, Inc Time Warner SmithKline Beecham Plc. Shell Transport & Trading Co BellSouth Corporation AT&T Broadband & Internet Svcs Wyeth 164,747 75,961 74,559 72,671 72,041 68,000 59,974 59,515 58,761 52,000

Mergers and Acquisitions: Break Ups As mergers capture the imagination of many investors and companies, the idea of getting smaller might seem counterintuitive. But corporate break-ups, or de-mergers, can be very attractive options for companies and their shareholders. MERITS The rationale behind a spinoff, tracking stock or carve-out is that "the parts are greater than the whole." These corporate restructuring techniques, which involve the separation of a business unit or subsidiary from the parent, can help a company raise additional equity funds. A break-up can also boost a company's valuation by providing powerful incentives to the people who work in the separating unit, and help the parent's management to focus on core operations. Most importantly, shareholders get better information about the business unit because it issues separate financial statements. This is particularly useful when a company's traditional line of business differs from the separated business unit. With separate financial disclosure, investors are better equipped to gauge the value of the parent corporation. The parent company might attract more investors and, ultimately, more capital. Also, separating a subsidiary from its parent can reduce internal competition for corporate funds. For investors, that's great news: it curbs the kind of negative internal wrangling that can compromise the unity and productivity of a company. For employees of the new separate entity, there is a publicly traded stock to motivate and reward them. Stock options in the parent often provide little incentive to subsidiary managers, especially because their efforts are buried in the firm's overall performance. Mergers and Acquisitions: Why They Can Fail It's no secret that plenty of mergers don't work. Those who advocate mergers will argue that the merger will cut costs or boost revenues by more than enough to justify the price premium. It can sound so simple: just combine computer systems, merge a few departments, use sheer size to force

215 down the price of supplies and the merged giant should be more profitable than its parts. In theory, 1+1 = 3 sounds great, but in practice, things can go away. Historical trends show that roughly two thirds of big mergers will disappoint on their own terms, which means they will lose value on the stock market. The motivations that drive mergers can be flawed and efficiencies from economies of scale may prove elusive. In many cases, the problems associated with trying to make merged companies work are all too concrete. Conclusion One size doesn't fit all. Many companies find that the best way to get ahead is to expand ownership boundaries through mergers and acquisitions. For others, separating the public ownership of a subsidiary or business segment offers more advantages. At least in theory, mergers create synergies and economies of scale, expanding operations and cutting costs. Investors can take comfort in the idea that a merger will deliver enhanced market power. the By contrast, de-merged companies often enjoy improved operating performance thanks to redesigned management incentives. Additional capital can fund growth organically or through acquisition. Meanwhile, investors benefit from the improved information flow from de-merged companies. M&A comes in all shapes and sizes, and investors need to consider the complex issues involved in M&A. The most beneficial form of equity structure involves a complete analysis of the costs and benefits associated with deals.

216 MERGERS AND ACQUISITION IN INDIA IN THE EMERGING GLOBAL BUSINESS SCENARIO V.O.Kavitha, Research Scholar, DOMS, Jawaharlal Institute of Technology, Coimbatore. The increasing economic power of emerging economies has led to a dramatic expansion in Indian markets. Merger and acquisitions (M&As) have become in indispensable part of Indian corporate environment. Business efficiency warrants that companies and organisations must be merged with or acquired by others for better performance and enhanced profit margins. In India, the concept of mergers and acquisitions was initiated by the government bodies. Some well known financial organizations also took the necessary initiatives to restructure the corporate sector of India by adopting the mergers and acquisitions policies. The Indian economic reform since 1991 has opened up a whole lot of challenges both in the domestic and international spheres. The increased competition in the global market has prompted the Indian companies to go for mergers and acquisitions as an important strategic choice. The trends of mergers and acquisitions in India have changed over the years. The immediate effects of the mergers and acquisitions have also been diverse across the various sectors of the Indian economy. Merger & Acquisition A merger is a combination of two or more businesses into one business. The term amalgamation is used synonymously for merger. An acquisition may be defined as an act of acquiring effective control by one company over assets or management of another company without any combination of companies. Thus, in an acquisition two or more companies may remain independent, separate legal entities, but there may be a change in control of the companies. Types of Mergers: 1)Horizontal mergers: The consolidation of firms that are direct rivals--i.e. firms that sell substitutable products or services within the same geographic market. 2)Vertical Mergers: The consolidation of firms that have potential or actual buyer-seller relationships. 3)Conglomerate Mergers: Consolidated firms may share marketing and distribution channels and perhaps production processes; or they may be wholly unrelated. 4)Congeneric mergers occur where two merging firms are in the same general industry, but they have no mutual buyer/customer or supplier relationship, such as a merger between a bank and a leasing company. Example: Prudential's acquisition of Bache & Company.
STRATEGIES OF MERGERS AND ACQUISITION

A solid strategic planning process delivers valid planning content, applies relevant methodologies, integrates the individual planning steps and tracks implementation. Drawing on our project experience, we have developed a benchmark process for strategic planning that satisfies all these requirements The M&A strategy should: Provide a framework for the target screening, transaction execution and combination phases Communicate a compelling strategy to your employees, or they will resist the change process required for effective combination Factor your unique people, process and technology considerations into the target screening phase Use a well-defined structure, but remember each combination is unique. LAW RELATING TO MERGERS AND ACQUISITION IN INDIA: Following are the laws that regulate the merger of the company:(I) The Companies Act , 1956 Section 390 to 395 of Companies Act, 1956 deal with arrangements, amalgamations, mergers and the procedure to be followed for getting the arrangement, compromise or the scheme of amalgamation approved. Though, section 391 deals with the issue of compromise or arrangement

217 which is different from the issue of amalgamation as deal with under section 394, as section 394 too refers to the procedure under section 391 etc., all the section are to be seen together while understanding the procedure of getting the scheme of amalgamation approved. Again, it is true that while the procedure to be followed in case of amalgamation of two companies is wider than the scheme of compromise or arrangement though there exist substantial overlapping. The procedure to be followed while getting the scheme of amalgamation and the important points, are as follows:(1) Any company, creditors of the company, class of them, members or the class of members can file an application under section 391 seeking sanction of any scheme of compromise or arrangement. However, by its very nature it can be understood that the scheme of amalgamation is normally presented by the company. While filing an application either under section 391 or section 394, the applicant is supposed to disclose all material particulars in accordance with the provisions of the Act. (2) Upon satisfying that the scheme is prima facie workable and fair, the Tribunal order for the meeting of the members, class of members, creditors or the class of creditors. Rather, passing an order calling for meeting, if the requirements of holding meetings with class of shareholders or the members, are specifically dealt with in the order calling meeting, then, there wont be any subsequent litigation. The scope of conduct of meeting with such class of members or the shareholders is wider in case of amalgamation than where a scheme of compromise or arrangement is sought for under section 391 Intellectual Property Due Diligence In Mergers And Acquisitions The increased profile, frequency, and value of intellectual property related transactions have elevated the need for all legal and financial professionals and Intellectual Property (IP) owner to have thorough understanding of the assessment and the valuation of these assets, and their role in commercial transaction. A detailed assessment of intellectual property asset is becoming an increasingly integrated part of commercial transaction. Due diligence is the process of investigating a partys ownership, right to use, and right to stop others from using the IP rights involved in sale or merger ---the nature of transaction and the rights being acquired will determine the extent and focus of the due diligence review. Due Diligence in IP for valuation would help in building strategy, where in:(a) If Intellectual Property asset is underplayed the plans for maximization would be discussed. (b) If the Trademark has been maximized to the point that it has lost its cachet in the market place, reclaiming may be considered. (c) If mark is undergoing generalization and is becoming generic, reclaiming the mark from slipping to generic status would need to be considered. (d) Certain events can devalue an Intellectual Property Asset, in the same way a fire can suddenly destroy a piece of real property. These sudden events in respect of IP could be adverse publicity or personal injury arising from a product. An essential part of the due diligence and valuation process accounts for the impact of product and company-related events on assets management can use risk information revealed in the due diligence. (e) Due diligence could highlight contingent risk which do not always arise from Intellectual Property law itself but may be significantly affected by product liability and contract law and other non Intellectual Property realms.

218 Therefore Intellectual Property due diligence and valuation can be correlated with the overall legal due diligence to provide an accurate conclusion regarding the asset present and future value CONCLUSION: As cash-rich Indian firms continue to hunt for strategic bargains abroad, industry insiders are confident that 2011 will continue to see a high volume of Indian M & A activity. According to Bloombergs M & A Global Outlook survey, companies in the Asia-Pacific region, including India and China, are expected to be the most active buyers in 2011 as attractive valuations drive deals globally. While activity is expected in all sectors, as Indian companies seek oil, gas, coal and other minerals to fuel Indias continued industrial growth, natural resources will undoubtedly continue to be the subject of a significant portion of deals originating in India

219

MUTUAL FUND AND HEDGE FUNDS


R. Priya Rathna, Faculty, R. Divya, K. Kanmani Students, Vasavi Vidya Trust Group Of Institutions MUTUAL FUND Introduction: A mutual fund is a portfolio, or collection, of individual securities (some combination of stocks, bonds, or money market instruments) managed according to a specific objective spelled out in the funds prospectus. A mutual fund allows investors to pool their money, then the funds invests it on their behalf. Unlike the individual stocks, whose value fluctuates minute by minute, mutual funds are priced at the end of the each day the market is open, based on what the securities in the portfolio are worth. Mutual Fund Structure BOARD OF TRUSTEES

ASSET MANAGEMENT COMPANY

SEBI REGULATIONS
UNITHOLDERS (BENEFICIARIES)

Each mutual fund has a Board of Trustees, an Asset Management Company or AMC (the manager) and unit holders. In India, we also have a promoter or sponsor who takes the initiative of starting a mutual fund but has no active role after the fund has been launched. The sponsor remains only as a shareholder of the AMC. As per SEBI regulations, the effective control of the AMC is not with the sponsor but with the Board of Trustees. A majority of the trustees have to be chosen from amongst independent persons and the rest are the nominees of the sponsor. The Board of Trustees functions as the governing body of the mutual fund. SEBI regulations provide the framework within which mutual funds have to operate. Maximum limits have been prescribed for management fees and other chargeable expenses, as detailed a little later. SEBI also regulates many other aspects of their operations and policies.

220 Classification of mutual funds

Mutual funds can be classified based on two criteria, 1. Structure 2. Investment objective HEDGE FUND Introduction : Hedge funds are generally privately-owned investment funds, and so are not regulated like mutual funds whose owners are public corporations. Furthermore, hedge fund managers are compensated as a percent of the returns they earn. This attracts many investors who are frustrated by mutual fund fees that are paid regardless of fund performance. Thanks to this compensation structure, hedge fund managers are driven to achieve above market returns. Since they get zero no matter how much money they lose, they are also very risk tolerant. This makes the funds very risky for the investor, who can lose much more than zero. Hedge fund managers are very good at using sophisticated derivatives, such as futures contracts, options and puts. Basically, these products all do two things: they use small amounts of money, or leverage, to promise large amounts of stocks or commodities. Secondly, they all say they will deliver this stock or commodity at a particular point in time. In that sense, hedge fund managers are trying to time the market, which some would say is very difficult if not impossible to do. Taxonomy of Hedge Fund Strategies Strategy Description Directional Based upon speculation of market direction in multiple asset classes. Both Trading model-based systems and subjective judgment are used to make trading decisions Relative Focus on spread relationships between pricing components of financial assets. Value Market risk is kept to minimum and many managers use leverage to enhance returns. Specialist Based around lending to credit sensitive issuers. Funds in this strategy conduct a Credit high level of due diligence in order to identify relatively inexpensive securities. Stock Combine long and short positions, primarily in equities, in order to exploit under Selection and overvalued securities. Market exposure can vary substantially.

221

Growth Of Hedge Funds: HEDGE FUNDS 2008

HEDGE FUND 2009 Reasons For Rapid Growth Of Hedge Fund Industry: While high net worth individuals remain the main source of capital, hedge funds are becoming more popular among institutional and retail investors. Funds of funds (hedge funds) and other hedge fund -linked products are increasingly being marketed to the retail investors in some jurisdictions. There are a number of factors behind the rising demand for hedge funds. The unprecedented Bull Run in the US equity markets during the 1990s swelled investment portfolios this lead both fund managers and investors to become more keenly aware of the need for diversification. Hedge funds are seen as a natural hedge for controlling downside risk because they employ exotic investments strategies believed to generate returns that are uncorrelated to asset classes. Until recently, the bursting of the technology and telecommunications bubbles, the wave of scandals that hit corporate America and the uncertainties in the US economy have lead to a general decline in the stock markets worldwide. This in turn provided fresh impetus for hedge funds as investors searched for absolute returns. The growing demand for hedge fund products has brought changes on the supply side of the market. The prospect of untold riches has spurred on many former fund managers and proprietary trades to strike out on their own and set up new hedge funds. With hedge funds entering the main stream and becoming respectable, an increasing number of banks, insurance companies, pension funds, are investing in them. Hedge Funds Impact On U.S. Economy: If hedge funds can dramatically increase the cost of oil, they can have a huge impact on the economy. Oil prices are a component of inflation, which cuts into consumers ability to purchase.

222 Since consumer products are 70% of the U.S. economy, a restriction in consumers buying power will lead to a slowdown in the economys growth. Hedge Funds Impact on Stock Market Hedge funds have made the stock market much more risky. Since they are unregulated, they can make investments without scrutiny by the SEC. Unlike mutual funds, they dont have to report quarterly on their holdings. This means no one really knows what they are invested in. Their use of derivatives means that, with little actual money invested, they have the capability to create large swings in the market. For example, many experts have said that the run-up in oil prices in July of 2006 was caused, in part, by hedge funds. Although no one really knows how much of the market is controlled by hedge funds, Credit Suisse estimates it could be half of the New York and London Stock Exchanges. (Source: International Herald Tribune, "U.S. Regulators Grow Alarmed Over Hedge Fund Hotels, January 1, 2007) Now, the differences: Hedge funds are managed much more aggressively than their mutual fund counterparts. They are able to take speculative positions in derivative securities such as options and have the ability to short sell stocks. This will typically increase the leverage - and thus the risk - of the fund. This also means that it's possible for hedge funds to make money when the market is falling. Mutual funds, on the other hand, are not permitted to take these highly leveraged positions and are typically safer as a result. Another key difference between these two types of funds is their availability. Hedge funds are only available to a specific group of sophisticated investors with high net worth. The U.S. government deems them as accredited investors and the criteria for becoming one are lengthy and restrictive. This isn't the case for mutual funds, which are very easy to purchase with minimal amounts of money. CONCLUSION 1. A mutual fund is a collective investment system that includes shares from bonds, stocks, securities and other short-term money market investments. 2. A hedge fund is an investment fund that is available to partial investors, and it allows for various trading activities and other investments. 3. Everybody can invest in mutual funds. 4. Hedge fund uses the whole market, in order to maximize the investment potential.

223

NON PERFORMING ASSETS PERTAINING TO HOUSING


Mrs.P.Vijaya Lakhsmi - Assistant Professor, R.V.S. College of Engineering and Technology, Dindigul INTRODUCTION The constitution of India recognizes the right to live and have a livelihood as a fundamental right. This includes the right to housing policy. Housing demand is a universal problem, being one of the prime necessities of life. Housing demand still needs to be fulfilled. This is because of the shortage of funds and inadequacy of financial institutions, coupled with as increase in cost. STRUCTURE OF THE HOUSING FINANCE INDUSTRY: Traditionally housing finance was dominated by a handful of private sector institutions. These housing finance companies commended 70% market share in FY 1999, which has subsequently fallen to 50% in FY 2004 as a direct result of policy changes that permitted the entry of this banks into this industry. Banks Now control 40% of this market and continue to show Explosive growth of 39.33% shown by commercial banks . PROBLEMS AND ISSUES WITH THE HOUSING FINANCE INDUSTRY IN INDIA: Variation in standards The housing sector is unrepressed varying standards and practices among the lending community, be it in origination and documentation or monitoring and supervision. Aggressive approach may lead to defaults Growing competition coupled with reduction in risk weights on housing loans has led the lending institutions to adopt aggressive practices. Security deficits due to norms Many primary lending institutions are making terms and conditions of sanction flexible and liberal, thus enabling the borrowers to avail the loans even more than the value of security for long tenure of 20 to 25 years. The large quantum of institutional finance in the property transaction may lead to the problem of security deficit. Due diligence issues Increasingly, there have been instances of dilution in due diligence on the part of lenders. Sometimes, loans are sanctioned without strictly complying with laid down rules, system and procedures. Lack of uniformity of norms amongst industry players The norms which are followed by the banks are not uniform and they are flexible to major expert. HOUSING FINANCE SERVICES Housing finance has not only become popular but the procedure for obtaining a loan has become so simplified that housing loans are easily available. This may be attributed to the change in the housing policy of both the central and staffs governments. A redeeming feature of Indian housing finance is the recent entry of commercial banks in a big way. NON PERFOMISNG ASSETS The banking sector plays larger role in channel sing money from one end to other end. It helps almost every person in utilizing the money at their best. The banking sector accepts the deposits of the people and provides fruitful return to people on the invested money. But for providing the better returns plus principal amounts to the clients, it becomes important for the banks to earn. The

224 main source of income for banks are the interest that they earn on the loans that have been disbursed to general person, businessman or any industry for its development. DEFINITION OF NON PERFORMING ASSETS RBI Notifications Non performing Asset (referred to in these directions as NPA) means: with effects from 31, 2003, means; a. An asset, in respect of which, interest has remained part due for six months. b. A term loan inclusive of unpaid interest, when the installment is overdue for a period of six months or more. REASONS FOR GROWTH OF NPAs The quantum of NPA has been calculated and put at different figures mainly due to absence of proper statistics and the method on the basis adopted for calculating the percentage of NPA in relation to either the total assets of the bank or the amount of loan post folio or on the basis of the number of the accounts or the sing of the out standing advances. Recently little attention was paid to the real reasons as to why and how non performing assets have appeared in the books of the banks and also the books of financial institutions. For a large numbers of years, the banks have been taking credit in its books, on basis of accrued interest income, even for the amount of periodic interest that was not actually paid by the borrower. This was done by raising debit in suspense account and crediting amount equal to the periodic interest in the loan account of the borrower BANKS COULD NOT PREVENT LOAN DEFAULTS This is mainly due to procedural lapse and in adequate control mechanism and loosening of bank supervision. In order to over come this problem each bank should evolve structured letter of sanction, a detailed loan agreement and elaborate security documents including all the supporting documents. Following data is relating to NPA declared by banks during the financial year 2009-2010. Amount Source Punjab (Rs. In crores) National Bank 853 Dena Bank 185 Bank of Baroda 515 Canada Bank 884 Daimio Jag ran India Bank 388 dated 29th Nov 2010 Syndicate Bank 419 UCO Bank 371 State Bank of India 1990 Vijay a Bank 479 Alahabad Bank 750 Union Bank of India 513 Bank 7347 Impact on Indian Economy: After NPA issue came into picture the share price of those concerns or companies fall on 25th Nov 2010 which highlights in this issue.

225 The data given below is as per data published in dainik jagaran on 26 Nov10. Bank / Company % Decrease in Price Pubjab National Bank 6.38 Canara Bank 5.85 Axis Bank 3.35 LIC Housing Finance 0.98 DB Reality 9.99 JP 5.19 DLF 4.13 India Bulls 5.22 Unitech 6.04 RECOMMENDATIONS TO REDUCE NPA In order to reduce NPA in housing finance bank the following measles help the market to perform more efficiently. can be adopted to

Adoption of uniform practice: the hosing finance inductee relating to malteds like appraisal and documentation, Repayment of housing loans, Conversation of tried sale loans into loading rate loans. Greater transparency: dealings with the bellowers to enable them to Exercise informed choice about product and leading institutions promotion securitization. The securitization act has been en acted for dealing with and souring problem of NPAS where these securities are purchased by SPV established in form of a trust, set up the non banking finance company it self and these after securable are sold to metal tend as the investor by issue of pass through certificates (PTC). Autonomy to bumps: we propose to the bank, through RBI, to under take lending a remunerative avenue. CONCLUSION Non-Performing Assets in banks are serious problem where due steps has to be taken to reduce. It is highly improbable for any bank to have zero percentage NPA. But at least Stapes have to be taken to reduce the NPA in banks particularly in housing finance to maintain and Complete with international Standards. To impure the efficiency and Profitability of banks the NPA has to be payment Scheduled.

226

FOREIGN DIRECT INVESTMENT IN MULTI-BRAND RETAILING


Mr.S.Chelladurai, Assistant Professor, MBA Department, Nehru Institute of Engineering & Technology, Coimbatore 641 105 Mrs.K.Sarguna, Assistant Professor, BBM Department, Nehru Arts and Science College Coimbatore 641 105 INTRODUCTION Marketing of two or more similar and competing products by the same firm under different and unrelated brands is called Multi brand retailing. The retail industry is mainly divided into Organized and Unorganized retailing. Organized retailing refers to trading activities undertaken by licensed retailers, who are registered for sales tax, income tax, etc. Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, i.e. kirana shops. The Economic Survey 2010-11 has favoured phased opening of foreign direct investment (FDI) in multi-brand retail to address the concerns of consumers, farmers and declining FDI inflows. Permitting FDI in multi-brand retail in a phased manner beginning with metros and incentivizing the existing retail shops to modernise could help address the concerns of farmers and consumers,'' the survey says. At present India allows 100 per cent FDI in cash and carry wholesale trading, while it is prohibited in multibrand retail. Up to 51 per cent FDI has been allowed in single-brand retail since 2006. The survey says FDI in retail may also help bring in technical know-how to set up efficient supply chains which could act as models of development. According to it, during April 2006 to March 2010, India witnessed FDI inflows worth $194.69 million in the retail sector, accounting for 0.21 per cent of total FDI inflows into the country during the period. A total of 94 proposals have been received till May, 2010, of which 57 were approved,'' the survey said. Global retail giants such as Walmart, Carrefour and Tesco have been pitching for opening FDI in multi-brand retail so that they can tap the immense potential this country offers. Globally, FDI in retail is permitted in countries such as Brazil, Argentina, Singapore, Indonesia, China and Thailand without any limit on equity participation, while Malaysia has equity caps. In India, retail trade is a State subject. There is no national framework for its regulation and development and States have their own regulations. Reasons behind the Reforms Trade is an important segment in Indias Gross Domestic Product (GDP). As per the National Accounts, released by the Central Statistical Organization (CSO), GDP from trade (inclusive of wholesale and retail in organized and unorganized sector), at current prices, increased from Rs 4,33,963 crore in 2004-05 to Rs 7,91,470 crore, at an average annual rate of 16.2 per cent. The share of trade in GDP, however, remained fairly stable at little over 15 per cent. in last four years1. The share of the private organized sector in total GDP from trade was 23.2 per cent in 2008-09 and it grew at 15.0% during the year. The share of the retail trade in GDP remained stable at 8.1 per cent during this period. The Inter-Ministerial Group (IMG) on Inflation headed by Chief Economic Advisor Kaushik Basu pitched for opening up multi-brand retail to foreign direct investment (FDI) along with changes in agriculture marketing laws to help contain the inflationary pressures on the economy. Committee of Secretaries (CoS) had proposed allowing up to 51% FDI in the politically sensitive multi-brand retail segment with a rider that a minimum of USD 100 million investment should be made The Planning Commission has given its green signal to foreign direct investment (FDI) in multi-brand retail sector. The multi-brand retail industry is enormous with Indian retails equalling $400 billion. Walmart alone has accounted for sales of $450 billion this year.

227 The business logic behind FDI Thomas Varghese, CEO of Aditya Birla Retail says, significant local knowledge is necessary to do business in India, irrespective of sectors. India, given its diversity and resultant multiple tastes, warrants flexible business models that cater to a multitude of needs and wants. So, foreign players may need this local knowledge in abundance, especially to penetrate Indian multi-brand retail markets. On the other hand, there are challenges in merchandising, supply chain and technology that Indian players face, when it comes to multi-brand retailing. How margin-free markets can take a beating One of the widely perceived and publicized benefits that come with allowing FDI in multibrand retail is that it would arrest the sky-rocketing inflation. The past experiences show that once the organized players come in, prices have not come down. It may not be the so-called kirana-stores that would be negatively affected by the advent of these big players. It would also be the stores which employ 4-5 people, the so-called margin-free markets that would be affected. Currently, these stores cater to a growing middle class; the stores may not be looking flamboyant or air-conditioned. But they cater to a rapidly surging middle-class whose members are being eyed by the big players. The kirana stores always have their place in the map; all because they have a space. They dont survive because of the scale but for their location. The so-called mediumtype stores survive because of scale and they can hardly match the scale and price as offered by the biggies like global retail giants Walmart, Tesco and Carrefour etc., LIMITATIONS OF THE PRESENT SETUP By sourcing commodities at a higher price in the global market, they would only add further to the existing inflationary pressures Table 1: Consumer Pharma / Cookware / Channel mark-up Garments Goods OTC Kitchenware In India In West 22% highest 40% average 30% branded 34% total 30% total 100% minimum 100% 100% minimum minimum Source: Shekar Swamy, Hindu Business Line, June 16 and 17, 2011

India is not an economy, which is suited to the kind of outsourcing and creation of supply chain, which can feed large retail chains. The single brand retail, which was allowed with big deal, has not taken off. It has merely created a window for import of finished products from richer countries. FDI in retailing would lead to unfair competition and result in large-scale exit of domestic retailers, leading to displacement of persons employed in the retail sector. Global retailers such as Wal-Mart would conspire and exercise monopolistic power to raise prices and monopolistic power to reduce the prices received by the suppliers causing asymmetrical growth in cities leading to discontent and social tension elsewhere A number of concerns have been expressed with regard to opening of the retail sector for FDI. 1. The first is that the retail sector in India is the second largest employer after agriculture. As per the latest NSSO 64th Round, in 2007-08 retail trade employed 7.2%6 of total workers and provided job opportunities to 33.1 million persons". The share of employment in the broad sector of trade, hotels and restaurants in 2007-08 was significantly higher compared to its share in 1993-94 for both males and females, in rural, as well as urban areas". More than 2/ 3rd of the total employment, in the broad category of trade, hotels and restaurants, is in the retail sector. 2. A second concern is that it would lead to unfair competition and ultimately result in largescale exit of domestic retailers, especially the small family managed outlets, leading to large scale

228 displacement of persons employed in the retail sector. Further, as the manufacturing sector has not been growing fast enough, the persons displaced from the retail sector would not be absorbed there. 3. A third argument is that the Indian retail sector, particularly organized retail, is still underdeveloped and in a nascent stage and that, therefore, it is important that the domestic retail sector is allowed to grow and consolidate first, before opening this sector to foreign investors. GIST OF RECOMMENDATIONS OF VARIOUS STUDIES: A number of views have been expressed regarding the subject of FDI in the retail trade sector. Various issues have also been raised on the possible approach to opening the retail trade sector for FDI. Some of the views expressed/issues raised are summarized ahead. 'FDI IN RETAIL- A POLICY PERSPECTIVE', PREPARED BY FICCI AND ICICI PROPERTY SERVICES IN FEBRUARY, 2005 i. Competition within the host country sector is a critical driver of improvements in sector performance as a result of FDI. ii. However, FDI's potential for impact can be greater because of the combination of scale, capital, and global capabilities which allow MNCs to close existing large productivity gaps more aggressively. iii. FDI can be a powerful catalyst to spur competition in industries characterized by low competition and poor productivity. Examples include the cases of consumer electronics in Brazil and India, food retail in Mexico, and auto in China, India, and Brazil. iv. Competition is also key to diffusing FDI-introduced innovation across an industry. In Brazilian food retail, high competitive intensity caused by informal players forced all modern retailers to rapidly increase productivity; in Mexican and Brazilian auto cases, increasing competition from imports induced foreign players themselves to increase their productivity. v. Increasingly, foreign direct investment is integrating developing countries into the global economy, creating large economic benefits to both the global economy and to the developing countries themselves. Industry restructuring enables global growth as companies reduce production costs and create new markets. For the large developing countries, integrating into the global economy through foreign direct investments improves standards of living by improving productivity and creating output growth. The biggest beneficiaries from this transition are consumers - both global consumers that reap the benefits from global industry restructuring, and consumers in the host countries that see their purchasing power and standards of living improve. vi. FDI can be a powerful catalyst to spur competition in the retail industry, due to the current scenario of low competition and poor productivity. It can bring about: Supply Chain Improvement Investment in Technology Manpower and Skill development Tourism Development Greater Sourcing From India Upgradation in Agriculture Efficient Small and Medium Scale Industries Growth in market size Greater Productivity Benefits to government: through greater GDP, tax income and employment generation

229 VII. The report inter alia made the following recommendations: Permit FDI in retail Remove Bottlenecks in the supply chain Relax SSI Reservation Remove distribution constraints Organize market for real estate Increase land supply CONCLUSION It is ironic that economic surveys prepared by the Ministry of Finance and released a week before the presentation of the annual budget float fanciful themes. These are so to say test balloons. Unfortunately, there is no correlation between the survey and the budget even on fundamental issues like fiscal correction. FDI in retail India is a lost cause. The lure of FDI in retail is based on the Wal-Mart story in China. That was when China had become the hub for exporting cheap goods into the U.S. Many U.S. corporations exploited the opportunity. That story has outlived its purpose. The yuan debate has undone it. The U.S. cannot afford to live with a hollowed manufacturing base; nor can China live with an exports-only strategy and has to turn inward. The moral is that there is no global model of retail which can be replicated elsewhere. Arguments in favor of FDI in retail are fallacious. India is not an economy which is suited to the kind of outsourcing and creation of supply chain which can feed large retail chains. The single brand retail which was allowed with fanfare has not taken off. It has merely created a window for import of finished products from richer countries. Companies like Prada, Gucci and other superior brands (perfumes!) which are beyond the reach of millions of Indians. Indian participation takes care of back-office and establishment expenses and there is no linkage with the Indian raw materials or processing. It has created an "island" decorating huge malls catering only to the noveau rich or those in the Forbes list. It is inconceivable that in a few years Wal-Marts and their ilk will be able to build linkages with Indian manufacturers in an equitable manner. It is idle to imagine that they will support small farmers or construct cold storages for them. These are slogans of PR companies to buttress their case and lack credibility. Lastly, Indian retail supports more than 30 million people. These have taken to retail as the government has failed to create employment opportunities for them. It is disguised unemployment. These millions will rise against FDI in retail and create situations not unlike that which happened in Egypt, Bahrain, etc. Dr. Manmohan Singh opposed FDI in retail when he was the leader of opposition in the Rajya Sabha. There are no material changes in the ground conditions and the situation, if anything, has turned worse. It is sad that the FDI in retail story has been popping up again and again during the last eight years.

230

IMPACT OF GLOBAL FINANCIAL CRISIS ON SHARE MARKET IN INDIA


Dr.S.Gandhimathi, Assistant Professor of Economics, Avinashilingam Deemed University for Women, Coimbatore The world economy witnessed financial crisis since mid 2008. This crisis affected the functioning of the global financial markets, stock markets and the economy. The problems that surfaced in the US sub-prime market in August 2007 reached their peak during September 2008. Credit markets virtually froze with financial institutions almost unwilling to lend to each other. The loss of confidence set off a chain of deleveraging, declining asset and commodity prices, falling incomes, shrinking demand and trade and capital flows, and rising unemployment in the advanced economies in the early stages. The turmoil in the financial sector of the advanced countries affected the financial sector of India, especially after the Lehman Brothers bankruptcy in mid- September 2008. The contagion spread to these economies through financial, trade and confidence channels, despite their relatively sound fundamentals. The Indian equity market has witnessed a significant improvement since the reform process began in the early 1990s. The equity market in India is now comparable with international markets. The changes in regulatory and governance framework have increased investors confidence. There has been a visible improvement in trading and settlement infrastructure, risk management systems and levels of transparency. These improvements have reduced transaction costs and led to improvements in depth and liquidity. Before the onset of the sub-prime crisis in the US in August 2007, capital markets across advanced and emerging market economies had witnessed a strong rally. The mounting losses of large financial institutions on account of the subprime crisis, however, intercepted the rally and capital markets started sliding in most of the advanced economies. Confidence in many large financial institutions was severely shattered by the sub-prime mortgage losses and the share prices of these institutions, especially investment banks, crumbled drastically from the later part of 2007. Subsequently, capital markets of emerging market economies also started decelerating, primarily on account of large pullouts by foreign institutional investors. Although Indian banks/ financial institutions had no significant exposure to the US sub-prime 211 market, Indian capital markets caught the global downswings in January 2008, largely driven by selling pressures by FIIs. In the present study, an attempt is made to analyse the trend in the share market in India and to analyse the impact of global financial crisis on share market. Results and Discussion The first impact of the global crisis on India was felt in the stock market in January 2008. This came through the reversal of inflows from foreign institutional investors (FIIs) into the country. India had received about US$ 17.7 billion as net equity investment inflows from FIIs during 2007. This turned into a net disinvestment of US$ 13.3 billion during the period from January 2008 to February 2009. This was the direct result of the massive de-leveraging of US banks after the financial meltdown. The FIIs withdrew funds from all over the emerging markets for meeting the liquidity requirements of their principals in the US. The sudden withdrawal of FIIs from the Indian stock market brought about a crash in the market in January 2008. The benchmark stock price index, the BSE Sensex, plummeted from 20,873 on 8 January to 9093 on 28 November 2008, a 56 per cent fall over a period of 11 months. The fall in Wall Street started two months before in November 2007, but the intensity of the market crash taking place after a lag in Dalal Street (Indias stock exchange) had been much larger. The severity of the current crisis can be gauged by the steep decline in the equity markets of advanced economies. The bursting of the sub-prime housing bubble caused Wall Street to lose a staggering US$8 trillion in market capitalization in a very short time (Brunnermier 2009). Interestingly, the loss in market capitalization and crash in equity prices has been significantly higher in periphery economies as compared to US markets (Table 1). According to Eichengreen and ORourke (2009) global stock markets fell faster during the current crisis than in 1929.

231 Table 1: Stock Market Crash and Exchange Rate Changes of Selected Countries Countries Stock Market Changes Rate Changes JuneDecember 2008 (%) JuneDecember 2008 vis--vis US$ (%) PRC -48 1 Hong Kong, China -40 1 India -41 -13 Republic of Korea -36 -20 Argentina -51 -13 Brazil -49 -31 Mexico -29 -26 Japan -36 18 Eurozone -37 -11 US (S&P 500) 36 Source: Loser (2009). The global financial crisis had significant impact on the share price index. The table-2 shows the average annual share price index before and after the global financial crisis Table 2 : Annual averages of share price indices and market Capitalization Year BSE Sensex BSE 100 Market capitalization (Base : 1978-79=100) (Base: 1983-84 = 100) BSE (Rs.Crore) 1980-81 138.87 1981-82 207.91 1982-83 221.51 9769.00 1983-84 238.33 100.00 10219.00 1984-85 266.19 116.01 20378.00 1985-86 492.23 216.99 21636.00 1986-87 567.39 256.85 25937.00 1987-88 454.46 232.23 45519.00 1988-89 613.66 307.84 54560.00 1989-90 729.49 384.84 65206.00 1990-91 1049.53 536.99 90836.00 1991-92 1879.51 916.63 323363.00 1992-93 2895.67 1321.04 188146.00 1993-94 2898.69 1373.00 368071.00 1994-95 3974.91 1899.53 435481.00 1995-96 3288.68 1525.93 526476.00 1996-97 3469.24 1554.64 463915.00 1997-98 3812.86 1650.07 560325.00 1998-99 3294.78 1457.07 545361.00 1999-00 4658.63 2278.16 912842.00 2000-01 4269.69 2170.51 571553.00 2001-02 3331.95 1587.70 612224.00 2002-03 3206.29 1597.32 572198.00 2003-04 4492.19 2315.70 1201207.00 2004-05 5740.99 3083.25 1698428.00 2005-06 8278.55 4380.71 3022191.00 2006-07 12277.33 6242.73 3545041.00 2007-08 16568.89 8691.47 5138015.00 2008-09 12365.55 6434.69 3086076.00 2009-10 15585.21 8187.25 6164157.00 Source: Handbook of Indian Economy

232 The table -2 shows that the sensex had declined from 16568.89 in 2007-2008 to 12365.55 in 20082009. The market capitalisation had also shown a very sharp decline from Rs. 5138015.00 crore in 2007-2008 to Rs. 3086076.00 crore2008-2009. CONCLUSION To conclude, although Indian banks/ financial institutions had no significant exposure to the US sub-prime 211 market, Indian capital markets caught the global downswings in January 2008, largely driven by selling pressures by FIIs. The severity of the current crisis can be gauged by the steep decline in the equity markets of advanced economies. The bursting of the sub-prime housing bubble caused Wall Street to lose a staggering US$8 trillion in market capitalization in a very short time (Brunnermier 2009). Interestingly, the loss in market capitalization and crash in equity prices has been significantly higher in periphery economies as compared to US markets. According to Eichengreen and ORourke (2009) global stock markets fell faster during the current crisis than in 1929.

233

FOREIGN CAPITAL INFLOWS TO REAL ESTATE INDUSTRY IN INDIA DURING LIBERALISATION ERA
Dr. S.Jayakkumar, Associate professor of commerce, Guru Nanak College, Chennai- 600 042. INTRODUCTION Ever since the economic liberalization process began in India, the economic sectors enter into competition among themselves to grab a major share of the economic development and growth of the country. In this process construction and Real Estate industry becomes a leader among the competitive sectors in attracting the Foreign capital in India. . The industry has adopted a host of offensive strategy and the Government of India gave a helping hand for effecting a revolutionary changes in the construction of housing, hotels, hospitals, resorts and recreation centers etc., To accelerate the economic liberalization process and to boost employment, infrastructure and economic growth, Government of India has allowed Foreign Direct Investment (FDI) with a minimum of $ 10 million in 100 per cent FDI projects and $ 5 million in joint venture projects under automatic route without going through the Foreign Investment Promotion Board (FIPB) in construction of housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure etc., over 50,000 square meters by obstructing the sale of undeveloped land by foreign investors to prevent speculation in real estate. The construction industry in India is worth over US$ 55 billion (37 billion) and accounts for more than 20% of GDP. In 2005, FDI in real estate was a mere Rs 171 crores which has soared to Rs 13,586 crores in 2009-10. Foreign direct investment in Indias booming real estate and housing market jumped 80 times during this period. India has been witnessing more money being attracted into housing sector from abroad despite the recent downturn in 2010 11 (up to September) Rs 2,957 crores in FDIs were attracted into the sector. The cumulative Foreign Direct Investment worth of Rs 40,205 crore has come India in the housing sector during the above period ( 2005 to 2010). FOREIGN CAPITAL INFLOWS IN INDIA Investment is usually understood as financial contribution to the equity capital of an enterprise or purchase of shares in the enterprise. Foreign investment is of two kinds (i) Foreign Direct Investment (FDI) and (ii) Foreign Portfolio Investment. Foreign capital investment consist of (a) Equity inflows under FIPB, RBI, Automatic acquisition route, (b) Equity inflows in unincorporated bodies, (c) Re-invested earnings and (d) other capital investment The following table No 1 shows clear picture about financial year wise Foreign capital inflows to India. TABLE No.1 FINANCIAL YEAR WISE FDI INFLOWS TO INDIA (Amount in US Dollars in million) Main components of FDI Equity Equity ReOther Total % of inflows inflows in invested capita FDI FDI under FIPB, unincorpo earnings l growth RBI, rated over Automatic, bodies previous Acquisition year Route 2,339 61 1,350 279 4,029 -3,904 191 1,645 390 6,130 (+) 52% 2,574 190 1,833 438 5,035 (-) 18% 2,197 32 1,460 633 4,322 (-) 14% 3,250 528 1,904 369 6,051 (+) 40% 5,540 435 2,760 226 8,961 (+) 48%

Financial year

Investmen t by FIIs( Foreign institution al investors Fund) net. 1,847 1,505 377 10,918 8,686 9,926

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

2006-07 2007-08 2008-09 2009-10 201011(up to Feb) Total

15,585 24,573 27,329 25,609 18,350 131,250

896 2,291 666 1,540 219 7,049

5,828 7,679 6,428 8,080 2,166 41,133

517 292 757 1,953 118 5,972

22,826 34,835 35,180 37,182 20,853

(+) 146% (+) 53% (+) 01% (+) 06% --

234 3,225 20,328 (-) 15,017 29,047 11,849

193,40 -82,691 4 SOURCE: RBI Bulletin October 2010 Dt 12.10.2010 (Table No 44- FOREIGN INVESTMENTS INFLOWS.) and Statistics of Indias Ministry of commerce and Industry. From Table No.1, it is found that equity capital inflows under FIPB, RBI, Automatic, Acquisition Route there is a steady increase in all the years from 2005-06 to 2009- 10. The level of inflow regarding Equity through unincorporated bodies are also increasing from 2005-06 to 2009-10 except 2008-09. The level of increase inflow was also maintained in the case of reinvestment of earnings and other foreign capital investment. Overall FDI inflows in 200506 was 8,961 million US Dollars, which is substantially increased to three times 22,826 million US Dollars. In the year 200809 also there is an increase in FDI inflow by 53% of the last year As a result of this, the World Investment Report stated that India is the second most attractive location for Foreign Direct Investment. It is also stated that there is a substantial increase in flow of FDI in South Asia and more particularly to India. FOREIGN CAPITAL INFLOW DIPS BY 25% in 201011(up to February) India needs to worry on Foreign Direct Investment (FDI) front. Statistics of Indias Ministry of Commerce and Industry stated India has received only 18.35 million U S Dollars in the first 11 months from April to February of financial year 2010-11, compared to 25.63 million U S Dollars that came in the first 11 months of the previous financial year. Although it is a significant dip, the government has not mentioned the reasons for the fall except for saying that the trend will be reversed as it has received a few proposals for FDI. It is observed that (a) Acquisition related inflows in value terms during the 11 months of 2010-11 already exceeded that for the entire year of 2009-10. (b) FDI inflows through the automatic route which were affected substantially rather than those through the Foreign Investment Promotion Board/Secretariat for Industrial Assistance (FIPB/SIA) approval route. (c) The problems in getting the approvals. (d) Voluntary restraint on part of the foreign investors and (e) Policy making circles has become a subject matter of public comments are the major reasons for fall in FDI inflows. IMPACT OF FALL IN FOREIGN CAPITAL INFLOW RBI in particular is now worried about the fall in FDI inflows in the context of higher level of current account deficit and dominance of volatile portfolio capital flows. The volatile FDI inflows which accounted for a substantial proportion of the equity flows have in turn contributed to the volatility in equity prices and the exchange rate. RBI underlined the sustainability risks posed by the composition of capital flows and the need for recovery of FDI are expected to have longer term commitments. Environmentally sensitive sectors like mining, integrated township projects and construction of ports, construction, real estate, business and financial services are identified as the sectors responsible for the slow down. The following table No 2 shows clear picture about financial year wise top TEN Foreign capital investing countries in India. It may be noted that Mauritius is the most preferred route for directing FDI in to India while Singapore is the second largest contributor in all the years from 200506 to 2010-11.

235 TABLE No. 2 TOP TEN FDI INVESTNG COUNTRIES (Amount in Rupees and in crores) April 2005 to May 2009
Countries MAURITIUS SINGAPORE USA UK CYPRUS NETHERLANDS JAPAN GERMAN UAE FRANCE Total 2005-06 11,441 1,218 2,210 1,164 310 340 925 1,345 219 82 19,254 200607 28,759 2,662 3,861 8,389 266 2,905 382 540 1,174 528 49,466 200708 44,483 12,319 4,377 4,690 3,385 2,780 3,336 2,075 1,039 583 79,067 200809 50,794 15,727 8,002 3,840 5,983 3,922 1,889 2,750 1,133 2,098 96,138 200910 12,428 1,280 852 306 1,521 540 1,498 999 366 29 19,819 Cumulative FDI 147,905 33,206 19,302 18,389 11,465 10,487 8,030 7,709 3,931 3,320 2,63,744 Cum % 56 % 12.59 % 10.92% 7.35% 4.34% 4% 3% 2.92% 1.49% 1.25% 100%

SOURCE: DIPP, Federal Ministry of Commerce and Industry, Government of India. Table 2 highlights that Mauritius has contributed 56% of the total FDIs inflows in India followed by Singapore with 12.59% compared to other countries like US which was only 10.52% and UK 7.35% in all the years from 200506 to 2009-10. According to another statistics of Indias Ministry of Commerce and Industry, Mauritius continues to be in the first place in FDI in India with 36% of FDI in the financial 2010 11 (up to feb 11) also. Japan comes in third with 8.3%, followed by the Netherlands and the USA with 6.1% each, and Cyprus with 4.5%. The U.K is a distant eight in FDI ranking, contributing 2.8% of the FDI inflow in to India during AprilFebraury 201011. Mauritius continues to be the preferred route for directing FDI in to India mainly because of the most of the investors want to avail the advantage of double taxation avoidance, agreement between India and Mauritius. Mauritius based investors need not pay capital gains tax in India is also a reason for higher contribution of FDI. FOREIGN CAPITAL IN CONSTRUCTION SECTOR The construction industry is a major driver of economic growth in any country. Some of the economies that were built mainly on the construction boom and here are our two neighbours Singapore and Hong Kong coming are coming to our mind instantly. The construction sector accounts for upwards of 6 per cent of GDP in any advanced economy. In United Kingdom it accounts for 8 per cent of the GDP, 16 per cent of Irelands and 11 per cent of Dubais. Managing Director of C B Richard Ellis, a real estate consultant states India is a huge market for property funds with its growing economy and rising demand for space. The entry of foreign investors will increase the housing stock in the country. That is good news for consumers who will not have to pay higher prices. Confederation of Real Estate Developers Association in India (CREDAI), highlights that India has the potential to attract huge amount of investment, but already overseas developers have increasingly started eyeing the Indian property sector aggressively. The construction industry in India is worth over US$ 55 billion (37 billion) and accounts for more than 20% of GDP. It is also the largest employer in the country after agriculture, employing approximately 31 million people. India is the second most populous country in the world with 1.17 billion people and constitutes 16% of the worlds population. There has been significant growth of the urban population over the past decade. There are 6 metropolitan cities with a total population of over 75 million. The organised real estate business in India is estimated at around 30 billion and is currently ranked 12th in the world, but is growing at a compounded annual growth rate (CAGR) of 30%. Consistent high economic growth, a shortage of residential and commercial space, a booming retail industry and strong growth in industrial output have all contributed to record levels of activity and investment in this thriving sector. The decision by the Government to allow 100% FDI in real

236 estate in 2005 has led to significant additional interest and growth, both in the real estate and construction sectors. Major international real estate companies are now looking to India to help drive their business growth. CURRENT TRENDS IN COOMMERCIAL SPACE UTILISATION In the year 2008, due to global recession and economic slowdown impacting the IT and financial services sector, the absorption rates for commercial space declined. During the year 2009 alone 41.6 million Sq. ft of commercial space as added out of which only 19.6 million Sq. ft as absorbed. The vacancy levels as at the end of the last quarter of FY 2009-10 ranged between 15-25% (as percent of availability) in major cities across India. Owing to the decline in absorption, the rental values also came in or correction. In some major cities, commercial property developers have slashed rentals by as much as 25%. GUIDELINES FOR FOREIGN CAPITAL INVESTMENT IN REAL ESTATE a) 100 per cent FDI through automatic route instead of going through Foreign Investment Promotion Board (FIPB) (b) Minimum land area requirement in residential sector is reduced from 100 acres to 25 acres (10 hectares). (c) Miniimum area for commercial development pegged at 50,000 square metres. (d) Sale of undeveloped plots by foreign investors not allowed. (e) The investment would further be subject to a minimum capitalization of $ 10 million for 100 per cent subsidiaries and $ 5 million for joint ventures with Indian partners. (f) The funds would have to be brought in within 6 months of commencing business. (g) The original investment cannot be repatriated before a period of 3 years from the date of completion of minimum capitalization amount. (h) The investor may be permitted to exit earlier with prior approval of the Government through the Foreign Investment Promotion Board (FIPB). (i) The investors cant sell undeveloped plots or areas where roads, water supply, street lighting, drainage, sewerage and other conveniences. (j) The investors should obtain the completion certificate from the local bodies and service agencies concerned before being allowed to dispose of the plot. (k) The investor may be permitted to exit earlier with prior approval of the Government through the Foreign Investment Promotion Board (FIPB). SEBI ISSUES GUIDELINES FOR REAL ESTATE AND MUTUAL FUNDS The Securities and Exchange Board of India on 26 th June, 2006 approved guidelines for real estate mutual funds, allowing them to invest directly in real estate properties in India. These funds would initially be close-ended schemes. Their units would be compulsorily listed on the stock exchanges and NAVs of the schemes would be declared daily. Investment norms: Apart from real estate properties in India, the schemes can invest in mortgage (housing lease) backed securities and equity shares/bonds/debentures of listed and unlisted companies dealing in properties and undertake property development. The board has also decided to exempt venture capital funds and foreign venture capital investors from the lock-in period during an IPO only if they hold shares in that company for a period of at least one year at the time of filing draft prospectus with the SEBI. This would help to ensure that only those who invest in the company with a long-term perspective would be allowed to get the benefit of exemption from requirement of lock-in period. The funds would be required to appoint a custodian who has been granted a certificate of registration to carry on the business of custodian of securities by the board. This is a welcome development for the mutual fund industry which enables common investors to participate in the growth of the real estate sector.

237 INDUSTRY RESPONSE Associated Chambers of commerce and Industry of India (ASSOCHAM} has welcomed the Government decision, allowing FDI for construction development to Foreign investors through automatic route for creation of townships, housing, built up infrastructure and construction development projects. In a statement, ASSOCHAM President said that with this decision, there will be creation of more jobs and economic activities will increase substantially which will lead to higher growth. It will also have multiplier effect on the economy of all types. In fact the Union Government decision to permit 100 per cent FDI on construction projects has brought tremendous joy and cheers to real estate industry. It is a step in the right direction and the liberalization of norms will augur well for the reality sector, especially the dilution of the 100 acres norm to 25 acres, Managing Director of Hiranandani Construction Pvt Ltd. stated that Another positive point is that Government has prohibited sale of undeveloped land to avoid speculation in real estate by foreign investors with relaxation of FDI norms. The Confederation of Indian Industry (CII) felt that increased investment in the sector would have a cascading impact on the economy, especially core infrastructure industries such as cement, steel and downstream industries. The President of FICCI, said it would give tremendous boost to group housing condo minimum, shopping malls and retail business. This is a very positive decision for the countrys economy as a whole. MD of Chesterton Meghraj property consultants pointed out that they will definitely see increased interest in the construction sector. The Government move comes at right time as the Government as well as the private sector are focusing on improving the countrys creaky infrastructure. FDI in construction will give an impetus to the manufacturing sector such as cement, steel, electrical and other industries that cater to the requirements of the infrastructure sector. FOREIGN CAPITAL INFLOWS TO REAL ESTATE INDUSTRY IN INDIA According to the Department of Industrial Policy and Promotion India (DIPP), the Indian real estate and housing sectors received US$ 1.12 billion in foreign direct investment (FDI) During 201011. Further, the industry also witnessed growth in private equity (PE) investments as well. Around 20 deals worth US$ 1.32 billion took place during January-May 2011, as compared to 22 deals worth US$ 483 million during the same period last year, according to Venture Intelligence, a research service focused on PE and mergers and acquisitions (M&A). INDIAN REAL ESTATE: MAJOR DEVELOPMENTS The real estate sector in India is on a growth path. The development in the real estate market encompasses growth in both commercial and residential spheres. Further, it has been estimated that there would be shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12), which provides a big investment opportunity, according to a report by the Technical Group on Estimation of Housing Shortage. The popularity of the Indian real estate sector is also highlighted by a report Emerging trends in Real Estate in Asia Pacific 2011 published by Price Waterhouse Coopers and Urban Land Institute. The report focuses on various places where developers such as Ansal Properties and Omaxe are building commercial and residential developments. These places include Jodhpur, Agra, Punjab, Uttar Pradesh, Haryana, Madhya Pradesh, and Rajasthan among others. In the present global scenario, India has been considered as the most promising and fast growing economy in the world. Due to the liberalized rules for Foreign Direct Investment in India, the real estate has been the attractive investment proposal for both the domestic as well as foreign investors and which has enhanced the economy of the country. Table 3 shows Foreign Direct Investment in Indias booming real estate and housing market jumped 80 times between 2005 and 2010.

238 TABLE 3 HOUSING AND REAL ESTATE FDIS AND TOTAL FDI IN INDIA (2005-2010 up to SEP) Rupees in Crores TOTAL FDI % housing, real estate YEARS FDI in HOUSING FDI to total FDI AND REAL ESTATE 200506 171 21,536 .79 200607 2,121 52,697 4.02 200709 8,749 70,960 12.32 200809 12,621 88,094 14.32 200910 13,586 81,730 16.62 201011(up to 2,957 32,756 9.02 September) Source: RBI Bulletine International Journal of Trade, Economics and Finance, Vol.2, No.1, February, 2011 Table 3 shows that in 2005, FDIs in real estate was a mere Rs 171 crores against total FDI of Rs 21,536 crores which is .79%. FDI in real estate soared to Rs 13,586 crores against to total FDI of Rs. 81,730 which is 16.67% in 2009-10. It indicates that FDIs inflows in Real Estate has jumped 80 times between 2005 and 2010.Even during the global recession period the realty sector in India has received a considerable amount of FDIs FINDINGS 1. There is a steady increase of equity capital inflows under FIPB, RBI, Automatic, Acquisition Route, equity through unincorporated bodies and reinvestment of earnings in all the years from 200506 to 2009- 10. In the year 200809 FDI inflow was increased by 53% over the last year, therefore it was declared by World Investment Report that India is the second most attractive location for Foreign Direct Investment. 2. During April-February 2011, FDI inflows into India declined by 25% over the previous year, due to Acquisition related inflows in value terms, obstacles in automatic route, approval problems, voluntary restraint on part of the foreign investors and public comments on policy making. 3. The construction industry in India is worth over US$ 55 billion (37 billion) and accounts for more than 20% of GDP. 4. The organised real estate business in India is estimated at around 30 billion and is currently ranked 12th in the world, but is growing at a compounded annual growth rate (CAGR) of 30%. 5. FDIs inflows in Real Estate has jumped 80 times between 2005 and 2010.Even during the global recession period the realty sector in India has received a considerable amount of FDIs 6. Mauritius is the most preferred route for directing FDI in to India while Singapore is the second largest contributor in all the years from 200506 to 2010-11. SUGGESTIONS FOR ATTRACTING FOREIGN CAPITAL INFLOWS 1. Scrapping of the contentious Press Note 1 of 2005, to encourage JVs and to provide flexibility for Indian companies to raise overseas capital, and liberalising foreign investments for production, construction, real estate and development of seeds. 2. Press Note 1. of 2005 Policy should not be used as a tool to override the contractually-agreed terms in this era of globalisation. With regard to bringing flexibility for companies to raise funds abroad. 3. The government should issue of equity to overseas firms against imported capital goods and machinery. 4. The route for raising foreign capital must be simplified and easier. 5. NOC requirements from Indian partner must be abolished. 6. The companies must be allowed to transform convertible instruments (like debentures, partly paidup shares, preferential shares, etc) into equity in accordance with the guidelines of the Foreign Exchange Management Act and the Securities and Exchange Board of India.

239 CONCLUSION In India, the real estate sector is the second largest industry after agriculture and it is asserted to be the most promising sector even today. The real estate market in India mostly continues to remain unorganized, fairly fragmented, mostly characterized by small players with local presence. Indian real estate has huge potential demand in almost every sector especially commercial, residential, retail, and industrial, hospitality, healthcare etc. India has witnessed a steady growth in the economy with the FDIs inflows. The market price of investment-grade real estate properties in India soared from USD 69.4 billion in December 31, 2006 to USD 108.8 billion by March 31, 2011. This is 8.2% of total GDP for the year 2009. Indian Real estate has been on rise from last few years. The total amount of FDI inflow has been continuously increasing and along with it the percentage of FDI in real estate sector. RBI Bulletin shows during 2007-2009 the FDIs inflows has almost doubled i.e. from Rs 2,83,284 crores to Rs 4,23,053 crores. This shows that India has been considered as the most attractive investment countries in Asia. Since 2005, various real estate projects have been given a green signal by RBIs. But certain factors like acquisition related inflows in value, automatic route clearances, Investment Promotion Board/Secretariat for Industrial Assistance (FIPB/SIA) approval route, policy making circles, public comments, voluntary restraint on part of the foreign investors are the major causes for fall in FDI inflows in 201011. The economic conditions of the developing economies in the world are putting pressures on the recovery of FDIs flows.

240

AN OVERVIEW OF HEDGE FUND


Dr.R.Geethalakshmi & Mr.C.Yuvaraj, Assistant Professor, Coimbatore Institute of Engineering and Technology, Coimbatore Introduction There is no exact definition to the term Hedge Fund; it is perhaps undefined in any securities laws. There is neither an industry wide definition nor a universal meaning for Hedge Fund. Hedge funds, including fund of funds, are unregistered private investment partnerships, funds or pools that may invest and trade in many different markets, strategies and instruments (including securities, nonsecurities and derivatives) and are not subject to the same regulatory requirements as mutual funds The term hedge funds, first came into use in the 1950s to describe any investment fund that used incentive fees, short selling, and leverage. Over time, hedge funds began to diversify their investment portfolios to include other financial instruments and engage in a wider variety of investment strategies. However, hedge funds today may or may not utilize the hedging and arbitrage strategies that hedge funds historically employed, and many engage in relatively traditional, long only equity strategies. Other unregistered investment pools, such as venture capital funds, private equity funds and commodity pools, are sometimes referred to as hedge funds. Although all of these investment vehicles are similar in that they accept investors money and generally invest it on a collective basis, they also have characteristics that distinguish them from hedge funds. Hedge Fund Investment strategies tend to be quite different from those followed by traditional asset managers. Moreover, each fund usually follows its own proprietary strategies Hedge funds have attracted significant capital over the last decade, triggered by successful track records. The global hedge funds volume has increased from US $ 50 billion in 1988 toUS$750 billion in 2003 yielding an astonishing cumulative average growth rate (CAGR) of 24 %. The global hedge fund volume accounts for about 1% of the combined global equity and bond market. Hedge funds are a growing segment of asset management industry and increasingly becoming popular not only with high net worth individual investors but also with institutional investors including university funds, pension funds, insurance and endowments. Hedge funds are sometimes perceived to be speculative and volatile. However, not all funds exhibit such characteristics. 3. Objectives of the study The objectives of the study are: To understand the concept of hedge fund in India and overseas. To know the history of the hedge fund industry To study the various types of hedge funds and To know the difference between mutual fund and hedge fund. 4. Hedge Fund Strategies: Convertible arbitrage: Purchase and sale strategy i.e. purchase convertible securities and at the same time sale the underlying equity. Distressed Securities: Buys equity, debt, or trade claims at deep discounts of companies in or facing bankruptcy or reorganization, with a view to capturing returns from mispricing of improved cash flow or value. Hedge equities: Long or short investments in equities and their derivatives and it may be country specific, hedging against downturns in equity markets by shorting overvalued stock. global or

241 Macro: Aims to profit from changes in global economies typically brought about by shifts in government policy which impact interest rates, in turn affecting currency, stock, and bond markets. Income: Invests with primary focus on yield or current income rather than only on capital gains. May utilize leverage to buy bonds and sometimes fixed income derivatives in order to profit from principal appreciation and interest income. Equity Market Neutral: Using statistical techniques and valuation models to capture fundamental inefficiency in equity markets. Risk Arbitrage (Merger Arbitrage): Trading in equities of companies likely to undergo some merger and acquisition activity and there are two principle types of arbitrage: cash merger and stock merger. Multi-strategy: Investment approach is diversified by employing various Hedge Fund strategies simultaneously to realize short- and long-term gains. 5. Market overview: Structure and Size Hedge Fund Market Structure: Operational Structure: Hedge funds are usually not operated in-house by their employees. They are just investment vehicles owned by investors and sponsors (or limited and general parents) and rely on external service providers to conduct the funds day-to-day business, including managing the fund portfolio and providing administrative services. So for this type of operation structure, hedge funds establish relationships with all the necessary industry service providers: The sponsors and the investors: The sponsor is the creator of the fund and he will typically hold a member of the founder shares in the fund; that is as we talked early (page 1) the sponsor will be the general partner and the investor will be the limited partner.

6. Hedge Fund and Other Pooled Investment Vehicles: Hedge funds are sometimes called as rich mans mutual fund. In addition, other unregistered investment pools, such as venture capital funds, private equity funds and commodity pools, are sometimes referred to as hedge funds. Although all of these investment vehicles are similar in that have they accept investors money and generally invest it on a collective basis, they also characteristics that distinguish them from hedge funds.

242 9. Reasons for Rapid Growth of Hedge Fund Industry While high net worth individuals remain the main source of capital, hedge funds are becoming more popular among institutional and retail investors. Funds of funds (hedge funds) and other hedge fund -linked products are increasingly being marketed to the retail investors in some jurisdictions. There are a number of factors behind the rising demand for hedge funds. The unprecedented Bull Run in the US equity markets during the 1990s swelled investment portfolios of the need for this lead both fund managers and investors to become more keenly aware diversification. Hedge funds are seen as a natural hedge for controlling downside risk because they employ exotic investments strategies believed to generate returns that are uncorrelated to asset classes. Until recently, the bursting of the technology and telecommunications bubbles, the wave of scandals that hit corporate America and the uncertainties in the US economy have lead to a general decline in the stock markets worldwide. This in turn provided fresh impetus for hedge funds as investors searched for absolute returns. The growing demand for hedge fund products has brought changes on the supply side of the market. The prospect of untold riches has spurred on many former fund managers and proprietary trades to strike out on their own and set up new hedge funds. With hedge funds entering the main stream and becoming respectable, an increasing number of banks, insurance companies, pension funds, are investing in them. Conclusion Unfortunately, hedge funds have been labeled by many as the vehicle that will provide high returns on this hedge body of investable wealth. Yet hedge funds are limited in their ability to accommodate such large asset holding while preserving higher returns. It is in this sense that the very existence of hedge funds, as originally constituted, has disappeared under the weight of their extraordinary growth over the past five years. Today, hedge funds are estimated to be managing about a total of $1 trillion or about 7% of total US financial net worth: less when it is recalled that many foreign investors are included in the $1 trillion hedge funds total. Still, return to large hedge funds, those with over $3 billion under management , are averaging between 10 and 15 percent annually, still high relative to current low single-digit returns on US equity markets, but really just a reflection of the hedge funds aggressive inclination to invest in more rapidly rising foreign stock and bond markets.

243

E-CRM & BANKING


P. Senthilmurugan, Lecturer, Dept of Management Studies, Tagore Engg. College, Chennai 48 INTRODUCTION Many companies today are racing to re-establish their connections to new as well as existing customers to boost long-term customer loyalty. Some companies are competing effectively and winning this race through the implementation of relationship marketing principles using strategic and technology-based customer relationship management (CRM) applications. Today marketing is not just developing, delivering and selling, it is moving towards developing and maintaining mutually long term relationships with customers. Relationship marketing is becoming important in financial service. If a bank develops and sustains a solid relationship with its customers, its competitors cannot easily replace them and therefore this relationship provides for a sustained competitive advantage. NEED FOR THE STUDY These five banks are already adapting themselves through this mindset more or less. The banks proceed to this important issue differently with different rates of success in customer satisfaction and customer relationship management. So, with a comparative approach their attitudes toward e-CRM will reveal and embrace their success and failure factors. RESEARCH DEISGN The research design followed for this study has been descriptive in nature where the aim would be to make a relative study about the advantages accruing to the 5 private banks ICICI Bank, HDFC Bank, IDB bank, Axis bank and Yes Bank from the perspective of its customers and its employees with respect to e-CRM.. The information sources used for this study could be grouped into two categories as primary data and secondary data. The tool used for collecting primary data was a questionnaire and the respondents were 125 customers belong to the various banks covered by the study. ANALYSIS Demographics of the Sample TABLE 1 Gender Male Female Age < 25 25 - 35 35 - 45 > 45 Educational Qualification UG PG Professional Others Banking with ICICI Bank HDFC Axis Bank IDBI Bank Yes Bank Percentage 69.6 30.4 Percentage 50.4 32.0 12.8 4.8 Percentage 55.2 30.4 11.2 3.2 Percentage 60.8 22.4 6.4 8.0 2.4

244 69.6% of the respondents are males and the remaining are females as covered by the study. Majority of the respondents belong to the age group of less than 25 followed by those in the age bracket of 25 35 years of age. It is to be noted that this age group is more inclined to online banking than the other age groups. 55.2% of the respondents possess UG qualification whereas 30.4% are Post graduates. . 60.8% of the respondents covered by this study are customers of ICICI Banks which is accepted to be the biggest public sector bank. About 22.4% are customers of HDFC Bank and the other banks have shown a low level of customer base as compared to these two giant banks. Opinion on concept and various aspects of e-CRM The responses pertaining to the above are summarised below : TABLE 2 Meaning of e-CRM Profitable Product Life Cycle Management Client Value and Loyalty Customer Retention Better Customer Knowledge in order to cross-sell Objective Increase Revenue Focus on right and Best customers Increase Efficiency and Effectiveness of Sales Multi-Channel Approach Activities Better Customer Preference Identification through channels Client Differentiation and thus better client segmentation Influence of e-CRM on different channels Better Identification Of Client's Preference Regarding Distribution Channels Identification of Eventual Incompatibility Between The Channels Measures of Strong Client-Bank Relationships Client Satisfaction Providing Appropriate Customer Information Understanding Customer Needs Improving Skills of Employees Measures of Customer Interaction Appropriate Response to Customer Request Integration of business processes Improving Channel Management Maximizing Effectiveness and Efficiency of Operations

Percentage 49.6 24.0 16.8 9.6 44.0 33.6 12.8 9.6 62.4 37.6 Percentage 36.0 64.0 57.6 27.2 10.4 4.8 52.8 27.2 14.4 5.6

According to 49.6% of the customers, e-CRM is about the profitable product life cycle management. 24% of respondents perceives e-CRM is about realizing the client value and loyal to them whereas 16.8% of the respondents see e-CRM as the tool to retain the customers. 44% of the customers interpret objective of e-CRM of bank is to increase the revenue, whereas 33.6% of respondents believe that the bank e-CRM is to focus on right and best customers. 12.8% of customers infer that Bank e-CRM helps to increase efficiency and effectiveness of Sales. According 62.4% of customers, Bank e-CRM facilitates to identify the Customer Preference in a better means through different channels. Rest deems that Bank e-CRM is to Client Segmentation through Client Differentiation. Bank e-CRM influences on different channels and products of the bank and it identifies the eventual incompatibility between the channels of the bank. This is agreed by

245 64% of the customers. Rest agrees that e-CRM influence the identification of clients preference about the distributing channels in a dependable manner. 57.6 % of customers believe Client Satisfaction factor as a measure of Strong Client-Bank Relationships. 27.2% of respondents believe that Provision appropriate Information to the Client plays an important role in measuring the relationship of Client and the bank. According to 52.8% of respondents, Customer Interaction could be measured from the approach of response to the customers request in the appropriate way. 27.2% respondents think the act of business processes integration could be a measure of Customer Interaction. Only least number of respondents considers that if the Effectiveness and Efficiency of Operations are maximized, it could a measure of customer interaction. CHI-SQUARE TESTING Bank Vs Objectives of bank e-CRM Null Hypothesis (H0) : There is no association between the bank and the opinion on Objectives of Bank e-CRM Since P-value is less than 0.05, it is seen that irrespective of bank, majority of respondents have expressed that the bank e-CRM objectives are for increasing the revenue. Bank Vs Meaning of e-CRM Null Hypothesis (H0) : There is no association between bank and opinion on meaning e-CRM TABLE 4 Meaning of e-CRM Profitable Product Life Cycle Management 39 Client Value and Loyalty 16 Better Customer Knowledge in order to cross-sell 9 Total Chi Square Value Pvalue

ICICI 76 Bank HDFC 12 5 8 3 28 Axis 4 4 0 0 8 Bank 25.20 0.032 IDBI 5 4 1 0 10 Bank Yes 2 1 0 0 3 Bank Total 62 30 21 12 125 Interpretation Since P-value is less than 0.05, it is seen that irrespective of bank, majority of respondents have understood the meaning of e-CRM as profitable product life cycle management. Bank Vs Activities of Bank e-CRM Null Hypothesis (H0) : There is no association between bank and the activities of Bank e-CRM

Customer Retention 12

Name of Bank

246 TABLE 5 Activities of Bank e-CRM Better Customer Client Preference Differentiation Identification and thus Better through Distribution Client Channel Segmentation 49 27 16 4 8 1 12 4 2 2

Total

ChiSquare Value

P-value

ICICI Bank HDFC Axis Bank IDBI Bank Yes Bank Name of Bank

76 28 8 10 3

33.39

0.028

Total 78 47 125 Interpretation Since P-value is less than 0.05, the null hypothesis is accepted at 5% level of significance. Chi square value (33.39) represents the percentage of relationship shared between the bank and the activities of bank e-CRM. Irrespective of the bank, majority of respondents have conveyed that Bank e-CRMs activities involve identification of Customer preference through distribution channel of the bank Bank Vs Influence of e-CRM on Different Channels and Products Null Hypothesis (H0) : There is no association between bank and the opinion about influence of eCRM on different channels and products TABLE 6 Influence of e-CRM on Different Channels and Products Better Identification ChiIdentification Of Of Client's Total Square P-value Eventual Preference Value Incompatibility Regarding Between The Distribution Channel Channels ICICI Bank 31 45 76 HDFC 5 23 28 Axis Bank 3 5 8 52.48 0.021 IDBI Bank 4 6 10 Yes Bank 2 1 3 Total 45 80 125 Interpretation Since P-value is less than 0.05, it is inferred that irrespective of bank, majority of respondents have expressed that e-CRM has better influence on identification of eventual incompatibility between the distribution channels Bank Vs Measures of Strong Client-Bank Relationships Null Hypothesis (H0): There is no association between the bank and the opinion on measures of strong client-bank relationship

Name of Bank

247 TABLE 7 Measures of Strong Client-Bank Relationships Client Satisfactio n Providing Appropriat e Customer Informatio n 24 Understandin g Customers needs Improvin g skills of Employee s Tota l ChiSquar e Value Pvalu e

ICICI 43 6 3 76 Bank HDF 18 6 3 1 28 C Axis 3 2 2 1 8 0.03 Bank 38.07 6 IDBI 6 1 2 1 10 Bank Yes 2 1 0 0 3 Bank Total 72 34 13 6 125 Interpretation Since P-value is less than 0.05, the null hypothesis is accepted at 5% level of significance. Chi square value (38.07) represents the percentage of relationship shared between the bank and the opinion on measures of strong client-bank relationship. Majority of them believes that if the bank satisfies the client then it becomes the strong deciding factor for Client Bank relationship. Bank Vs Measures of Customer Interaction Null Hypothesis (H0): There is no association between bank and the opinion on measures of customer interaction TABLE 8 Measures of Customer Interaction Appropriat Integratio Improving Maximising ChiPe Response n of Channel Effectivenes Tota Squar valu to Business Manageme s& l e e Customer Processes nt Efficiency Value Request of Operations ICICI 40 20 11 5 76 Bank HDF 14 9 4 1 28 C Axis 3 2 2 1 8 0.03 Bank 42.35 9 IDBI 7 2 1 0 10 Bank Yes 2 1 0 0 3 Bank 66 34 18 7 125 Total Interpretation Since P-value is less than 0.05, it is inferred that that there is relationship between bank and opinion on measures of customer interaction.

Name of Bank

Name of Bank

248 Bank Vs Gender of Respondents Null Hypothesis (H0): There is no association between the account holding bank and the gender of the respondents Gender of respondents Total Chi-Square Value P-value Male Female ICICI Bank 54 22 76 HDFC 17 11 28 Axis Bank 6 2 8 28.34 0.042 IDBI Bank 8 2 10 Yes Bank 2 1 3 Total 87 38 125 Interpretation Since P-value is less than 0.05, it is inferred that gender of the respondents influences choice of bank.. Bank Vs Age of Respondents Null Hypothesis (H0): There is no association between the account holding bank and the age of the respondents Age of Respondents Total Chi-Square P< 25 25 35 - 45 > 45 Value value 35 ICICI 39 24 10 3 76 Bank 12 12 4 0 28 HDFC Axis Bank 4 1 2 1 8 34.45 0.038 IDBI Bank 7 2 0 1 10 1 1 0 1 3 Yes Bank Total 63 40 16 6 125 Interpretation Since P-value is less than 0.05, it is inferred that age of the respondents has influence on the choice of the bank to hold an account. Name of Bank Name of Bank Name of Bank

Bank Vs Educational Qualification of Respondents Null Hypothesis (H0): There is no association between bank and the education qualification of the respondents ChiEducational Qualification of Respondents PTotal Square UG PG Professional Others value Value ICICI 40 27 8 1 76 Bank HDFC 19 3 4 2 28 Axis Bank 4 2 1 1 8 46.70 0.045 3 6 1 0 10 IDBI Bank 3 0 0 0 3 Yes Bank Total 69 38 14 4 125 Interpretation Since P-value is less than 0.05, it is inferred that education Qualification of the respondents has 47% of persuasion on the preference of the bank to hold an account.

249 Age of Respondents Vs Activities of Bank with respect to e- CRM Null Hypothesis (H0): There is no association between the age of the respondents and opinion on activities of bank e-CRM Activities of Bank CRM Better Customer ChiClient PPreference Total Square Differentiation and value Identification Value thus better Client through Distribution Segmentation Channels < 25 48 15 63 25 19 21 40 35 35 8 8 16 50.33 0.016 45 > 45 3 3 6 Total 78 47 125 Interpretation Since P-value is less than 0.05, it is seen that age of the respondents affect the opinion about the activities in Bank e-CRM. Age of Respondents Vs Influence of e-CRM on Different Channels and Products Null Hypothesis (H0) : There is no association between the age of the respondents and the opinion about influence of CRM on different channels and products Influence of CRM on Different Channels and Products Better Identification of Client's Preference Regarding Distribution Channels 30 8 Identification of Eventual Incompatibility between the Channels Total ChiSquare Value P-value

Age of Respondents

Age of Respondents

< 25 33 63 25 32 40 35 35 5 11 16 18.31 0.04 45 > 45 2 4 6 Total 45 80 125 Interpretation Since P-value is less than 0.05, age of the respondents affects the opinion of respondents about influence of CRM on different channels and products. OVERALL RANKING OF BANKS BASED ON THEIR E-CRM INITIATIVES Ranking of banks as per the survey details and observations made with respect to e-CRM in the private banking industry is as follows : NAME OF BANK ICICI BANK HDFC BANK IDBI BANK AXIS BANK YES BANK RANKING I II III IV V

250 Without an exception on every facility and option given to banking customer, the above ranking holds good. CONCLUSION Customer Relationship management marketing (CRM) is about introducing the right product to the right customer at the right time through the right channel to satisfy the customer's evolving demands. E-CRM is not just customer service, self-service web applications, tools or the analysis of customers' purchasing behaviors on the internet; E-CRM is all of these initiatives working together to enable an organization to more effectively respond to its customers' needs and to market to them on a one-to-one basis REFERENCES 1. Dafermos, G.N. Macromedia is blogging at full speed, in Blogging the Market: How weblogs are turning corporate machines into real conversations, 2003. 2. Economist (UK). "A Survey of E-Management", 2000, November. Kaplan, P.J. F'd Companies: Spectacular dot-com flameouts, NY: Simon & Schuster, 2002. 3. Peppers D. & Rogers M.. Enterprise One-to-One: tools for competing in the interactive age, Doubleday/Currency, 1997. 4. Postma, P. The New Marketing Era: Marketing to the imagination in a technology driven world, McGraw-Hill, 1999. 5. Selland, C. Beyond the Hype: the impact of Webservices on CRM, Reservoir Partners White Paper, March, 2003.

251

INVESTMENTS AND RISKS


M.Gayathri Devi M.B.A, RVS Institute Of Management Studies Investing in various types of assets is an interesting activity that attracts people from all walks of life irrespective of their occupation, economic status, education and family background. When a person has more money than he requires for current consumption, he would be coined as a potential investor. The investor who is having extra cash could invest it in securities or in any other assets like gold or real estate or could simply deposit it in his bank account. The companies that have extra income may like to invest their money in the extension of the existing firm or undertake new venture. All of these activities in a broader sense mean investment. INVESTMENT: In finance, the purchase of a financial product or other item of value with an expectation of favorable future returns. In general terms, investment means the use money in the hope of making more money. To the economist, investment is the net addition made to the nations capital stock that consists of goods and services that are used in the production process. A net addition to the capital stock means an increase in the buildings, equipments or inventories. These capital stocks are used to produce other goods and services. RISK: Risk of holding securities is related with the probability of actual return becoming less than the expected return. The word risk is synonymous with the phrase variability of return. Investments risk is just as important as measuring its expected rate of return because minimizing risk and maximizing the rate of return are interrelated objectives in the investment management. An investment whose rate of return varies widely from period to period is risky than whose return that does not change much. Every investor like to reduce the risk of his investment by proper combination of different securities. Investment Risks and Alternatives There are many types of risk involved with investments. Let's consider two types: investment risk and purchasing power risk. Investment risk is the probability that the actual return on an investment will be different from what we expect. This is the type of risk one usually thinks of when considering investments. For example, CD's and EE savings bonds are considered safe investments because the probability that the actual return on our investment will be what we expect is 100 percent. They are guaranteed. On the other hand, stocks are considered more risky because we have no guarantee about the actual return. Of equal importance is a second type of risk associated with investments which is also important to consider. Purchasing power risk is the risk that the value of the money we invest will not keep up with inflation. In general, this risk is greatest with those investment alternatives with a set, guaranteed rate of return. So while CD's have a low investment risk, they have a high purchasing power risk. Pre-Investment Questions Fraud is always a possibility, even with secured, regulated investments. Before investing, ask tough questions, both of us and those who are soliciting our investments. If the answer to any of these questions is "no" or if the answers are vague or complicated more than likely the investment being pitched is a fraud. Is the company Im investing in registered to sell securities?

252 Be cautious if the company selling us stock, assets, or partnership units has not registered its securities. Companies that register their securities file prospectuses and annual reports with securities regulators. If a promoter tells us that our investment is "structured" to exempt the securities of the company from registration, we may be dealing with an outfit thats purposely avoiding contact with regulators. Is it "too late" if I dont invest my money now? Using sales scripts, scam artists create the impression that only a few shares of stock or partnership units are left. They try to convince us that we will miss out on a big opportunity if we dont send them thousands of dollars by overnight courier or wire transfer. Once we give our money to a scam artist, it may be too late to get it back. Does the investment have a track record? Claiming that their "opportunity" is similar to those of "hot" entrepreneurs, scam artists often use news stories about the success of legitimate companies as bait. Unfortunately, success stories of other companies in the field are irrelevant for our purposes. Get the track record of the company were considering investing in and the background of the people promoting it. Where is my money going? Legitimate companies account for investors money at all times. Ask for written proof of how much of our money is going to the actual purchase or development of the opportunity and how much is going to commissions, promoters profits and marketing costs. If most of our financial investment is slated to cover expenses and costs, much less will be available to earn a return. Telemarketing is particularly expensive; if we are investing in a telemarketed investment, how much are our brokers getting paid to talk to us? Do I have an independent, knowledgeable, trustworthy person who can advise me? Get an independent appraisal of the specific asset, business or venture we are considering. An appraisal offered by the party selling the investment opportunity can be fake. Talk to the previous owners of an asset or a business youre acquiring for its value history. Discuss all investment ideas or plans with an accountant or an advisor you know and trust. Do I know who Im dealing with? Can we find published information about the company in which we are investing, proof that the company has registered the securities it is selling with a government agency (if required), or someone we trust who has heard of the company? Have we checked with our state securities agency to see if the promoter or sales person is licensed to sell securities in our state, if required? If not, be cautious. We are giving our money to strangers. Checking law enforcement agencies and Better Business Bureaus in the community where promoters are located is prudent, but not fool-proof. It may be too soon for the companys victims to realize theyve been defrauded or to have lodged complaints with the authorities. In addition, fraudulent promoters can lie about their name or their business history, or even pay people to be "references." Can I tell a genuine company from a fictional one? Dont let appearances fool you. For a few dollars, anyone can incorporate an entity. Personal computers and desktop publishing software help scam artists produce slick promotional materials. Phone service providers can put toll-free telephone numbers in homes. Did my sales representative tell me the risk of losing my money was high? Sales representatives should tell us the risk of particular investments. Be particularly suspicious of sales pitches that play down risk or portray written risk disclosures as routine formalities

253 required by the government. Believe the risk disclosures that say us could lose our whole investment. When our money is gone, fraudulent investment promoters often use "risk disclosures" against us. Can I be certain a promoter is not lying to me? Scam artists lie. Their success depends on having an airtight answer for everything. They inflate the costs and value of worthless investments. They promise us profits years down the road so we wont find out that our investment is a scam until long after theyve disappeared with our money. Do I know when something is too good to be true? Investing is risky business. Anyone who tells us an investment is likely to turn a profit quickly should have a basis for the claim. Demand written proof of profit projections from independent sources. Be especially wary when someone tells us profits will be big enough to offset the risk of investing. Every potentially high profit investment is high risk.

254

PERSPECTIVES OF SMALL INVESTORS ON INVESTMENT AND RISK


M.Kalavalli, Research Scholar, DOMs,Jawaharlal Institute of Technology, Coimbatore Dr.P.T.Vijaya Rajakumar, Professor & Director, DOM, Nehru Institute of Engineering & Technology, Coimbatore In the prevailing environment of global economic and financial uncertainty, investment should be made cautiously to avoid or reduce risk. Small investors are individuals who purchase small amounts of securities for him/herself, as opposed to an institutional investor or individual or retail investors. They prefer Low risk, profit making, benefiting from volatile market conditions and shortterm investment are characteristics of small investors. The investors seldom prefer to do research or collect information on market. The efficient allocation of capital is important for investment and risk endurance by the small investors. There are many other kinds of investment opportunities for small investors, which are fixed deposits, bonds, mutual funds, insurance and the like. These can be quite confusing for small investors. Though each investment opportunity seems promising, not every investor is impressed by them. All an investor needs to know is the purpose and period of investment, risk tolerance and expectations of return. The paper tries to help these small investors and maximize their hard-gain money, investment networking portals offer advice and expertise about the investment problems, how the choice to be made between investments, when should an existing asset be replaced, when is the optimum timing of investment. In related to the investment decisions, there are perspectives to different degrees of risk, like, what is the risk in investment, and the concept of risk in investment decisions. The paper explores the issues relating to the investment planning and different types of investment alternatives and risk and return. INTRODUCTION: Investment refers to a commitment of funds to one or more assets that will be held over some future time period. Almost all individual have wealth of some kind, ranging from the value of their services in the workplace to tangible assets to monetary assets. Anything not consumed today and saved for future use can be considered an investment. For our purposes, investment will mean a measurable assets retained in order to increase ones personal wealth. Investment in India has grown at a phenomenal pace in the last three to four years. Several industries, including business process outsourcing, information technology, health care, construction, real estate and infrastructure, have benefited immensely from the investments by the small investors. Risk: Small Investor Perspectives: The small investor is heavily conditioned by the past, with investment patterns being determined by known opportunities, and it takes considerable time for them to alter these patterns. Information flows, especially about structural changes, are slow in percolating down to them, and their ability to appreciate the implications is limited. In our opinion, there are major questions that need to be addressed adequately in order to persuade the small investor in India to enter. Investment Scenario in India: Emerging strong even during the scariest phase of global financial meltdown, India has become one of the favorite investment destinations for the foreign investors across the globe. The investment scenario in India is getting better and better with each passing day due to high confidence level of the investors. Today, India is considered the 4th biggest economy in the world. Its impressive GDP rate, especially in the field of purchasing power, has catapulted it to second position among all the developing nations. According to forecasts, Indian economy will grow to become 60% in size of the economy of US. It will also witness macro-level stability in economic conditions. Behind all this, investment can be said to be the key player. In the midst of the global economic crises, the Indian economy offers an investment opportunity in its internal consumption surge. In the coming decade, due to its favorable

255 demographics, Indias rising per capita income and consumption boom is likely to make the country a superior investment opportunity, compared to other emerging markets. India is somewhat safeguarded from external shocks due to its inward-driven growth story fuelled by domestic consumption and investments in infrastructure, compared to other emerging economies driven mainly by exports. The pressure of margins which are shaping the inflationary expectations and the impact of monetary tightening are visible in a slowdown in key sectors like auto, consumer durables, and real estate. Though the Foreign Direct Investment (FDI) in educational sector, comprising higher education, has been allowed by the Indian government, there are still many shortfalls that need to be overcome. An increase in the enrollment figures is being constantly witnessed. But, when it comes to cumulative states expenditure, the scene is quite gloomy. For the period 2007-08, a fall of about 18% has been seen in the total expenditure. Further, a clear gap in the per capita education expenditure among the states can also be seen. Per capita fund inflow to educational sector in Uttar Pradesh stood at ` 483 whereas in Bihar it was ` 487 in 2005-06. Himachal Pradesh has 1777 and Maharashtra and Kerala show ` 1034 per capita fund flow. Despite good financial performance of many of the states, their spending scenario in educational sector has been found in poor condition. Infrastructure Investment: Investment scenario in India in infrastructure sector is attractive. Many sectors have been allowed to receive private investment, which is truly a turning point. In past few years, many road projects have been launched under National Highway Development Programme. The project costing neared about US$ 12 billion. In this, the foreign construction companies have also been invited to take part. Telecom sector and power reforms have also experienced massive improvement. Telecom and Oil and Gas sector are seeing disinvestments processes. Government is also thinking of introducing a more integrated transport system with chalking out plans for the investment. Current Investment Scenario in India Globalization and Foreign Direct Investment form an integral part of all the developed as well as developing economies. In fact, the growth of the underdeveloped economies is also dependant on these key factors. These components equip any nation with new skills, new items and provide smooth access to markets and technology. Today, every nation across the globe is looking for foreign and overseas investors. Whether it's India or China, everyone wants foreign investments. According to recent trends, India is only second to China in the league of favorite investment destinations. In the report issued by Department of Industrial Policy and Promotion, the fund inflow to India reached US$ 27.3 billion in the period 2008-09, considered from the month of April 2008 to the month of March 2009. Last quarter of 2008-09 alone witnessed an inflow of approx. US$ 6.2 billion. In the reports issued by Reserve Bank of India for outward investment from India, a growth of 29.6% to US$17.4 billion has been seen in the period 2007-08. The figures do not include individuals and banks. India is considered the 2nd highest foreign employer in the United Kingdom after the United States. Global Investment Scenario Along with India, the others who are participating in the race of investment among the developing economies are China, Singapore, Malaysia, Russia and Brazil. Most of them are vying for contracts from USA and Europe. Some of the well known companies which offer various kinds of India Investment fund are: ICICI Prudential HDFC Prudence Fund HDFC MIP Escorts Liquid Plan Birla Sun Life

256 Franklin India Index All these investment funds offer good returns on the money that is put and are also secure. They can be a wonderful option to invest and enjoy financial stability in the long run. Government exemptions for certain investments risk analysis: Tax Rebates under Indian Income Tax Act Specified Investment Schemes u/s 80C Life insurance premium payments Contributions to Employees Provident Fund (EPF) / GPF Public Provident Fund (maximum Rs 70,000 in a year) National Saving Certificates including accrued interest. [NSC] Unit Linked Insurance Plan (ULIP) 5-Year fixed deposits with banks and Post Office Repayment of Housing Loan (Principal) CONCLUSION: The investors are advised to take into account their risk appetite before investing. That small investor attitude towards change, and that this will not be possible without a radical overhaul of the small savings schemes in India. The lack of depth and width in government bond markets needs to increase so that small investors can invest in debt securities for capital gains rather than simply hold them to maturity as income instruments. There seems to be widespread misconception about pooled investment vehicles that needs to be removed as investments such as mutual funds can really fulfill the entire range of risk appetite for small investors while increasing the depth and width of primary and secondary debt capital markets. Staggered investments considering the prevailing volatility in the markets, small investors should invest in a staggered manner over a period of time. The near-term concerns about the global macro-economic scenario, high commodity prices, inflation in Asian economies and the unearthing of local scams continue to emanate. Thus, the overall structure growth story of India still remains intact, which will attract the small investor. REFERENCES: Pronab Sen, Nikhil Bahel, Shikhar Ranjan, Developing the Indian Debt Capital Markets: Small Investor Perspectives, perspective planning division planning commission government of India, July 2003. Brokers best Ambareesh Baliga, coo way2wealth, Emerging Market, Domestic Growth pg. 16, Dalal Street Investment Journal, Aug 15 28, 2011. Hemant rusting ceo wiseinvest advisors pvt ltd, rising inflation and your portfolio pg.89, Aug 15-28, 2011, Dalal street Investment Journal Visemih William muffee, risk management in rural financial institutions in Cameroon: a case of the buea police co-operative credit union limited, International Economics & Financial Journal, vol.5, Nos. 1-2, January-December (2010) : 61-73, pg.61. Sudhidra Bhat, Security Analysis and Portfolio Management, Excel Books, First Edition: New Delhi, 2008

257

MERGER & ACQUISITION


Ms. R. Priya Rathna (Faculty), Ms. K. Maragatham & Mr. A. Bhuvaragavan Vasavi Vidya Trust Group Of Institutions INTRODUCTION: Mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can aid, finance, or help an enterprise grow rapidly in its sector or location of origin or a new field or new location without creating a subsidiary, other child entity or using a joint venture. The distinction between a "merger" and an "acquisition" has become increasingly blurred in various respects (particularly in terms of the ultimate economic outcome), although it has not completely disappeared in all situations. ACQUISITION: An acquisition is the purchase of one business or company by another company or other business entity. Consolidation occurs when two companies combine together to form a new enterprise altogether, and neither of the previous companies survives independently. Acquisitions are divided into "private" and "public" acquisitions, depending on whether the acquiree or merging company (also termed a target) is or is not listed on public stock markets. An additional dimension or categorization consists of whether an acquisition is friendly or hostile. Achieving acquisition success has proven to be very difficult, while various studies have shown that 50% of acquisitions were unsuccessful. The acquisition process is very complex, with many dimensions influencing its outcome. 1. Improper documentation and changing implicit knowledge makes it difficult to share information during acquisition. 2. For acquired firm symbolic and cultural independence which is the base of technology and capabilities are more important than administrative independence. 3. Detailed knowledge exchange and integrations are difficult when the acquired firm is large and high performing. 4. Management of executives from acquired firm is critical in terms of promotions and pay incentives to utilize their talent and value their expertise. 5. Transfer of technologies and capabilities are most difficult task to manage because of complications of acquisition implementation. The risk of losing implicit knowledge is always associated with the fast pace acquisition. DISTINCTION BETWEEN MERGERS AND ACQUISITIONS: Although often used synonymously, the terms merger and acquisition mean slightly different things. This paragraph does not make a clear distinction between the legal concept of a merger (with the resulting corporate mechanics, statutory merger or statutory consolidation, which have nothing to do with the resulting power grab as between the management of the target and the acquirer) and the business point of view of a "merger", which can be achieved independently of the corporate mechanics through various means such as "triangular merger", statutory merger, acquisition, etc. When one company takes over another and clearly establishes itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded. FINANCING M&A Mergers are generally differentiated from acquisitions partly by the way in which they are financed and partly by the relative size of the companies. Various methods of financing an M&A deal exist:

258 CASH Payment by cash. Such transactions are usually termed acquisitions rather than mergers because the shareholders of the target company are removed from the picture and the target comes under the (indirect) control of the bidder's shareholders. STOCK Payment in the acquiring company's stock, issued to the shareholders of the acquired company at a given ratio proportional to the valuation of the latter. Which method of financing to choose? There are some elements to think about when choosing the form of payment. When submitting an offer, the acquiring firm should consider other potential bidders and think strategically. The form of payment might be decisive for the seller. With pure cash deals, there is no doubt on the real value of the bid (without considering an eventual earnout). The contingency of the share payment is indeed removed. Thus, a cash offer preempts competitors better than securities. Taxes are a second element to consider and should be evaluated with the counsel of competent tax and accounting advisers. Third, with a share deal the buyers capital structure might be affected and the control of the New company modified. If the issuance of shares is necessary, shareholders of the acquiring company might prevent such capital increase at the general meeting of shareholders. The risk is removed with a cash transaction. Then, the balance sheet of the buyer will be modified and the decision maker should take into account the effects on the reported financial results. For example, in a pure cash deal (financed from the companys current account), liquidity ratios might decrease. On the other hand, in a pure stock for stock transaction (financed from the issuance of new shares), the company might show lower profitability ratios (e.g. ROA). However, economic dilution must prevail towards accounting dilution when making the choice. The form of payment and financing options are tightly linked. If the buyer pays cash, there are three main financing options: Period 18971904 19161929 19651969 19811989 19922000 20032008 Name First Wave Second Wave Third Wave Fourth Wave Fifth Wave Sixth Wave Facet Horizontal mergers Vertical mergers Diversified conglomerate mergers Congeneric mergers; Hostile takeovers; Corporate Raiding Cross-border mergers Shareholder Activism, Private Equity, LBO

Deal objectives in more recent merger waves During the third merger wave (19651989), corporate marriages involved more diverse companies. Acquirers more frequently bought into different industries. Sometimes this was done to smooth out cyclical bumps, to diversify, the hope being that it would hedge an investment portfolio. Starting in the fourth merger wave (19921998) and continuing today, companies are more likely to acquire in the same business, or close to it, firms that complement and strengthen an acquirers capacity to serve customers. Buyers arent necessarily hungry for the target companies hard assets. Now theyre going after entirely different prizes. The hot prizes arent thingstheyre thoughts, methodologies, people and relationships. Soft goods, so to speak. Many companies are being bought for their patents, licenses, market share, name brand, research staffs, methods, customer base, or culture. Soft capital, like this, is very perishable, fragile, and fluid. Integrating it usually takes more finesse and expertise than integrating machinery, real estate, inventory and other tangibles.

259 CONCLUSION Many companies find that the best way to get ahead is to expand ownership boundaries through mergers and acquisitions. For others, separating the public ownership of a subsidiary or business segment offers more advantages. At least in theory, mergers create synergies and economies of scale, expanding operations and cutting costs. Investors can take comfort in the idea that a merger will deliver enhanced market power. By contrast, de-merged companies often enjoy improved operating performance thanks to redesigned management incentives. Additional capital can fund growth organically or through acquisition. Meanwhile, investors benefit from the improved information flow from de-merged companies. M&A comes in all shapes and sizes, and investors need to consider the complex issues involved in M&A. The most beneficial form of equity structure involves a complete analysis of the costs and benefits associated with the deals

260

RECENT TRENDS IN MICRO FINANCE IN INDIA


Mr.M.Karthikeyan, Asst. Prof. Ph.D Research Scholar Department of Commerce, Karpagam University, Coimbatore. Dr.P.Sivakami, Assistant Professor,Department of Commerce,Govt Arts College,Coimbatore. Introduction Microfinance is the extension of very small loans (microloans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microfinance is a part of microfinance, which is the provision of a wider range of financial services to the very poor. Microfinance is a financial innovation that is generally considered to have originated with the Grameen Bank in Bangladesh. In that country, it has successfully enabled extremely impoverished people to engage in self-employment projects that allow them to generate an income and, in many cases, begin to build wealth and exit poverty. Microfinance has been around for about three decades and it has evolved significantly as new loan products and new lending/business models were invented and new markets were explored. Many microfinance providers, who started off as not-for-profit setups, later grew to become large nonbanking financial institutions that offered an array of financial services apart from loans. A few of these grew to scales that warranted IPOs as well (MicroBanking Bulletin, Issue 18, 2009). This is not surprising. The bottom of the pyramid, because of its sheer volume, presents great opportunities for business minded entities that wish to provide loans or insurance products. However, credit risk and opportunity go hand in hand, and as old challenges in microfinance are addressed, new ones keep emerging. This post talks about a few positive and negative trends in the microfinance sector, based on which, we can confidently say that this sector will soon grow into a complex and thriving industry. Some Encouraging Trends in the Microfinance Sector In the face of several obstacles, there are certain encouraging trends taking place as businesses and governments realize the importance of the development sector. Below are a few noticeable initiatives being adopted by MFIs as they look for ways to further penetrate markets and make their credit ventures sustainable. Microfinance Trend 1 Diversification of Microfinance Institutions: microfinance providers are beginning to broaden the range of services offered under the microfinance umbrella which started with loans, but now includes insurance, savings and money transfer facilities as well. Microfinance Trend 2 Specialization of Microfinance Institutions: microfinance providers are beginning to focus on certain livelihoods such as crop insurance, loans for handicraft businesses, or loans for fisheries, etc. As microfinance institutions study each business model, they can design loan products that are aligned with the unique cash flow cycles or the varying demand patters of the clients business. Microfinance Trend 3 Turnkey Solutions: some microfinance institutions are beginning to provide services other than loans and savings, to support their clients businesses. Such services include assisting clients with supply chain management, or sharing marketing infrastructure to enhance these micro-businesses. Microfinance Trend 4 New channels: clients no longer have to visit physical offices of microfinance institutions in order to repay loans or acquire a new credit line. Franchise-based business models and branchless banking are becoming effective ways of reaching potential clients who often live in disparate rural areas. An example of this is Kivas API platform called Build Kiva.

261 Institutions offering Micro Finance in India Different types of institutions in India offer these micro finances and they can be nongovernmental organizations, credit unions, non-bank financial intermediaries, and commercial banks. These micro finance institutions operate as per the guidelines of the apex bank of India - The Reserve Bank of India. Further, the Reserve Bank of India has formed a group to facilitate the development of the micro finance industry in India. The main functions of these four groups are as follows Structure and sustainability Funding Regulations Capacity building

Recommendations for the industry of Micro Finance in India Creation of an autonomous and professionally-managed National Micro Finance Equity Fund with an initial subscription of ` 200 crore. The fund of the banks towards the equity fund are be treated as weaker section lending under the priority sector and the quantum of the equity fund to be raised to ` 500 crore within the next two to three years Creation of a special type of non-banking finance companies to facilitate growth of the micro finance business with initial capital of ` 25 lakh .The Reserve Bank of India should facilitate establishing more micro-finance funds Subsidy funds should be mobilized from Rural Infrastructure Development Fund, National Bank for Agriculture and Rural Development and also as the profits of commercial banks The Reserve Bank of India should establish a permanent working group on micro-finance to monitor and review the progress of resources and also undertake the capacity building initiatives All Non-governmental organization or the self help groups, those who facilitate micro finance should transform themselves into mutually aided co-operative societies, maximum within a period of two years

Conclusion Microfinance programmes are one of the most important interventions in developing country efforts to reduce poverty. Recent years have seen a huge growth of the sector in terms of numbers and size of organisations, numbers of clients and provision of subsidised donor funding. A large proportion of Microfinance Institutions (MFIs) include poverty reduction in their Mission, and donor funding is allocated to microfinance on this basis. At the most basic level there is a need to understand and improve the impact of Microfinance as a key premise to successful poverty reduction.

262

FINANCIAL MARKETS INNOVATIONS AND GROWTH


S.Sasirekha, Mr.S.Athul Pandey, VLB Janakiammal College of Arts & College INTRODUCTION - MARKET: Both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded) exist. Markets work by placing many interested buyers and sellers in one "place", thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy such as a gift economy. DEFINITIONS OF FINANCIAL MARKET: In economics, a financial market is a mechanism that allows people to buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis. A generic term for the markets in which financial instruments are traded. Financial instruments have no intrinsic value of themselves. A category of markets for the exchange of capital and credit, including the money markets and the capital markets. Institutions acting as intermediaries between suppliers and users of money. They are wholesale and retailers of funds. In finance, financial markets facilitate: The raising of capital (in the capital markets) The transfer of risk (in the derivatives markets) International trade (in the currency markets) and are used to match those who want capital to those who have it. Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends. TYPES OF FINANCIAL MARKETS: The financial markets can be divided into different subtypes: Capital markets which consist of: o Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof. o Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof. Commodity markets, which facilitate the trading of commodities. Money markets, which provide short term debt financing and investment. Derivatives markets, which provide instruments for the management of financial risk. o Futures markets, which provide standardized forward contracts for trading products at some future date. Insurance markets, which facilitate the redistribution of various risks. Foreign exchange markets, which facilitate the trading of foreign exchange. The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities.

263 INDIAN FINANCIAL MARKET - ORIGIN AND GROWTH: Indian Financial market is one of the oldest in the world and is considered to be the fastest growing and best among all the markets of the emerging economies. The history of Indian capital markets dates back 200 years toward the end of the 18th century when India was under the rule of the East India Company. The development of the capital market in India concentrated around Mumbai where no less than 200 to 250 securities brokers were active during the second half of the 19th century. The financial market in India today is more developed than many other sectors because it was organized long before with the securities exchanges of Mumbai, Ahmedabad and Kolkata were established as early as the 19th century. By the early 1960s the total number of securities exchanges in India rose to eight, including Mumbai, Ahmedabad and Kolkata apart from Madras, Kanpur, Delhi, Bangalore and Pune. Today there are 21 regional securities exchanges in India in addition to the centralized NSE (National Stock Exchange) and OTCEI (Over the Counter Exchange of India). The launch of the NSE (National Stock Exchange) and the OTCEI (Over the Counter Exchange of India) during the mid 1990s by the government of India was meant to usher in an easier and more transparent form of trading in securities. The NSE was conceived as the market for trading in the securities of companies from the large-scale sector and the OTCEI for those from the small-scale sector. While the NSE has not just done well to grow and evolve into the virtual backbone of capital markets in India the OTCEI struggled and is yet to show any sign of growth and development. FINANCIAL MARKET INNOVATIONS - EMERGING TRENDS: Innovations in financial markets have played a crucial role in shaping the economic landscape of the leading and also emerging economies of the world. In the past few decades, capital markets, risk management tools and techniques and financial services have witnessed many successful innovations leading to better integration and greater maturity of world financial markets. These financial innovations have promoted efficiency and growth of financial markets and provided low-cost and effective financial tools and instruments, have created new opportunities and thrown up new challenges for all market participants. Innovations and recent trends in capital markets explores the changing nature of financial market and gives few recommendations for the growth through innovation. Innovation covers a new trading system at NASDAQ, hedge funds, exchange traded funds and real estate investment trusts, etc. GROWTH OF FINANCIAL MARKETS: As every country today is aiming at reaching the status of developed country, the most important input they require is the investment. Where do they get their investments? Capital Market is the place where the economy can pool up funds required for their investment needs. In the modern scenario of globalization Capital Market plays a vital role in any economy. The strong presence of Capital Market resembles the strength of the economy. The term capital market refers to only stock markets as per the common man's ideology, but the capital markets have a much broader sense. Where as in global scenario, it consists of various markets such as: 1.Government securities market 2. Municipal bond market 3. Corporate debt market 4. Stock market 5. Depository receipts market 6. Mortagate and asset-backed securities market 7. Financial derivates market 8. Foreign exchange market

264 ROLE OF CAPITAL MARKETS: Capital markets play a vital role in Indian economy, the growth of capital markets will be helpful in raising the per-capita income of the individuals, decrease the levels of un-employment, and thus reducing the number of people who lie below the poverty line. With the increasing awareness in the people they start investing in capital markets with long-term orientations, which would provide capital inflows to the sectors requiring financial assistance. DEVELOPMENT PROCESS OF FINANCIAL MARKET: In India, many of the above markets are not developed to the required extent, and some does not even exist. A capital market can provide huge impetus to the development of any economy .so, it can be said that the growth and sustainability of capital markets plays an important role towards the development of the economy. It is being observed that huge fluctuations are happening in Indian capital market in recent past, but with the help of proper mechanism, which is being observed in India and after examining various risk factors involved in capital markets, we attempt to say that the growth which has been observed in Indian capital market in recent past is a realty, but not a myth. In India the capital market consists of 1. Stock market 2. Bonds, convertible debentures and debt market 3. New issue market and merchant banking There are no special markets for the trading of municipal bonds, asset backed securities, foreign exchange market and depository receipts market. Right from the independence, thanks to steps initiated by the Indian government especially after the post liberalization era. A huge growth has been observed in the aspects of quality and quantity. Huge increase has been observed in the volumes of trade. CONCLUSION: A steady and growing market size, reliable business community, high levels of intellectual manpower, technological expertise and a dedicated reform process that has brought about impressive economic liberalization, has made India a very attractive destination for investments in capital markets.

265

A STUDY ON BEHAVIOURAL MAPPING OF INDIVIDUAL INVESTORS


Dr.Anuvalentina Mrs V.Eveline Vijaya, Asst professor, Nirmala college for women ,Redfields Coimbatore Mrs Lydia.H.Swamy, Asst professor, Nirmala college for women ,Redfields Coimbatore INTRODUCTION Investment or investing is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. Investing is the active redirecting resources from being consumed today so that they may create benefits in the future; the use of assets to earn income or profit. An investment is the choice by the individual to risk his savings with the hope of gain. Rather than store the good produced, or its money equivalent, the investor chooses to use that good either to create a durable consumer or producer of good, or to lend the original saved good to another in exchange for either interest or a share of the profits. OBJECTIVES OF THE STUDY PRIMARY OBJECTIVES To study the behavioral aspect of individual investor towards various investment avenues. SECONDARY OBJECTIVES To study the demographic factors of investors which affects the investment. To analyze the factors that induces the investors to invest in various investment avenues. To find out the attitude of investors in taking various decisions regarding their investments. RESEARCH DESIGN A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. DESCRIPTIVE RESEARCH DESIGN: investigation into the research type. It is used for formulating a problem for precise

POPULATION: The population of this research consists of the various investors of the Coimbatore city who invest in different investment avenues. SAMPLING TECHNIQUES The sampling technique used is Non-probability sampling. NON-PROBABILITY SAMPLING The technique selected in this project is Convenience Sampling. In this, the researcher can choose the fraction of population to be investigated according to his or her convenience. SAMPLE SIZE Sample size for this project is 200 and all the details are collected from people who are interested in saving their income. TECHNIQUES OF DATA COLLECTION Questionnaire consisting of 20 questions-all are close ended questions. TOOLS USED FOR DATA ANALYSIS The tools used for data analysis are:

266 Percentage analysis method Chi-Square analysis Cross table tabulation method

ANALYSIS AND INTERPRETATION TABLE 1- AGE GROUP NUMBER OF PARTICULARS PERCENTAGE RESPONDENTS 18 - 25 32 16.00% 26 35 19 9.50% 36 45 41 20.50% 46 55 35 17.50% Above 55 73 36.50% TOTAL 200 100.00% From the above table it is evident, that 36.50%of the respondents are of the age group Above 55 years , 20.50% of them, are of the age group 36-45 years, 17.50% and 16% are of the age group of 46-55years and 18-25years respectively, and the remaining 9.50% are the age group 26-35years. Hence it can be concluded that majority of the respondents are of the age group of 36years and above. TABLE :2 - GENDER NUMBER OF PARTICULARS PERCENTAGE RESPONDENTS MALE 147 73.50% FEMALE 53 26.50% TOTAL 200 100.00% From the table above, it can be understood, that 73.50% of the respondents are male and the remaining 26.50% of them are women. Hence, it is concluded that majority of the respondents are MEN Thus, it is concluded that majority of the respondents are doing business on their own capacity. TABLE-3 - ANNUAL INCOME NUMBER OF PARTICULARS RESPONDENTS RS.3 LAKHS AND BELOW 39 ABOVE RS.3LAKHS AND UPTO RS.5 62 LAKHS ABOVE RS.5LAKHS AND UPTO RS.7 56 LAKHS ABOVE RS.7LAKHS 43

PERCENTAGE 19.50% 31.00% 28.00% 21.50%

TOTAL 200 100.00% From the above table it is evident that 31.00% of the respondents fall under the income group between Rs.3lakhs Rs.5lakhs, 28.00% of them fall under income group Rs.5lakhs Rs.7lakhs, 21.50% fall under above Rs.7Lakhs and 19.50% fall under below Rs.3lakhs per annum.

267 Hence it can be concluded that maximum of the respondents fall under the income group between Rs.3lakhs Rs.5lakhs per annum. TABLE-4 - TENURE OF INVESTMENT NUMBER OF PARTICULARS RESPONDENTS LESS THAN SIX MONTHS 35 ABOVE SIX MONTHS AND UPTO 61 ONE YEAR ABOVE ONE YEAR AND UPTO 67 THREE YEARS ABOVE THREE YEARS 37 TOTAL 200

PERCENTAGE 17.50% 30.50% 33.50% 18.50% 100.00%

From the above table it is evident that 33.50% of the respondents fall under the tenure of above one year and up to 3years, 30.50% of them fall under the category of above six months and upto one year, 18.50% of the category are above three years and the rest 17.50% falls under the category of less than six months. Hence it can be concluded that maximum of the respondents fall under the Investment Tenure of Above One Year and up to Three Years. TABLE:5 - INVESTMENT OUT OF ANNUAL INCOME NUMBER OF PARTICULARS PERCENTAGE RESPONDENTS BELOW 10% ABOVE 10% AND BELOW 20% ABOVE 20% AND BELOW 30% ABOVE 30% TOTAL 74 38 50 38 200 37.00% 19.00% 25.00% 19.00% 100.00%

From the above table it is evident that 37.00% of the respondents fall under the the category of below 10% investment of their annual income, 25% fall under the category of 20% - below 30% and 38% fall equally under the other category of Investing above 10% and below 20% and above 30% respectively. TABLE-6 - VARIOUS INVESTMENT AVENUES THE RESPONDENTS HAVE INVESTED IN PARTICULARS GOLD SHARES MUTUAL FUNDS BONDS REAL ESTATE OTHERS TOTAL NUMBER OF RESPONSES 100 83 75 24 55 42 379 PERCENTAGE 26.45% 21.89% 19.78% 6.33% 14.51% 11.121% 100%

268 From the above table, it can be understood that 26.45% of the responses are towards investment in Gold, 21.89% in Shares, 19.78% in Mutual funds, 14.51% in Real estate, 11.121% in other forms and 6.33% in Bonds. Hence, majority of the responses are towards Gold as their preferred investment avenue. TABLE:7 COMPANY TYPE NUMBER OF RESPONDENTS 104 36 60 200

PARTICULARS BLUE CHIP SMALL CHIP MID CAP TOTAL

PERCENTAGE 52% 18% 30% 100%

From the above table, it can be inferred that 52% of the respondents prefer to invest in Blue Chip Companies, 30% prefer Mid Cap Companies and 18% prefer Small Cap Companies. Therefore, Blue Chip Companies are preferred by majority of the respondents. Therefore, an expected return of 9-12% is chosen as the most preferable by most of the respondents. TABLE: 8 RESPONDENTS REACTION, WHEN THEIR INVESTMENT DECREASES IN VALUE PARTICULARS NUMBER OF PERCENTAGE RESPONDENTS SELL IMMEDIATELY 59 29.5% WAIT 110 55% TAKE ADVANTAGE 40 20% TOTAL 200 100% From the above table, we infer that the reactions of the respondents, when the investment decreases in value, that 55% of them are willing to wait for the market conditions to improve, while 29.5% are ready to sell immediately to avoid further loss, and 20% of them will to take advantage and invest more. Hence, it is concluded that majority of respondents prefer to wait for the market conditions to improve. TABLE 9 CROSS TABLE BETWEEN AVENUES AND EXPECTED RETURNS AVENUES RETURNS 0-3% 3-5% 5-7% 7-9% 9-12% GOLD 3 1 5 4 11 SHARES 3 12 16 14 54 BONDS 4 5 7 11 53 MUTUAL FUNDS 5 8 6 11 42 REAL ESTATE 1 1 8 10 34 OTHERS 0 0 4 11 17 From the above table it is inferred that the majority of the respondents expect 9-12% of returns irrespective of their investment in any investment avenues.

269 INCOME <2 Lakhs 2-5 Lakhs 5-8 Lakhs >8 Lakhs I GOLD GOLD GOLD REAL ESTATE II SHARES SHARES REAL ESTATE GOLD III MUTUAL FUNDS MUTUAL FUNDS MUTUAL FUNDS SHARES

From the above table it is evident that income group below 5 lakhs invest more in Gold and shares and above 5 lakhs invest more in Real Estate and Gold. From the above table it can be inferred that most of the respondents both men and women prefer to invest more in gold but men equally invest in shares. I) HYPOTHESIS TESTING - Friedman Test PREFERENCE OF INVESTMENT SCHEMES H0 : There is no significant difference in the preference of the investment schemes H1 : There is a significant difference in the preference of the investment schemes Descriptive Statistics N 200 200 200 200 200 200 200 Minimum 1 1 1 1 1 1 1 Maximum 7 7 7 7 6 4 7 200 Mean 4.19 6.08 2.68 4.65 3.04 1.51 5.84 Std.Deviation 1.575 1.346 1.267 1.424 1.090 0.743 1.167

Shares Bond Bank Deposit Mutual Fund Real Estate Gold Government Securities TEST STATISTICS N CHI-SQUARE DF ASYMP.SIG Test Statisticsa N Chi-Square df Asymp. Sig. 75 308.664 7 .000

Mean Ranking For Investment Schemes Particulars Mean Rank Gold 1.51 Bank Deposit 2.68 Real Estate 3.04 Shares 4.19 Mutual Funds 4.65 Government Securities 5.84 Bond 6.08

Std. Deviation 0.743 1.267 1.090 1.575 1.424 1.167 1.346

Ranking 1 2 3 4 5 6 7

270 INFERENCE Since the Asymp. Significance value is less than 0.05 we accept the alternative hypothesis, so we conclude there is a difference in the preference of the investment schemes. Based on the investors ranking made from 6 to 1 We conclude that they prefer the Growth related, Income Related and Tax Saving scheme rather than other schemes. FACTORS INFLUENCING THE PREFERENCE IN INVESTMENT SCHEMES H0 : There is no significant difference in the factors influencing the choice of the investment schemes H1 : There is no significant difference in the factors influencing the choice of the investment schemes Descriptive Statistics N Safety Flexibility capital Taxbenefit Liquidity Return Professionalmanagement Diversificationbenefit Test Statisticsa N Chi-Square Df Asymp. Sig. 75 308.664 7 .000 75 75 75 75 75 75 75 75 Mean 4.9333 4.6133 5.2933 5.9333 4.4933 6.8267 1.6533 1.8000 Std. Deviation Minimum Maximum 1.79589 1.32434 1.73807 1.22290 1.95471 1.31902 .58108 1.43320 2.00 3.00 1.00 4.00 1.00 4.00 1.00 1.00 8.00 8.00 8.00 8.00 8.00 8.00 3.00 8.00

a. Friedman Test TABLE: Mean Ranking for the factors influencing the choice of investor Particulars Mean Std. Deviation Mean Rank Safety 4.93 1.80 4 Flexibility 4.61 1.32 5 Capital Appreciation 5.29 1.74 3 Tax Benefit 5.93 1.22 2 Liquidity 4.49 1.95 6 Good Return 6.83 1.32 1 Professional Management 1.65 0.58 8 Diversification Benefit 1.80 1.43 7 INFERENCE Since the Asymp. Significance value is less than 0.05 we accept the alternative hypothesis, so we conclude there is a difference in the preference of the investment schemes. Based on the investors ranking made from 8 to 1 we conclude that they choose the schemes based on important factors like good return, Tax benefits, and capital Appreciation. CONCLUSION The study on the investors awareness and the factors influencing their investment decisions has helped in understand the perspectives of the investors in their choice of investment. It can also be concluded that in the current economic scenario people are ready to accept only lower risks inspite of them expecting high returns. And investment in Gold has topped their priority list. Investors are very careful about their investments, hence; wait patiently for market conditions to improve.

271

TALENT MANAGEMENT
K.Srivignesh Kumar, Assistant-Professor Department of Management(U.G) Sree Saraswathi Thyagaraja Colege Thippampati, Pollachi Talent management refers to the process of developing and integrating new workers, developing and keeping current workers and attracting highly skilled workers to work for your company. Talent management] in this context does not refer to the management of entertainers. The term was coined by David Watkins of Softscape published in a article in 1998 Talent management is a process that emerged in the 1990s and continues to be adopted, as more companies come to realize that their employees talents and skills drive their business success. These companies develop plans and processes to track and manage their employee talent, including the following: Attracting and recruiting qualified candidates with competitive backgrounds Managing and defining competitive salaries Training and development opportunities Performance management processes Retention programs Promotion and transitioning Talent management is also known as HCM (Human Capital Management), HRIS (HR Information Systems) or HRMS (HR Management Systems), and HR Modules.Companies that are engaged in talent management (human capital management) are strategic and deliberate in how they source, attract, select, train, develop, retain, promote, and move employees through the organization. This term also incorporates how companies drive performance at the individual level (performance management). The term talent management means different things to different people. To some it is about the management of high-worth individuals or "the talented" whilst to others it is about how talent is managed generally - i.e. on the assumption that all people have talent which should be identified and liberated. Talent Management IT TAKES Talent to spot Talent! A tone deaf will never be able to appreciate the music of maestros. Only a seasoned jeweler would know that all that glitters is not real! And, only those who can recognise the worth of a diamond can value it, for others it's just a stone! Talent is doing easily what others find difficult. In an organisation, there is nothing more crucial than fitting the right employee in the right position. Or else you would be trying to fit a square peg in a round hole. When people do jobs that just don't suit their liking, inclination or temperament, the results, or rather the lack of them will be disastrously obvious. Low productivity, dissatisfaction, low morale, absenteeism and other negative behaviour will become typical till the employee is shown the door. Or perhaps, there is another option Talent Management. Talent management implies recognising a person's inherent skills, traits, personality and offering him a matching job. Every person has a unique talent that suits a particular job profile and any other position will cause discomfort. It is the job of the Management, particularly the HR Department, to place candidates with prudence and caution. A wrong fit will result in further hiring, re-training and other wasteful activities. While there is no magic formula to manage talent, the trick is to locate it and encourage it. Talent Management is beneficial to both the organisation and the employees. The organisation benefits from: Increased productivity and capability; a better linkage between individuals' efforts and business goals; commitment of valued employees; reduced turnover; increased bench strength and a better fit between people's jobs and skills. Employees benefit from: Higher motivation and

272 commitment; career development; increased knowledge about and contribution to company goals; sustained motivation and job satisfaction. So, how does an organisation effectively manage talent? Recognise talent: Notice what do employees do in their free time and find out their interests. Try to discover their strengths and interests. Also, encourage them to discover their own latent talents. For instance, if an employee in the operations department convincingly explains why he thinks he's right even when he's wrong, consider moving him to sales! Attracting Talent: Good companies create a strong brand identity with their customers and then deliver on that promise. Great employment brands do the same, with quantifiable and qualitative results. As a result, the right people choose to join the organisation. Selecting Talent: Management should implement proven talent selection systems and tools to create profiles of the right people based on the competencies of high performers. It's not simply a matter of finding the "best and the brightest," it's about creating the right fit - both for today and tomorrow. Retaining Talent: In the current climate of change, it's critical to hold onto the key people. These are the people who will lead the organisation to future success, and you can't afford to lose them. The cost of replacing a valued employee is enormous. Organisations need to promote diversity and design strategies to retain people, reward high performance and provide opportunities for development. Today's Top 10 Talent-Management Challenges 1. Attracting and retaining enough employees at all levels to meet the needs of organic and inorganic growth. 2. Creating a value proposition that appeals to multiple generations 3. Developing a robust leadership pipeline. 4. Rounding out the capabilities of hires who lack the breadth of necessary for global leadership. 5. Transferring key knowledge and relationships. 6. Stemming the exodus of Gen X'ers from corporate life 7. Redesigning talent management practices to attract and retain Gen Y's 8. Creating a workplace that is open to Boomers in their "second careers 9. Overcoming a "norm" of short tenure and frequent movement. 10. Enlisting executives who don't appreciate the challenge. Defining the Talent Management Process Organizations are made up of people: people creating value through proven business processes, innovation, customer service, sales, and many other important activities. As an organization strives to meet its business goals, it must make sure that it has a continuous and integrated process for recruiting, training, managing, supporting, and compensating these people. The following chart shows the complete process: 1. Workforce Planning: Integrated with the business plan, this process establishes workforce plans, hiring plans, compensation budgets, and hiring targets for the year. 2. Recruiting: Through an integrated process of recruiting, assessment, evaluation, and hiring the business brings people into the organization. 3. Onboarding: The organization must train and enable employees to become productive and integrated into the company more quickly. 4. Performance Management: by using the business plan, the organization establishes processes to measure and manage employees. This is a complex process in itself, which we describe in detail in our new research High Impact Performance Management.

273 5. Training and Performance Support: of course this is a critically important function. Here we provide learning and development programs to all levels of the organization. As we describe in the Death of the Corporate University, this function itself is evolving into a continuous support function. Therefore the Business must Lead the Solution Therefore, if you want the talent management solution to be effective and well-adopted throughout your organization, it must be led by a line executive (not HR). While HR is clearly the subject-matter and process expert (we think of HR as the steward, not the owner), an HR-driven approach usually creates a high level of compliance but a low level of true adoption. Consider the following data: this data, taken from our High Impact Talent Management research (which analyzed more than 1 million different elements of strategy and impact) clearly shows that business-driven solutions have much greater impact than HR-driven initiatives.

Figure 2: Impact of Governance in Talent Management Is Talent Management too Important to Delegate to HR? In a sense, the answer is yes. It is too important to be left to HR - while HR must steward the process and implement much of the solution elements, ultimately talent management solutions must be business-driven. Our research details the process for developing and governing these solutions, and also helps you identify the best-practices for such solutions. Not Sure How to Define your Talent Management Strategy? In our Talent Management Framework, we describe how organizations can integrate their people processes (sourcing & recruiting, performance management, succession planning, leadership development, learning & development, and succession planning) to address their urgent talent challenges. Read and listen to us describe this framework to help you get started. CONCLUSION Talent challenges exist in the context of the underlying business strategy. It is because the business is growing (or shrinking) that a certain skills or talent gap exists. It is because of the companys expansion into a new market that new managers are needed. If you, as an HR or L&D manager do not understand this underlying business strategy, you cannot possibly hope to design, implement, and manage a process to solve it.2. The detailed solution to these problems is unique to your organization, but can leverage best practices. You cannot buy a book on talent management to solve these problems. There is no textbook answer to the problem of hiring more engineers, for example. At Raytheon, the problem is manifest by a huge increase in US Federal contracts which demand US citizens. At NetworkAppliance the problem is manifest by hyper growth and the need to hire customer-facing engineers that understand the network storage industry. BIBLIOGRAPHY 1. www.businessweek.com/managing/content/jun2008/ 2. http://bersin.wordpress.com/2007/05/11/talent-management-too-important-to-be-delegated-to-hr/ 3. http://en.wikipedia.org/wiki/Talent_management 4. http://www.hinduonnet.com/jobs/

274

LEADERSHIP DEVELOPMENT AND SUCCESSION PLANNING


S. Muthu Kaleeswaran, Student, K.Ramakrishnan College of Engineering & V.Sruthi, Student, K. Ramakrishnan College of Engineering Introduction Leadership development and Succession Planning are considered to be the most important thing in achieving excellence in any organization. But the fact is that these are not managed in a proper way which in turn creates imperfection in the job. Here we are going to suggest some techniques to achieve perfection in managing these two. Leadership Leadership can be said as an art which is born out of the understanding of the needs. The leader is the one who leads the team. The qualities which are innate within the leader, but are unseen to the working environment unless it is explored by the inner soul to the outer world are called Leadership qualities. These leadership qualities are considered to be the most powerful source of an organization in achieving perfection. The Success of any country depends on Leaders. Likewise success of any organization depends on successful leader. This leader leads his/her team towards his thoughts for completing the tasks assigned to them. A leader always represents his/her team in front of the higher officials. When perfection is considered, only the leader strikes into the mind. Leadership Development It is the process of training the leaders for a high standard so as to increase the overall performance. This training is just given to wax the qualities within the leader. This training includes developing the skills like integrity, dedication of purpose, selflessness, knowledge, skill, implacability as well as determination not to accept failure. Emotional intelligence training is also given here since the leader needs to control his emotions when he communicates within the organization as well as to the business partners. In most of the leading industries leadership development is the main reason for their success. Need of Leadership Development This is essential for developing the inherent skills within the leader. This also increases the team performance. To make the leader tackle any situation. To create the fittest leader. To enhance the opportunities for skillful employees. To simplify the process of monitoring in an organization. To analyze the performance of the team. For successful completion of tasks assigned to the team. Effective and Ineffective Leadership An effective leader and ineffective leader have many similar qualities. But the only difference is that an ineffective leader does not maintain peaceful relationship with all the employees. Transformational Leadership This involves the transformation of leadership into succession planning. Succession Planning Failing to plan is planning to fail. Any goal cannot be reached within a day. We have to plan well for completion of any work. This plan may be a simple task but executing the plan is a very difficult task. We need to check the execution of plan each and every time. Success is the complement of Hard Work. Hence hard work is also required for achieving the goal. Super Motivation is required here. Because Motivation makes a better way to achieve the goal in a short time. Need of Succession Planning Having this process in place is vital to the success of the organization because the individuals identified in the plan will eventually be responsible for ensuring the company is able to tackle future challenges. These "high potential" candidates must be carefully selected and then provided training and development that gives them skills and competencies needed for tomorrow's business environment.

275 Another reason its important is because these high potentials will one day become the leaders of the Company. This is why their development needs to incorporate a broad range of learning opportunities in your organization. The individuals should also be exposed to as much of the working environment as possible so that they gain a good understanding of what the company requires to remain successful. Succession planning is one of those initiatives that many companies don't find the time to start until it's too late - if you don't address succession planning now your organization may end up facing the burden in the middle of a crisis. Finally, organizations that understand the need to manage the development of their high performers are a step ahead of their competitors! The effort required to establish a development program for future leaders is worthwhile because it creates a motivated and capable group of employees that are ready to move forward in the organization when the need arises. CONCLUSION By this way if we have a strong leader with leadership development and all the employees with succession planning then the organization will undoubtedly flourish well though it is a very small one.

276

AN ANALYSIS ON LEADERSHIP BEHAVIOUR AND ITS EFFECTIVENESS IN INDIAN BUSINESS ORGANISATIONS WITH SPECIAL REFERENCE TO TAMIL NADU
T. Prakash, Ph.D. Research Scholar, Department of Economcs, Urmu Dhanalakshmi College Trichy 620 019, Dr. S. Mookiah, Centre for the Study of Social Exclusion and Inclusive Policy, Manonmaniam Sundaranar University, Tirunelveli 627 012 INTRODUCTION Leadership is an attempt to influence people, individually and in groups, for whatever reason. Influence and leadership may be used interchangeably. Not all leadership behavior is directed toward accomplishing organizational goals. In fact, many times when you are trying to influence someone else, you are not even part of an organization. For example, when you are trying to get some friends to go someplace with you, you are not engaging in management, but you are certainly attempting leadership. If they agree to go, you are an effective leader but not an effective manager. Even within an organizational setting, managers may engage in leadership rather than management if they are trying to accomplish personal goals, not organizational ones. IMPORTANCE OF LEADERSHIP I do not want my house to be walled in on all sides and my windows to be stuffed. I want the cultures of all the lands to be blown about my house as freely as possible. but I refuse to be blown off my feet by any. - Mohandas Karamchand Gandhi In just the way that M.K. Gandhi and other broad minded political leaders have embraced all world cultures business leaders are doing so too. An attempt by an individual to have some effect on the behavior of another is called attempted leadership. This attempted leadership can be successful or unsuccessful in producing the desired response. A basic responsibility of managers in any type of organization is to get work done, with and through people, so their success is measured by the output or productivity of the group they lead. With that thought in mind, Bernard M. Bass suggested a clear distinction between, successful and effective leadership or management. REVIEW OF LITERATURE Since the publication of two classical studies on leadership, one by Michigan State University (Katz et al., 1950) and the other by Ohio State University (Stogdill & Coons, 1957), the interest in leadership style and its consequences has grown by leaps and bounds. There are numerous studies on the behaviour of leaders (e.g. Katz & Kahn, 1951; Fleishman & Harris, 1962; Zulaiha, 1993) as well as situational determinants of leader's behaviour (e.g. Fieldler, 1967; Mintzberg, 1973; Balkheyour, 1982; Bass, 1990). In addition, researchers have also examined the variations in leadership styles based on differences in cultures and ethic background (e.g. Yang, 1977; Everett, et al., 1984; Kang & Saiyadain, 1994; Asma Abdullah, 1996; Carney, 1998). Most of these studies leave the impression that leadership works one way the leader influences the members. Of late there is growing evidence to suggest that leader's behaviour, to an extent is influenced by subordinates' perspective and perceptions. Effectiveness of leadership behaviour may perhaps be an interactions position influenced by members' expectations. A recent study concluded that leaders would be perceived most effective by their members and succeed in exerting great influence on them when they behave in ways closely matched with the needs and values of members (Baron, 1986). In a more recent article, Bennis (1989) suggested that members make good leaders good. Quoting several examples of significant leaders in American history, he feels persuaded to accept the underappreciated importance of effective members lrTmqulding the styles of their leaders.

277 Research evidence in this area is rather scanty. Perhaps the first such attempt was made by Brown (1964). Respondents were asked to identify characteristics of their "poorest boss", examples of their most "bizzare" behaviour and their effect on the performance of the members. His results indicated that members identified 30 characteristics of poor bosses grouped in five categories (organisational performance, decision making skills, communication skill, relationship with others and personal characteristics). They also identified 18 bizzare behaviours and 19 effects on members. STATEMENT OF THE PROBLEM The effectiveness of leadership in selected Business Organisations in Tamil Nadu. feedback from members which in turn provides them a sense of codetermination and enhances members' perception of leader's effectiveness. Members also expect leaders to be loyal to themselves and organisation (Berliner, 1979). Alert, self assured and interpersonally competent leaders set examples for members to follow. The female respondents who perceived stronger relations between the variables than their male counterparts were supervisors who worked closely with their immediate bosses. Perhaps the proximity helped them to make more realistic judgements about their leaders. Leaders are increasingly dependent on their members for a variety of activities. Silence is the one answer that leaders should refuse to accept. While for members it is hard to speak up or disagree with the leaders, effective leaders encourage openness and even dissent. They understand the momentary discomfort on being "told" or made to realize that they are wrong. But it is offset by the fact that reflective back-talk increases leader's ability to make good decisions. Members who speak up and leaders who listen to them are an unbeatable combination (Bennis, 1989). The ultimate irony is that, by and large, members who look for effective leadership behaviours show precisely the kind of behaviour that effective leadership is made of. SCOPE OF THE STUDY In the Globalisation era, the problem of maintaining cordial relationship between employee and employer is a different task. In the industrial arena, the problems and disputes are multi dimensional one. The proposed work will be dealt in the lines of leadership behaviour and its effectiveness in the selected Business Organisations in Tamil Nadu. Though there were many earlier have been carried out in the similar topics but no such an effort would be carried out on the effectiveness of leaders will context. so the proposed study will be an immense importance in the sense of analysing. OBJECTIVES The proposed study on leadership behaviour and its effectiveness in Tamil Nadu tries to find out the following major of objectives. To deal the various factors of leadership behaviour in this area. 1. To fid out the organisational performance decision making skill communication skill and other aspects. 2. To examine the factors responsible for effective leadership in Tamil Nadu among the selected industry. 3. To throw lights the relationship between the supervisors and employees in the selected respondent. 4. To explore further possible avenues of increasing the effectiveness of leadership among the various organisations. METHODOLOGY Questionnaire Since the focus of the study is to be on the perceptions of the members an attempt will be made to identity key areas of leaders behaviour. As many as 72 employees with clearly defined leaders will be asked to indicate 5 key areas that they felt were most important for effective leader behaviour.

278 This exercise yielded 23 areas of which decision making, communication skill, organisational performance and personal characteristics topped the list with the rest trailing far behind. Leader behaviour on these four areas will be was measured by adapting the general scheme provided by Brown (1964). Fifteen statements will be developed to cover the four areas (organisational performance = 6, decision making -- 3, communication skill = 3 and personal characteristics = 3). The respondents will be asked to read these statements keeping their immediate supervisors in mind and show their agreement/disagreement with them on a six point scale (strongly agree = 6, agree = 5, agree a little = 4, disagree a little = 3, disagree = 2, strongly disagree =1). Leadership effectiveness was measured by adopting the scale developed by Cummings (1967). It consisted of five statements based on five effectiveness criteria (Planning, Human Consideration, Originality, Overall Effectiveness as perceived by respondents and Organisation). The respondents will be asked to rate their immediate supervisors on these statements using a six-point scale (very high = 6, high = 5, somewhat high = 4, somewhat low = 3, low = 2, very low =1). Statements will be presented in Exhibit 1. SAMPLE Sample will be consisted of employees working in a multinational organisation in Tamil Nadu. The major criteria in the choice of sample consisted of each respondent having a structurally defined leader to whom he/she responded for both functional and administrative purposes. The questionnaires will be distributed to 250 respondents. Out of which 60% of the respondent will constitute leaders from production oriented organizations and 40% leaders from service oriented organisation. Data Analysis After collection of data, 60% from the production oriented organization and 40% from the service oriented organizations, the gathered information through the questionnaire will be grouped according to the organization. In the production oriented it will be grouped it to, textiles, automobiles, cement, Fabrication, Merchant Establishment and etc. In the service oriented in to Banking insurance, Software, Corporate Hospitals and etc. Then to condense data SPSS (Statistical Package on Social Science) is also used to analysis and interpretation of data ANOVA test, causality test, DurbinWetson (D-W Statistic) Granger (or) Sims tests will be used wherever it is necessary. On the basis of these observations certain conclusions and findings will be drawn. To interpret and analyse the data prominent statistical tools will be used. ANOVA (Two way classification models) within blocks/between block. CONCLUSION There is growing evidence to suggest that leader's behaviour is influenced by the perceptions and expectations of the subordinates. The results of this study show that if subordinates perceive their leaders effective in such areas as organisational effectiveness, decision making and communication skills and personal characteristics, they also perceive them as effective leaders. The implication for stich a conclusion is clear. In order to maintain and /or enhance the overall effectiveness of the organisation, leaders must get support from all the constituents, particularly from their subordinates. These subordinate, in turn, would make a good leader good. Training of subordinates, maintaining high level of motivation and morale and exploiting their full competencies are potential sources for not only getting high performance but also making them to expect and receive superior output from their leaders. These are mutually reinforcing forces that organisations need to survive in today's turbulent environment.

279 REFERENCES 1. Ashford, J-A. and Tsui, A.S. (1991), "Self Regulation for Managerial Effectiveness: The Role of Active Feedback Seeking", Academy of Management journal, 34(2), 251-280. 2. Asma Abdullah (1996), Going Glocal, Malaysian Institute of Management, Kuala Lumpur. 3. Balkheyour, A.A. (1982), Effective Administrative Leadership, Unpublished Doctoral Dissertation, Glaremont Graduate School. 4. Baron, R.A. (1986), Behaviour in Organisations, Allyn and Bacon, Boston. 5. Bass, B.M- (1990), Bass and Stodgiest Handbook of Leadership: Theory, Research and Managerial Application (3rd Ed.), Free Press, New York. 6. Bennis, W. (1989), "Followers Make Good Leaders Good", The New York Times, December, 31. 7. Berliner, W.M. (1979), Managerial and Supervisory Practices: Cases and Principles, Homewood, II.: Irwin. 8. Brown, D-S. (1964), "Subordinates' View of Ineffective Executive Behaviour," Academy of Management Journal, 7(4), 288-299. 9. Buono, A-F. and Bowditch, J.L. (1989), The Human Side of Mergers and Acquisitions: Managing Collision Between People, Culture and Organisations, Jossey-Bass, San Francisco. 10. Cameron, K. (1991), "Best Practices in White-collar Downsizing -Managing Contradictions", Academy of Management Executives, 5(3), 57-73. 11. Carney, M. (1998), "A Management Capacity Constraint? Obstacles to the Development of Oversees Chinese Family Business", Asia Pacific journal of Management, 15,137-162. 12. Cummings, L.L. (1967), "Managerial Effectiveness II: Performance at the Graduate Student Level", Academy of Management journal, 10(2). 145-160.

280

CROSS CULTURAL ENVIRONMENT TRAINING


Mr.S.Theodore Manova, Asst.Prof, Selvam College of Technology Namakkal ABSTRACT Cross cultural training is now becoming an integral part of staff training as managers and HR staff wants to ensure that effective communication is developed between employees. By educating staff through cross cultural training courses, such as cross cultural team building and communication programs, companies and organizations are becoming more competitive in the global marketplace as cross cultural synergy in the workplace grows. It is a fairly broad term that covers a variety of different training programs. Each training program will have its own focus and will address the certain needs of a particular client group. Cross cultural awareness training has a number of applications. Its main objective is to introduce, analyze and constructively tackle the different manifestations of culture in the workplace. It essentially deals with interpersonal interact Cross cultural management training aims to equip management staff with the knowledge and skills to effectively supervise a multi-cultural staff. Cross cultural awareness training results in a more convivial and understanding work environment. Cross cultural training aims to develop awareness between people where a common cultural framework does not exist. In the business world in particular this manifests in better interpersonal understanding leading to more effective communication which ultimately results in a more productive business environment. Cross cultural management training aims to equip management staff with the knowledge and skills to effectively supervise a multi-cultural staff. Cross cultural awareness training results in a more convivial and understanding work environment. Cross cultural awareness training deals with the manifestations of culture in the workplace and has many applications. Its main purpose is to evaluate and constructively tackle the challenges cross cultural differences can bring to the workplace. Culture/country specific training is generally aimed at individuals or teams that regularly visit a foreign country or who frequently interact with overseas clients or colleagues. Such training usually focuses on areas such as values, morals, ethics, business practices, etiquette, protocol or negotiation styles with reference to one country. Key words: Cross Cultural Team Building Training, Cross Cultural Negotiation Training and Diversity Training and Awareness Training. INTRODUCTION Cross cultural is a comparison of a culture with one or more other cultures. The purpose is to provide detailed information about the development of others in their own cultures and compare this development across cultures. The comparison looks at not only what is different between the cultures, but also what is similar or universal among them It always examines the culture from within, viewing the context of that culture, rather than from outside of the culture. This gives true insight into the culture and a truer comparison thus broadening ones appreciation of that culture and of your own. Basically human races came with different background. "Cultural background". The way of doing things in one culture may not be the way in other culture. What is good in one culture, may be bad in other culture. Some time the activities are all the same in two different cultures, but two different meanings, two different interpretations. When person from one cultural background, meet, interact with, understand and deal with person from other cultural background. That is cross-cultural management. Some people are in favor of the world is converging, all things are going to be same. They are right. some people are arguing still the world has divergence. They are also right. dont fight over this issue. we are smart people. learn how to manage both the convergence and divergence. That is the key to success.

281 I Team Building Training: The companies and organisations of today consist of staff from the four corners of the globe. Colleagues work in multi-cultural teams either in the same office or across borders. Issues can and do arise in areas such as approach to management, expectations, decision making, planning, conflict resolution and communication styles. Few people work alone in todays work environment. We all depend on others to get our work done. We are part of teams, work groups, ad-hoc committees, task forces, crews, etc. Collectively, we generate ideas, manufacture products, provide services, sell goods and much more. Our ideas and efforts combined with the ideas and efforts of others result in performance excellence and high quality products and services. Experience, expertise, adequate physical conditions, technology and the right tools are just a small part of the big picture. People are assembled into teams and embark on a discovery process towards achieving a common goal successfully. Team members from various backgrounds explore each others personalities, strengths, behaviors, as well as work habits. They identify the vision, goals, values and strategies by which collectively they will complete their task and exceed expectations. Cross Cultural Team Building Benefits: Facilitate the building of interpersonal relationships. Foster mutual understanding and respect. Help understand where cross cultural differences lie Provide solutions, guidelines and techniques to help the team building process. Efficient time management Creative and innovative ideas Employee satisfaction Improved performance Higher product/service quality Reduces waste of resources Assures clear and concise communication Encourages higher productivity Motivates employees II Cultural Diversity Training Our Cultural Diversity Training is designed to help companies and organisations with their multi-cultural diversity issues in the workplace. Courses are primarily aimed at management, HR staff and/or staff themselves. Courses are tailored to provide either an overview of multi-cultural issues in the workplace and/or to provide insight into a particular religion, race or nationality. Cross Cultural Diversity Training Benefits: Diversity, Relationship and Cross-Cultural training has become an integral part of organizational development. This dynamic course is designed for all organizations seeking to create or enhance a meaningful process-driven diversity program that addresses key diversity, interpersonal, cross-cultural and other organizational challenges. Bridging the gap between cultured and non-cultured employees, managers, and other personal relations thus providing more efficiency within the company Making your company more accessible to other consumer markets Making your company more consumer-friendly Creating more business relationships

282 Diversity Training utilizes the needs assessment as a proactive tool for the sole purpose of interpreting the state of an organization in relation to a particular concern. The needs assessment is not intended to expose or punish the employer/employees. It designs and implements contextualized training programs highlighting employer objectives, policies and procedures. Negotiation Training Objectives * Understanding Types of Negotiation *