ISSN No - RBS

RaiManagementJournalAn Initiative of Rai Business SchoolPrice : 75/-ISSN No: 0975-4326Vol. 7 Issue 2Training Delivery and Methodology in Banks (An Empirical Study)Glamour, Glitz and Promotion – Celebrities and The AdworldAjaz Akbar and Shamima KamiliSumana ShomeHuman Resource Management in Indian Industries: Motivating Businesses to Sustain EconomicDevelopment into the FutureVenkat Bakthavatchaalam and Andrew FoxRestaurant Industry in Ghaziabad, IndiaA Study on Exporters Problems in Garment IndustriesGunjan MalhotraS. Venkatachalam and P. PalaniveluAn Empirical Study on Indian Health Insurance IndustryK. Balanaga Gurunathan and M. MohanasundariRandom walks in stock market prices, with special reference to Indian Oil and Gas Stocks.Neha MishraImpact of Dividend Announcements on Stock Returns: A Study across Popular Sectors In IndiaS.V. Malhotra and Parul BhatiaAn Empirical Study on Factors Affecting Consumer Preferences of Shopping at Organised RetailStores in PunjabK C Mittal, Mahesh Arora and Anupama PrasharA Study on the Assessment of Marketing Feasibility to Locate An Organised Retail Store at ATargeted PlaceR. Kasilingam and S. SudhaRole of Relationship in Pharmaceutical Marketing- A study in Western U.P. (India)Rajeev Gupta and Abhishek GuptaEmpirical Study On Performance Measurement Of Plastic Industry Of Madhya PradeshA. K. Singh and Charu SinghA Study on Analysis of Various Factors Affecting Customer Satisfaction in Service Industry with referenceto Indian Hotel IndustryParul Khanna and Alka Kaul

EditorDr. Sheetal KaulRai Business School, Delhi, IndiaProf. Gunjan A. RanaRai Business School, Delhi, IndiaAssociate EditorsProf. Piyush RanjanRai Business School, Delhi, IndiaProf. U S WahieRai Business School, Delhi, IndiaPaul EdelblutSenior Vice President, Vantage Labs, New Jersey,USADr. Mahesh ChandraAssociate Professor, Hofstra University, New York, USAAdvisory BoardSalehuddin AhmedChief Technical Advisor, IPRCC, Beijing, ChinaDr. Annabel DroussiotisAssociate Professor, Limassol, Cyprus, USADr. B.K MohantyProfessor, Indian Institute of Management, Lucknow, IndiaBasab BordoloiVice President- HR, Domino Pizza, Noida, UP, IndiaDr. R.K GuptaProfessor, Punjab University, Chandigarh, IndiaHimanshu ChawlaHead Enterprize Partner Sales, Sun Microsystem India Pvt Ltd., Delhi, IndiaUpender RaiGeneral Manager - HRD, NTPC, Delhi, IndiaEditorial BoardDr Abhishek MishraAssistant Professor, Indian Institute of Management, Ahmedabad, IndiaDr. Sukumar NandiProfessor, Indian Institute of Management, Lucknow, IndiaDr Dinesh KumarProfessor, Indian Institute of Management, Bangalore, IndiaMr. Vivek GuptaSr. Research Associate, Indian Institute of Management, Lucknow, IndiaDr. M.JayadevAssociate Professor, Indian Institute of Management, Bangalore, IndiaDr. Neera JainAssistant Professor, Management Development Institute, Gurgaon, IndiaProf. Harkirat SinghProfessor, Indian Institute of Foreign Trade, Delhi, IndiaDr. Sandeep AnandAssistant Professor, Xavier Institute of Management, Bhubaneswar, IndiaDr. Parul RishiAssistant Professor, Indian Institute of Forest Management, Bhopal, IndiaDr. Biresh K SahooAssociate Professor, Xavier Institute of Management, Bhubaneswar, IndiaDr. Manoj SrivastavaAssistant Professor, Management Development Institute, Gurgaon, IndiaDr. Anita GoyalAssociate Professor, MDI, Gurgaon, IndiaDr. Avanish KumarAssociate Professor, MDI, Gurgaon, IndiaDr. Sabita MahapatraAssistant Professor, Indian Institute of Management, Indore, IndiaProf. Sanjay DhamijaProfessor, International Management Institute, Delhi, IndiaProf. Pradip ChakrabortySenior Professor, Fore School of Management, Delhi, IndiaDr. P. N PandeyProfessor, CDAC, Delhi, India\Dr. Ambrish GuptaSenior Professor, Fore School of Management, Delhi, IndiaProf. PR RamanujamDirector, IGNOU, New Delhi, IndiaProf. Seema UnnikrishanAssociate Professor, NITIE, Mumbai, IndiaDr. Ranjana AgarwalAssistant Professor, IMT, Ghaziabad, IndiaDecember 2010 Vol. 7, Issue 2[ 1 ]

From the Editor’s DeskIt gives me great pleasure to present the secondvolume of Rai Management Journal,this season. This year, global economyseems to have expanded after a recent shock. IndianEconomy however, felt the blow of global economicrecession and the real economic growth has seen asharp fall followed by the lower exports, capital outflowand corporate restructuring. There are a lot ofchallenges which the growing economies face in therealms of basic necessities in life. The growth of theIndian economy in the recent past and the compulsionto sustain it is has forced the Indian governmentto accelerate the process of developing all the branchesof the Indian education system. Consequently, thesubject of Management has assumed the most relevantimportance in emerging economies of theStates.Management education in India is fast undergoinga radical change. The two current developmentssweeping India, namely liberalization and globalization,have had a considerable impact on managementeducation. When we talk about management education,we are basically referring to the shaping up of astudent to develop the competency and capabilityeither as an intrapreneur (to join and help an organizationto grow) or as an entrepreneur (to establishand grow one's own organization). This capabilitymeans developing the will & skill to contribute forSelf reliance and self sustenance in nation buildingand only stronger nations can withstand the tale oftime. India, with its plurality and paradoxes, hasnever ceased to fascinate. And education in India isonly one among various other elements that havecaptured the attention of the world. Various othercountries in the world are amazed by the quality ofsome of the human resources that the Indian educationsystem has produced. Therefore, it becomes veryimportant for different stakeholders to unite andfocus on developing various sectors.Through this journal, we attempt to showcaseemerging sectors which range from education, environment,health care, transport, manufacturingand service areas. It is important to document andspark a debate on areas focused on management incontext of emerging geographies. The key focuswould however be the emerging sectors andresearch which discusses application and usabilityin societal or consumer context whether individualor industrial. The aim is to serve as a channel forsharing of knowledge through compendium ofpapers that will subsequently form a repository ofknowledge for our future generations.The mission of Rai Management Journal is toprovide a forum for the sharing of the academic,theoretical, and practical research that may impacton the development of the management discipline.Original research, replicated research, and integrativeresearch activities are encouraged for reviewsubmissions. Manuscripts which focus upon empiricalresearch, theory, methodology, and review of abroad range of management topics are stronglyencouraged. Submissions are encouraged from bothacademic and practitioner communities.We are indeed very grateful to the contributorsfor sending in their papers which reflect prolificand creative thoughts, ideas, opinions and beliefsthat will certainly conjure up and stimulate professionalthinkers to weigh and evaluate thesethought provoking contributions.My appreciation always goes to the members ofthe Editorial Board, and the authors whose havesignificantly contributed to the growth of RaiManagement Journal. Without their continuoussupport, it would have been impossible for RaiManagement Journal to reach such heights. A veryspecial note of thanks goes to the Associate Editorswho are extra-ordinary academicians and thesource of my strength and encouragement. Finally,I am thankful to the management and the colleagueswho have shown interest in the journal.It is my hope that there will be subsequentissues devoted to varied topics in management thatwould undoubtedly have an enormous impact onour institutions’ ability to improve the quality oflife for all.Suggestions and criticisms are always welcome.You can reach us at raijournal@rbs.edu.inDr Sheetal KaulEditor[ 2 ] Rai Management Journal

ContentsTraining Delivery and Methodology in Banks (An Empirical Study) 4 - 19Glamour, Glitz and Promotion – Celebrities and The Adworld 20 - 33Human Resource Management in Indian Industries: Motivating Businesses toSustain Economic Development into the Future34 - 46Restaurant Industry in Ghaziabad, India 47 - 57A Study on Exporters Problems in Garment Industries 58 - 74An Empirical Study on Indian Health Insurance Industry 75 - 92Random walks in stock market prices, with special reference to Indian Oil andGas Stocks.Impact of Dividend Announcements on Stock Returns: A Study across PopularSectors In IndiaAn Empirical Study on Factors Affecting Consumer Preferences of Shopping atOrganised Retail Stores in PunjabA Study on the Assessment of Marketing Feasibility to Locate An OrganisedRetail Store at A Targeted PlaceRole of Relationship in Pharmaceutical Marketing- A study in Western U.P.(India)Empirical Study On Performance Measurement Of Plastic Industry Of MadhyaPradeshA Study on Analysis of Various Factors Affecting Customer Satisfaction inService Industry with reference to Indian Hotel Industry93 - 99100 - 114115 - 128129 - 149150 - 161162 - 172173 - 186December 2010 Vol. 7, Issue 2[ 3 ]

Training Delivery and Methodology inBanks (An Empirical Study)Ajaz Akbar*Shamima Kamili**Human resource is the backbone of any organization. Properly trained and highly developed humanresource is perceived as the greatest asset of an organization. Trained personnel contribute to the efficiency,growth, increased productivity and market reputation of an enterprise. Organizations need to realize andstrategically train and manage the resource for a sustainable growth in the present uncertain environment,past research studies on training and development programmes indicate that appropriate trainingdelivery and methodology is crucial decision the trainers have to make to yield optimum result. This hasbeen realized by industrial, commercial, research establishments and even government institutions. In thiscontext present paper is an endeavor to look into the functioning of training delivery and methodology asperceived by the employees in the public as well as private sector service organizations viz., ‘The SBI’ and“The J & K Bank Ltd.’ This paper also makes a humble attempt to trace out the areas which need overallimprovement with respect to effective role of trainer, training methods and training environment andfacilities.Keywords: Training, Role of Trainer, Training facilities and Environment.Organizations need torealize and strategicallytrain and manage theresource for a sustainablegrowth in the presentuncertain environment,past research studies ontraining and developmentprogrammes indicate thatappropriate trainingdelivery and methodologyis crucial decision thetrainers have to make toyield optimum result.IntroductionEvery organization needs to bedynamic and growth oriented notonly to withstand but to succeed inthe fast changing and competitiveenvironment as the globalizationphenomenon has led to the survivalof the fittest syndrome all over.Probably, never in the history ofglobal business such a keen sense ofcompetition was noticeable amongcorporates (Sohdhi, 1999).Technological innovations are nomore of strategic importance, evenas they are a fundamental necessity.It is believed that human resource isthe only factor in the value creationprocess which has immeasurablegrowth and potential, and is beingviewed as the most critical tocompetitive success. Primarily ofutmost importance, an organizationis poised for the growth anddynamism only through efficientefforts of its human resources.According to the World Bank’sassessment of 192countries on anaverage, physical capital accountsfor 16 percent of wealth, naturalcapital for 20 percent and humancapital accounts for 64 percent .Thisis much against the general beliefthat physical capital is mostimportant proactive wealth.*Assistant Professor, School of Business Studies, Islamic University of Science and Technology,Awantipora, Pulwama (Jammu and Kashmir), India**Research Scholar, The Department of Commerce, University of Kashmir, Hazratbal-Srinagar (Jammuand Kashmir), India[ 4 ] Rai Management Journal

According to (Khan, 1984), thebroadening capacities of man, theextension of his knowledge andupgrading of his skills may lead toeconomic developments which resultsfrom action.The importance of HR for businesssuccess has been aptly pointed out byMortia (1987) when he says that yourbusiness and its future are in thehands of the people you hire.Training plays a pivotal role inconverting human being into 'humanresource' in an Organisation ortranslating man into manpower byadding the required 'power' to the manfor the purpose of accomplishment ofthe assigned task and realisation ofthe global goals. Companies that useinnovative training and developmentpractices are likely to report betterfinancial performance than theircompetitors that do not. Studies by theNational centre on educational qualityof the workforce based at theUniversity of Pennsylvania show thatemployees are requiring more skillsfor production and support positionsthat they have asked for. Training anddevelopment helps a company to meetcompetitive challenges, as companiesattempt to expand into foreign marketplaces, their success will bedetermined by employee’s ability towork in a new culture ( Noe, 1998).Fisher et al; (1999), in a surveyreports “Organisations providetraining for many reasons; they wishto orient new hires to the organisationor teach them how to perform in theirinitial assignment. Someorganisations also wish to improve thecurrent performance of employees whomay not be working as effectively asdesired, or to prepare employees forfuture promotions, or for upcomingchanges in design, processes, ortechnology in their present jobs.Training is not something that is doneonce to new employees; it is usedcontinuously in every well-runestablishment as in Japan 10 millionworkers (or one in every six workers )need to provide retraining in order tobuild economy of Japan and preparefor drastic deregulation in logisticdistribution, energy , information ,finance, and telecommunication(Bremmer 1998). Continuous trainingand education of workers is necessaryfor enabling them to comprehend theissues connected with theparticipation process as testified byLajuria (2002) in units like ‘Tata Iron’and ‘Steel’ company. Constant effort toupgrade the skills of participation ofworkers and to increase theirinvolvement in the decision makingprocess, has made a positivecontribution to the success ofparticipation. There is visibleparticipation in units like cementcorporation of India (Aadilabad) andNational Fertilizers Limited (Panipat)where training in both conceptual andcommunication skills was given to themanagement and the workers Lajuria(2002). Training programmes in theseorganisations are conducted toenhance the awareness of workerstowards participative forums andtheir utility. Bill Gates wrote in hisbook Business “Speed of Thought”that business is going to change morein the next 10 years than it did in thelast 50 years. His statement ‘we arealways two years away from failure’ isa powerful indication towardsuncertain and unsteady conditions.Noceraz (1996) said that the skillspossessed by a person gets obsolete inTraining plays apivotal role inconverting humanbeing into 'humanresource' in anOrganisation ortranslating man intomanpower by addingthe required 'power'to the man for thepurpose ofaccomplishment ofthe assigned taskand realisation ofthe global goals.December 2010 Vol. 7, Issue 2[ 5 ]

The work force ofan organizationbecomes a resource“only whenappropriate doses ofknowledge, skillsand attitudes areprovided to them fortransforming theminto the productiveworkforce”.three to five years. Thus, there is adire need to remain updated tosurvive which calls for unlearning,relearning the old habits, knowledgeand skills. In order to make trainingand development effective,productive, profitable and resultoriented, “Preparation of a need basedcurriculum and Selection of anappropriate methodology is a complexproblem as it depends on the nature ofwork, availability of facilities, fundsand time” (Caroll, Paine andNancovich, 1972).Keeping in view the aforesaidimportance of research conducted byvarious researchers, an attempt hasbeen made by the author to assess theperceptions of employees regardingtraining delivery and methodologyand find out the areas which needoverall updating with respect toeffective role of trainer, trainingenvironment and facilities andtraining methods in the bankingorganisations.ObjectivesThe aim of the study is1. to assess the perception ofmanagers and non managers withregard to the training deliveryand methodology in the sampleorganizations,2. to assess the variations if anybetween and within theemployees of the sampleorganizations and3. to suggest the ways and means formaking training delivery andmethodology more effective.Research MethodologyFor the purpose of the study twoorganisations were selected, one froma leading private sector organizationof the J & K State namely “The J & KBank Ltd.” another from a leadingPublic sector organization of theCountry namely “The SBI”.The data was collected from a sampleof 10% of the employees i.e., 310 fromthe Private sector and 119 from thePublic sector. The respondents wereapproached individually for thepurpose of collecting the data. Theywere administered a questionnairedeveloped by Kunder (1998) based onthree dimensions –Role of trainer,Methods of training and Trainingenvironment and facilities, these werefurther based on 33 items. The itemswere scored on a 5-point rating scaledeveloped by Rensis Likert (1932). Atthe end of the questionnaire,respondents were allowed to sharetheir opinion, feelings, suggestions,and the problems regarding theongoing ‘training delivery andmethodology system’ in theirOrganisations.Research EvidenceThe work force of an organizationbecomes a resource “only whenappropriate doses of knowledge, skillsand attitudes are provided to them fortransforming them into theproductive workforce” (Bhatia 1989).Training delivery and methodologyconstitute a key feature in the formaldevelopment of employees. It canbring an employee into a positionwhere he performs his job correctly,effectively and conscientiously:[ 6 ] Rai Management Journal

a) correctly, is that he can applywhatever he has been taughtb) effectively, is that he may be in aposition where he can perform theexpected standards andc) conscientiously is that thebehavior of the trainer can bringthe trainees to the position wherethey can put their maximum effortat the right time, Harrison (1993).The result of the study with regard tothe above has been presented in tables1 & 2. In spite of the fact that trainingdelivery and methodology keep theemployees updated with a new set ofskills and knowledge but theemployees of the sample organisationsare moderately satisfied with thedelivery and methodology of trainingin their organisations as is depicted bythe mean score 3.286 (Table 1) and3.344 (Table 2).Dimension wise analysisRole of TrainerTrainer plays a key role in enhancingthe employee’s skills and attitudesand training environment influencesthe learning of individuals. Managersof the Private sector and NonManagers of the Public sectororganizations are possessing slightlyfavorable attitude towards the ‘Role oftrainer’ he plays while specifying thegoals of training at the beginning ofeach training session, teach traineeshow to check their own work to makesure that things go right and motivatethe trainees about the need to practiceif they had to keep their skill at a highlevel as has been proved by thereceived mean scores as depicted intable 3 and 4.Training Environment andfacilitiesTraining environment and facilitieshave a strong influence on thelearning of trainees. The managers ofthe organizations are largely satisfiedwith the training facilities, whichincludes; Library, Lighting, Heating,Canteen, Refreshments, Attitude ofthe staff, Cleanliness, ProperVentilation and Availability of shortbreaks.All employees of the sampleorganisations perceive minimalsimilarity of the environment theywork in to the location they aretrained in, (Table 5 & 6), and are alsomoderately satisfied with the locationof the training centres.Wexley and Latham (19994) point outthat Audio Visual can be very effectiveand are widely used. But the markedmean scores as depicted in table 5 & 6,make it clear that such facility ismoderately satisfactory. With regardto ‘Transportation’ and libraryfacilities all employees of the sampleorganisations are moderately satisfiedexcept that of Non-managers of thePublic sector organisation, whoseresponse lies just within the minimalrange as shown in table-5.Training MethodsMuch of the research on trainingmethods centres on trying todetermine whether one method isbetter or more effective than another,Trainer plays a keyrole in enhancing theemployee’s skills andattitudes andtraining environmentinfluences thelearning ofindividuals.June 2010 Vol. 7 Issue 1[ 7 ]

Choice of trainingand delivery methodsdepends upon manythings, includingorganizationalculture and values,training and deliverymechanism, objectivesand content, profileof trainees andtrainers, resourceavailability, locationand time constraints.Cascio (1995). Choice of training anddelivery methods depends upon manythings, including organizationalculture and values, training anddelivery mechanism, objectives andcontent, profile of trainees andtrainers, resource availability,location and time constraints. Here inthe private organisations usage ofvarious types of training methods liesbetween minimal to moderate on theevaluation or rating scale as isevident in the Table 7.In the organisation trainers makemoderate use of Induction orOrientation, Job Rotation, Lectureand Computer software methodswhich is statistically proved by thereceived mean scores depicted inTable 7. Similar is the case withPublic sector organizations, theorganization makes moderate use ofall types of training methods whiletraining the employees which isconveyed by the mean scores in theTable 8.Rothwell & Kazanas (1994), contendthat in strategic, future orientedtraining, learners must be givenopportunities, through role plays,case studies, and scenarios thatstimulate future conditions, to gainexperience before they confront realsituations, but the selectorganisations are not taking due careof it.Perceptional VariationIn the present study perceptionalvariation within the employees of thesample organisations, was analyzedand it was revealed as shown in table-9 that all the four comparisons withthe help of t-test. In all the fourcomparisons P>0.05 which amplypoints out that there isinsignificant perceptional variationbetween and within the employees ofthe sampleorganizations or it can be said thatthey are almost possessing identicalperception regarding trainingdelivery and methodology.Conclusions• Trainer moderately plays a keyrole in changing the employee’sskills and attitudes in both theorganizations.• The employees of both theorganizations point out thatduring training they are notprovided enough opportunities topractice whatever they learn.• In the Private concern,orientation method is mostly usedfor training employees followed bythe job-rotation in case ofmanagers and lecture method incase of non-managers. In thePublic concern various on the joband off the job training methodsare moderately used, whereinLecture method is mostly used asa medium of training formanagers and orientation for nonmanagersfollowed by othermethods.• In the sample organizationsmostly traditional trainingmethods are used and less usageof the other methods is seen.• Regarding training environment[ 8 ] Rai Management Journal

and facilities other than libraryand transport facility, theemployees of the sampleorganization seem largelysatisfied.• The training- environment is notsimilar to the Job- environment.• Location of the training centres isnot easily accessible, andreluctantly the trainees are facinga lot of difficulties to reach there.• The advanced training institutesare mostly situated outside theState of, the employees of the stateare facing a lot of difficultiesespecially in respect of climateand food intake, which affectstheir health and ultimatelytraining gets suffered.• Mostly female employees resistgoing to trainings to far off placesdue to family or other bindings.• All the employees have identicalperception regarding the overalltraining delivery andmethodology.SUGGESTIONSBased on the findings of the presentstudy and the existing literature ontraining and development, thefollowing suggestions are put forth:-TRAINERTrainer is the person who mustpossess the capacity to control thegroup of trainees, understandorganizational needs and workDecember 2010 Vol. 7, Issue 2strategically so as to relate thetraining importance to the practicalworlds of trainees by giving themappropriate examples. His credibilityand integrity should be so high as tomake the trainees perceive that thetrainer can add to their learningprocesses at the same time he shouldpossess the sense of humour in orderto avoid or reduce stress/boredom inthe training environment and foster arelaxed learning climate.DEVELOP TRAINEEREADINESSInstructors can stimulate traineereadiness for the learning to come bycarefully preparing and distributing anumber of devices designed to hooktraining interest in advance of thetraining session. This could includeattractively packaged pre coursematerial distributed to trainees beforethe start of the program. These mayinclude simple description of how theprogram fits into the mission of theorganization, examples ofprerequisites needed for the course orsimple self assessment exercise thatallow trainees to score themselves andidentify areas of potentialdevelopment.PROVIDE POSITIVETRAINING ENVIRONMENTTrainees will be primed for transfer, ifthe timing of the training is rightwhich builds on the concept of theteachable moment. In terms oflocation, sometimes trainingembedded in the work itself is mosteffective while in other cases offsitelocation protects trainees from work-Trainer is the personwho must possess thecapacity to controlthe group oftrainees, understandorganizational needsand workstrategically so as torelate the trainingimportance to thepractical worlds oftrainees by givingthem appropriateexamples.[ 9 ]

Research studies ofmemory followinglearning stronglyindicate a sharpdrop-off in recallcapabilities followinginitial input.related interruptions and distracters.As well, the physical surrounding andfacilities during training should becomfortable and pleasant.Supervisors who help to provide thistype of positive learning contextcreate a supportive climate fortransfer.METHODSSuch training methods need to beencouraged wherein trainees getmentally and physically involved likeRole-Playing, Group-Discussion, CaseStudy, etc, so that the trainees findthemselves alert and an essentialpart of the event.PROVIDE PRACTICEOPPORTUNITIESOpportunities to practice newlearning during training givestrainees the chance to put newlyacquired knowledge to work. Theseare safe opportunities to experimentwith new skills andgive instructors the chance to noteindividual’s strengths and weakness.They should also encourage traineesto ask questions, try alternatives andgain confidence. The key success inthis strategy is to develop practiceopportunities that are relevant tolevels of trainee skills and convincingtrainees that they can benefit fromdoing so.MAINTAIN IDEAS ORAPPLICATION NOTEBOOKOne way of doing this is by convertinggeneral principles into specificpractices through a notebook. Foreach session trainees can record theideas, concepts and principles (what Iheard or learned) and the applicationof it (how I intend to use it). Thisnotebook provides a self-disciplinemechanism encouraging trainees tolook for useful ideas throughout thetraining program instead of relyingon their recall abilities.TRAINEES RESPONSIBILI-TIESApart from managementresponsibilities, the trainees alsoneed to play their role. The traineesshould understand the concept andimportance of training for individualand organizational development.They should actively participate inthe process starting from the needassessment to training delivery andevaluation. Their attitude towardsthe training should be enthusiasticrather than considering it as a breakfrom routine job. Trainees shouldestablish a regular time forperiodically reviewing their coursematerial following the trainingprogram. Research studies of memoryfollowing learning strongly indicate asharp drop-off in recall capabilitiesfollowing initial input. This decline iseven worse when other factorsinterfere with immediate and regularapplication of the knowledge or whensignificant time passes before theindividual reviews the materials.In short, everything points in thedirection of the desirability of earlyand frequent reviews. The traineesneed to make conscious and diligenteffort to learn and assimilate the[ 10 ] Rai Management Journal

training inputs to advantage. Theyshould approach training seriouslyand be ever alert to pick up conceptsand techniques for application in thepost training situation by the sametoken.Table -1: Overall training delivery & methodology in the ‘J &K Bank’DimensionNosDIMENSIONSMEANSCORES%MEAN SCORES1 Role of Trainer 3.548 70.9532 Training Environment 3.625 72.53 Training Methods 2.685 53.65Total-Average 3.286 65.701Scale- 1=Not at all, 2=Minimal, 3=Moderate, 4= Large, 5= very LargeTable -2: Overall training delivery & methodology in the ‘SBI’DimensionNosDIMENSIONSMEANSCORES%MEAN SCORES1 Role of Trainer 3.766 75.3282 Training Environment 3.6 71.9963 Training Methods 2.961 59.223Total-Average 3.344 68.849Scale- 1=Not at all, 2=Minimal, 3=Moderate, 4= Large, 5= very LargeDecember 2010 Vol. 7, Issue 2[ 11 ]

Table -3: Perception of employees regarding the ‘Role of Trainer’ in the ‘J&KBank’’ROLE OF TRAINERMANAGERIAL Non-ManagerialItem Nos Items M-S %M-S M-S %M-S1.2.3.4.5.6.Trainer specifies the goals oftraining at the beginning ofeach training session.Trainees are taught how toidentify mistakes they commit/made.Trainer taught trainees howto check their own work tomake sure that things goright.The Trainer gave trainees alot of different problems towork on.The Trainer motivated thetrainees about the need topractice if they had to keeptheir skills at a high level.During training the trainerskept making use of new skillsand ways to deal with differentproblems.3.87 77.38 3.82 76.43.63 72.68 3.39 67.73.74 74.74 3.83 76.63.48 69.6 3.07 61.33.85 77.02 3.6 723.69 73.72 3.53 70.77.During training you are providedopportunities to practicewhatever you learnt.3.27 65.38 2.9 58.1TOTAL-AVERAGE 3.65 72.93 3.45 69Scale- 1=Not at all, 2=Minimal, 3=Moderate, 4= Large, 5= very Large[ 12 ] Rai Management Journal

Table -4: Perception of employees regarding ‘Role of Trainer’ in the ‘SBI’ROLE OF TRAINERMANAGERIAL Non-ManagerialItem Nos Items M-S %M-S M-S %M-S1.2.3.4.5.6.Trainer specifies the goals oftraining at the beginning ofeach training session.Trainees are taught how toidentify mistakes they commit/made.Trainer taught trainees howto check their own work tomake sure that things goright.The Trainer gave trainees alot of different problems towork on.The Trainer motivated thetrainees about the need topractice if they had to keeptheir skills at a high level.During training the trainerskept making use of new skillsand ways to deal with differentproblems.3.833 76.66 3.652 73.043.643 72.86 3.804 76.083.762 75.24 3.859 77.183.286 65.72 3.446 68.923.762 75.24 3.5 703.595 71.9 3.674 73.487.During training you are providedopportunities to practicewhatever you learnt.3.31 66.2 3.272 65.44TOTAL-AVERAGE 3.599 71.97 3.601 72.02Scale- 1=Not at all, 2=Minimal, 3=Moderate, 4= Large, 5= very LargeDecember 2010 Vol. 7, Issue 2[ 13 ]

Table -5: Perception of employees regarding the ‘Training Environment &Facilities in the ‘J&K Bank’‘Training Environment & Facilities Managerial Non-ManagerialItem Nos Items M-S %M-S M-S %M-S1.The environment that youwere trained in was verysimilar to the location youwork in.2.223 44.46 2.474 49.482. Audio-visual facility 3.554 71.08 3.756 75.123. Adequacy of space 3.977 79.54 3.837 76.744. Cleanliness 4.057 81.14 4.185 83.75. Refreshments 3.909 78.18 3.83 76.66. Transport facility 2.909 58.18 2.222 44.447. Proper ventilation 3.84 76.8 3.778 75.568. Seating arrangement 3.909 78.18 3.881 77.629. Lighting 4.034 80.68 3.956 79.1210. Heating 3.811 76.22 3.622 72.4411. Canteen facility 3.674 73.48 3.541 70.8212. Library facility 3.32 66.4 2.763 55.2613. Availability of short breaks 3.766 75.32 3.6 7214. Attitude of the staff 4.171 83.42 4.356 87.1215.Location of the trainingplace3.897 77.94 3.896 77.92TOTAL-AVERAGE 3.67 73.401 3.58 71.596Scale- 1=Not at all, 2=Minimal, 3=Moderate, 4= Large, 5= very Large[ 14 ] Rai Management Journal

Table -7: Perception of employees regarding the ‘Training Environment &Facilities in the ‘J&K Bank’‘Training Environment & Facilities Managerial Non-ManagerialItem Nos Items M-S %M-S M-S %M-S1.Induction method/Orientation.3.333 66.66 3.315 66.32. Job rotation 3.119 62.38 3.011 60.223. Lecture 3.548 70.96 2.815 56.34. Group Discussion 3.071 61.42 2.457 49.145. Role playing 2.976 59.52 2.315 46.36. Case study 3.024 60.48 2.587 51.747. Computer software 3.31 66.2 3.565 71.38.Computer based selfinstruction3.286 65.72 3.207 64.149. Simulation 2.762 55.24 2.641 52.8210. Conferences 2.524 50.48 2.652 53.0411. Seminars 2.714 54.28 2.663 53.26TOTAL AVERAGE 3.061 3.061 2.839 56.78Scale- 1=Not at all, 2=Minimal, 3=Moderate, 4= Large, 5= very Large[ 16 ] Rai Management Journal

Table -8: Perception of employees regarding ‘Training Methods’ in the ‘SBI’’‘Training Environment & Facilities Managerial Non-ManagerialItem Nos Items M-S %M-S M-S %M-S1.Induction method/Orientation3.463 69.26 3.4 682. Job rotation 3.246 64.92 2.785 55.73. Lecture 2.994 59.88 3.148 62.964. Group Discussion 2.509 50.18 2.674 53.485. Role playing 2.4 48 2.593 51.866. Case study 2.571 51.42 2.541 50.827. Computer software 3.08 61.6 2.963 59.268.Computer based selfinstruction2.806 56.12 2.741 54.829. Simulation 2.28 45.6 2.215 44.310. Conferences 2.149 42.98 2.193 43.8611. Seminars 2.171 43.42 2.096 41.92TOTAL AVERAGE 2.697 53.944 2.668 53.362Scale- 1=Not at all, 2=Minimal, 3=Moderate, 4= Large, 5= very LargeDecember 2010 Vol. 7, Issue 2[ 17 ]

Table -9: Perceptional variation between and within the employees of thesample organisationsCOM-PARISONSM-SCORESS.DM-SCORESS.DMEANDIFFE.T-VALUEP-VALUEWithin J& KBankManagersJKB-3.3090.457Non-ManagersJKB-3.2660.409 0.042 0.14 0.897**WithinSBIBankManagers-3.3990.413Non-Managers-3.28304030.116 0.40 0.703**BetweenManagersManager-3.309s0.458 Managers-3.3990.413 -0.0090 -0.29 0.783**BetweenNon-ManagersNon-Managers-3.2670.409Non-Managers-3.2830.403 -0.016 -0.05 0.958**** P-Value > 0.05 = Insignificant* P-Value < 0.05 = Significant[ 18 ] Rai Management Journal

Reference• Bhatia, S.K (1989). “Challenges in HumanResource Development”.The ManagementReview iii (1989).• Bremmer, B. (1998, Nov.30). “Japan-Special Report: Wanted-A new economicmodel”. Business Week, 62-63, 66, 71.• Caroll, Paine and Nancovich (1972). “TheRelativeness of training methods-expertsopinion and research”. PersonnelPsychology, Vol.25(1), pp12-25• Rothwell, & Kazans, H. (1994). “Planningand managing human resources: Strategicplanning for personnel management”(rev.ed)-• Sodhi, J.S (1999). “Industrial Relations andHuman Resources Management inTransition “, Indian Journal of IndustrialRelations,• Wexley, K.N. and Latham, G.P. (2000).“Developing and Training HumanResources in Organisations”. Vol.3,Englewood Cli.s, NJ:Prentice-Hall.• Cascio, W.F. (1995). “Managing HumanResources –productivity, quality of workLife, profits”. 4th Edition. New York:McGraw-Hill• Fisher, C.D., Schienfeldt, L.F, &Shaw, J.B.(1999). Human Resource Management,Boston: Houghton Mufflin Company, P.389.• Harrison, R. (1993). “Human ResourceManagement: Issues and Strategies”.Addison-Wesley.• Human Technology, Inc. (1993).“Department of justice training anddevelopment project task 3 report: trainingand development framework anddescriptions of best practices”. Humantechnology, Inc.: McLean, VA.• Khan Parveen (2001). “Training Employeesfor total quality”. IJTD, Vol. XXXI, No. 2,April-June 2001.• Kunder Holder Linda (1998). “Employeesperception of the Status and Effectiveness ofthe Training and Development system andthe Value of Training and Development”.Virginia Polytechnic Institute and StateUniversity.• Lajuria Kumar B A (2002). “ManagementAnd Training” Sundaysupplement ofGreater Kashmir, Oct. 13, 2002.• Morita, Akio (1987). “Made in Japan.”.London: Harper Collins Publishers• Noceraz, J. (1996). “Living with Layoff”.Fortune, 6(133):69-71.• Noe, R.A (1998). “Employee Training andDevelopment.” Boston: Irwin, McGraw-Hill.June 2010 Vol. 7 Issue 2[ 19 ]

Glamour, Glitz and Promotion –Celebrities and The Adworld.Sumana Shome*It will be quite interesting to note that as time passed, the notion of communicating to the target market(about a product) has considerably changed. The world of advertisement is nothing but a Dionysian fieldof unmatched creativity and imagination. The muse of the adman is found everywhere - From glamorousBollywood celebrities to serial artistes, from sportsmen to local stars – The buck does not stop there – Fromdesigner sets to designer costumes, et al, have captured the creative mind of the advertiser. The favourableand likeable qualities of a celebrity endorser are reflected in their promoted products. Moreover, becauseof their name and fame, it becomes easier for the adman to attract the audience, as well as it becomes easierfor the consumer to recall a brand endorsed by a celebrity. The paper tries to get into the nuances ofcelebrity endorsements and their effectiveness in endorsing a particular product. It delves deep into thefactors concerning the psychology of the consumer, particularly concerning the gamut of celebritypromotions.Key Words : Celebrities, Brand, Promotion, Creativity, Endorsement.The mesmerizingcharisma, theoverwhelming glamour,the attractiveness, theunmatched grandeur,the magnanimity, theethereal appeal – Suchqualities have added upto the creation ofcelebrity endorsements.INTRODUCTION“Shah Rukh To Nahin, ParHandsome Koi Bhi Ban Sakta Hai”(TV Commercial) – There goes a linefrom a famous advertisement formen’s fairness creams – Emami ‘Fairand Handsome (Mardon WaaliStrong Cream)’ - endorsed by noneother than, Bollywood hottie, ShahRukh Khan. The mesmerizingcharisma, the overwhelmingglamour, the attractiveness, theunmatched grandeur, themagnanimity, the ethereal appeal –Such qualities have added up to thecreation of celebrity endorsements.Wherever you see, they are there.One of the greatest philosophers ofall ages, Aristotle had very rightlysaid – “Beauty is a greaterrecommendation than any letter ofintroduction.” – For this very reasonthe world of advertisement runsafter celebrity endorsements – Onecan find them promoting ‘n’ numberof products, with or without anysignificant need or benefit from thesame. Moreover, every product hasits image in the minds of theconsumers – He or she tries to usethat very brand which, he feels,would satisfy his own personality.The best-fit celebrity wouldeventually be a person with whomthe consumer would have a feeling of‘oneness’ – That is, he would be ableto identify his personality with the* Lecturer, Head Of The Department (Marketing), George College (Department Of Management Studies)Mollargate, Kolkata, India[ 20 ] Rai Management Journal

celebrity. Keeping these two things inmind, the process of creativity gets apush and the adman enmeshesvarious appeals, lucrative sets,designer costumes, the jingles tocompletely take over the consumer’ssenses. These celebrities are proven tobe successful in standing out from the‘noise’ and clutter of various otherpromoted products – They eventuallysucceed in the creation of an‘aspiration’, in the minds of theconsumers, to ‘acquire’ that productendorsed by his/her favouritecelebrity.The celebrities tread a multifacetedway out in endorsing innumerableproducts – From commercialcampaigns to advertisements meantfor the social welfare of the people –For instance, Amitabh Bachchancampaigning for polio awareness,Priyanka Chopra traversing the waytowards ‘going green’ by endorsing‘Greenathon’ and ‘Save The Girl Child’campaign, cricketers campaigning forpolio and DOTS, just to name a few.The emotional appeal used in socialcampaigns enhances the magnanimityof a celebrity in reaching out to thegrassroots for mass campaigns. Thisprovides a holistic view of celebrityendorsements and we tend to findthem anywhere and everywhere.The tide of Bollywood actresses andmodels had their first step in theworld of brand endorsements duringthe 1930’s with Lux Soap – The firstIndian lady to create history wasLeela Chitnis. But now, from JuhiChawla to Aishwarya Rai Bachchanand from Priyanka Chopra to KatrinaKaif, all have found their place in theLux Soap advertisements. Of late, themen have also joined the bandwagon –Shahrukh Khan and AbhishekBachchan are endorsing Lux Soap.Our ‘Men In Blue’ from Team Indiaare not far away from endorsingfamous brands – both national as wellas international. To name the two bignames in our team –• Sourav Ganguly – Brandambassador of Puma, ChiragComputers, Hero Honda, TCL,Tata Indicom, etc.• Sachin Tendulkar – Brandambassador of Pepsi, Adidas,MRF, Sunfeast, Canon, Boost, etc.Not everyone, but, TV serial artists,like Smriti Irani (of ‘Kyunki Ki SaasBhi Kabhi Bahu Thi’ fame), haveacquired a great fan following owingto their cognitive connectivity withour Hindu griha badhu. How can oneforget about the politicalendorsements by our celebrities? Thispsychological interaction between theaudience and the celebrity is verycarefully moderated by the admaker,because any crests and troughs in therole model’s personal life woulddefinitely affect such a psychologicaldialogue, thereby disturbing the wholeaffair.OBJECTIVEThere exists a pinch of difference, orrather a very thin line of demarcationbetween a brand ambassador and abrand face –• Brand Ambassador – The BrandAmbassador is an integral andvital part of the brand identity,who actually helps in connectingThe emotionalappeal used in socialcampaigns enhancesthe magnanimity ofa celebrity inreaching out to thegrassroots for masscampaigns.December 2010 Vol. 7, Issue 2[ 21 ]

as well as interacting with thetarget audience psychologicallyand emotionally, thereby cuttingacross every barrier. He or shewould be supporting andpromoting the brand all the time,be involved in pressconferences/releases, and wouldparticipate, quite actively, withanything related to the brand.Needless to say, a brandambassador walks and talks thebrand with him.• Brand Face – A Brand Face isone who just appears in anycommercial to enhance recall ofany particular brand. He or shewould not be associated with anyother nuances related with thebrand. They used as tools forbrand recall.A study carried out by AdEx India (adivision of TAM Media Research)shows that there has been anincreasing growth in celebrityendorsements since 2003 – In 2007,the filmstars walked away with awhooping 81% share of them all, andwith Shah Rukh Khan topping the listwith the maximum number ofadvertisers. There has been about49% growth in 2007 in the field ofcelebrity endorsements. In 2009,cricketer-captain M.S. Dhoni had themaximum number of advertisements.But, the Bollywood biggies had themaximum share of celebrityendorsement, of 80%. The figuresbelow would reflect the status ofcelebrity endorsements –Figure I[ 22 ] Rai Management Journal

Figure IIFigure IIIDecember 2010 Vol. 7, Issue 2[ 23 ]

Figure IVThe lucrative figures in the graphsreflect the overwhelming responsesthat celebrity endorsers enjoy. Thesecelebrities may very well walk awaywith élan, but, when it comes torescuing the sinking ship, the captainmay think of various otheralternatives. Two of the greatestadvertisement campaigns that havecreated history in the field ofcreativity and imagination are –• Surf Advertisement in themid-80’s – The period when Surf(the leader in detergent washingpowder) faced stiff competitionfrom the ‘then’ introduction ofNirma washing powder – A timewhen Surf was priced at Rs. 21/-and Nirma at Rs. 7/-, even theloyal customers of Surf wereswitching their brands to Nirma.Nirma’s iconic figure of a little girlswirling around appealed to themasses and triggered salesleaving behind Surf – Nirmaalmost won over the market bysheer price value. It was then thatSurf had to re-think and reformulatea strategy to bypassNirma – Then came the icon, veryfamously known as ‘Lalitaji’(played by TV artiste KavitaChoudhary) – A character whoactually appealed to the massesby her famous line – “Surf kikharidari mein hi samajhdarihai”.[ 24 ] Rai Management Journal

• The Pepsi Campaign after theIndian cricket team’s debacleat the World Cup, 2007 –PepsiCo had suffered huge lossesafter the dismal performance bythe Indian cricket team in the2007 World Cup. The cricket teamendorsed Pepsi before the WorldCup, and eventually it was a hugehit. But, after the poorperformance, the audience lostfaith in their role-models and as aresult PepsiCo was the worst hit.One of the reasons of usingcelebrities to promote a brand isthe attribute of ‘trustworthiness’.‘Celebrities’ are celebritiesbecause of their performances intheir subjective fields. If the baseof performance becomes ‘poor’,then such celebrities lose theirposition in the minds of theaudience – The ‘trust’ due to whichthey can psychologically interactwith the audience gets a blow. AsAlyque Padamsee (Indianadvertising analyst) had pointedout –“If this goes on and we keep losing,then I tell you all cricketers will be offthe clients' list. They'll say 'No I don'twant any cricketers, you can never tellif their form is up, their form is down.”Then came the advertisement thatfeatured an old tailor and a bunch ofkids. The theme remained intact (ofwinning the World Cup), but thepunch from the kids ran thus – “ChaarSaal Baad, Agla World Cup HumLayenge”. The emotional appeal thatfollowed the campaign was moreacceptable to the masses, because itstruck the right chord of ‘optimism’and ‘learning from defeat’ – With thisthe advertisement campaign of PepsiGold became bigger than the religionof cricket itself in India.There are perhaps many suchevidences which bespeak thatcelebrity endorsements may not bealways effective in communicatingand developing a relationship with thetarget audience. The choice of acelebrity to promote a brand is ofutmost importance – That requiresquite a lot of research work. Justchoosing any celebrity (without properstudy) to promote any brand mayprove to be ineffective. The paper triesto find the choice of celebrity, amongstconsumers, their awareness quotientand their likeability as a celebrityendorser.METHODOLOGYSince the paper seeks to find outconsumer perception about celebrityendorsements, an effort has beenmade to interact with them.• A sample size of 100 respondentshas been taken into concern –Aged from18-50 years. Both malePepsiCo hadsuffered huge lossesafter the dismalperformance by theIndian cricket teamin the 2007 WorldCup.December 2010 Vol. 7, Issue 2[ 25 ]

and female respondents havebeen considered.• Data has been collected with thehelp of personal interviews, mallinterceptions and informaldialogues.• The research instrument is astructured questionnairedesigned to understand theconsumer perceptions.• The Q-Rating technique has beenapplied to study consumerfavourites among 20 celebrityendorsers. The Q-Ratingtechnique is used to measure thefamiliarity of a celebrity, brand,and company or could betelevision show also. The formulato measure the Q score of acelebrity would be –% OF RESPONDENTSINDICATING ‘ONE OF MYFAVOURITE’% OF RESPONDENTSINDICATING FAMILIARITY• First the percentage of familiarityhas been found out – Thepercentage of people who have atleast heard about the celebrity.• In the Second step, thepercentage indicating ‘One of myFavourites’ has been found out –It is the absolute measureregarding the popularity of acelebrity, be it a sportsman or anactor.• Finally, the celebrities are rankedas per their Q-score.[ 26 ] Rai Management Journal

Table showing PERCENTAGE OF FAMILIARITYAmongst 100 respondents about 20 celebritiesNAME FAMILIARITY % FAMILIARITYShah Rukh Khan 100 100%Amir Khan 100 100%Amitabh Bachchan 100 100%Sachin Tendulkar 100 100%Aishwarya Rai Bachchan 100 100%Sourav Ganguly 100 100%M.S. Dhoni 100 100%Irfan Pathan 98 98%Priyanka Chopra 97 97%Abhishek Bachchan 100 100%Preity Zinta 94 94%Kareena Kapoor 98 98%Katrina Kaif 100 100%Yuvraj Singh 100 !00%Rahul Dravid 100 100%Deepika Padukone 97 97%Ranbir Kapoor 99 99%Sushmita Sen 100 100%Ishant Sharma 98 98%Virendra Sehwag 99 99%December 2010 Vol. 7, Issue 2[ 27 ]

Table showing PERCENTAGE OF FAVOURITESAmongst 100 respondents about 20 celebritiesNAME FAVOURITE % FAVOURITEShah Rukh Khan 56 56%Amir Khan 60 60%Amitabh Bachchan 54 54%Sachin Tendulkar 55 55%Aishwarya Rai Bachchan 36 36%Sourav Ganguly 66 66%M.S. Dhoni 34 34%Irfan Pathan 20 20.41%Priyanka Chopra 45 46.4%Abhishek Bachchan 30 30%Preity Zinta 26 27.66%Kareena Kapoor 22 22.45%Katrina Kaif 62 62%Yuvraj Singh 33 33%Rahul Dravid 28 28%Deepika Padukone 41 42.27%Ranbir Kapoor 61 61.61%Sushmita Sen 38 38%Ishant Sharma 21 21.43%Virendra Sehwag 27 27.27%[ 28 ] Rai Management Journal

NAMETable showing PERCENTAGE OF Q-SCORE and RANKINGAmongst 100 respondents about 20 celebrities%FAMILIARITY%FAVOURITES%Q-SCORE RANKINGShah Rukh Khan 100% 56% 56% 5Amir Khan 100% 60% 60% 4Amitabh Bachchan 100% 54% 54% 7Sachin Tendulkar 100% 55% 55% 6Aishwarya RaiBachchan100% 36% 36% 11Sourav Ganguly 100% 66% 66% 1M.S. Dhoni 100% 34% 34% 12Irfan Pathan 98% 20.41% 20.83% 20Priyanka Chopra 97% 46.4% 47.84% 8AbhishekBachchan100% 30% 30% 14Preity Zinta 94% 27.66% 29.43% 15Kareena Kapoor 98% 22.45% 22.91% 18Katrina Kaif 100% 62% 62% 2Yuvraj Singh 100% 33% 33% 13Rahul Dravid 100% 28% 28% 16Deepika Padukone 97% 42.27% 43.58% 9Ranbir Kapoor 99% 61.61% 62.23% 3Sushmita Sen 100% 38% 38% 10Ishant Sharma 98% 21.43% 21.87% 19Virendra Sehwag 99% 27.27% 27.54% 17June 2010 Vol. 7 Issue 1[ 29 ]

ANALYSIS• Kolkata’s Maharaja, or veryfavouritely known as ‘Dada’,Sourav Ganguly stands tallamongst these 20 celebrities, with66% Q-score. Perhaps the GregChapel episode has helped him alot.• The charismatic beauty ofKatrina Kaif has won over ShahRukh Khan’s magnanimity andhas appealed to both the malesand females – Audience has givenher 62%.• The youngsters are all for RanbirKapoor, putting him in the thirdposition (62.23%) amongst wellknown 20 star celebrities.• Amir Khan and Shah Rukh Khanhave the fourth and the fifthpositions respectively, with 60%and 56% in their kitty. They haveyet managed a position within thefirst ten slots – People love toview them again and again.• The stars of all times, SachinTendulkar and AmitabhBachchan (55%, 54% respectively)are on the sixth and seventhpositions – Needless to say, withfamiliarity of 100%, such rankingwould eventually not affect theirstardom and they will continue toget offers.• Priyanka Chopra and DeepikaPadukone rank eighth and ninthrespectively (47.84%, 43.58%respectively) – Perhaps peoplewould love them more in films.• Interestingly, both thesupermodels, Sushmita Sen andAishwarya Rai Bachchan are atclose calls to each other (just astheir beauty pageant contest)with 38% and 36% respectively, atthe tenth and eleventh positions.• The Team India captain and vicecaptain,M.S. Dhoni and YuvrajSingh are at positions twelfth andthirteenth, with 34% and 33%respectively – To climb up at thefirst three spots, the Indian teamhas perform well to establish andposition themselves in the mindsof the people – They have toregain their trustworthiness.• Star son of Amitabh Bachchan,Abhishek Bachchan and PreityZinta have the Q-rating of 30%and 29.43% respectively. The LirilGirl’s IPL team ‘Kings XI Punjab’did not perform well – As a matterof fact the quotient of beingfavorable to consumers has notclicked. Moreover, perhaps, itwould take a long time forAbhishek as well as the targetaudience to come out of that littlechip of being the ‘son of AmitabhBachchan’.• At the sixteenth and seventeenthranks we have Rahul Dravid(28%) and Virendra Sehwag(27.54%) respectively – The bestway for these two celebrities tocommunicate to the consumerswould be by social campaigns –We all may be familiar with thembut, the youth brigade on the fieldare more popular now.• Kareena Kapoor, Ishant Sharma[ 30 ] Rai Management Journal

and Irfan Pathan have beenranked at the eighteenth,nineteenth and twentiethpositions respectively. The sizezero girl may be popular but rankslow on the favourite list with22.91%. The next World Cup mustbe worth the wait for these twoplayers to rise at the top of the list– Respondents, though familiarwith their names, have rankedthem with 21.87% and 20.83%respectively - Perhaps we wouldlove to see them perform well firstin their respective fields.LIMITATIONS AND CON-STRAINTS• The research has been carried outand was strictly limited amongst100 respondents.• The area where the research hasbeen done was limited to the Southof Kolkata.• The thin line of demarcationbetween the meanings of ‘beingfamiliar with’ and ‘favourite’ wasunknown to most of therespondents.• The essence of being a celebrityand maintaining celebrity statusis ephemeral – It changes withtime.CONCLUSIONThe world of advertisement is filledwith plethora of ideas, imaginationand creativity. Every moment newideas are created so as to appeal to theconsumer – The consumer must bemade to ‘look into’ the essence ofadvertising a product. Celebrityendorsements are the talk of the day,as because each brand wants tooutshine the other and position itselfin the minds of the consumers. Thebattle of the brands is very closelylinked to the battle of the stars, or thecelebrities promoting them. Twocompeting brands would never havethe same celebrity for endorsement –Though, if thought of as a ‘Team’,Team India does campaign. It does notrequire saying how well a celebritypromotes a product – Rather, it wouldbe important to find out how well isthe celebrity positioned in the minds ofthe consumer or target audience due totheir performances in their relativefields of work. Sachin Tendulkar isstill crowded with offers for brandendorsement – only because of the factthat despite lows in his career, he hasproved himself, by his performance, tobe the best cricketer of the world.Only such efforts can send positivevibes and help create a trustworthypicture in the minds of the consumer.At times one may tend to forget thatcelebrities are created by the masses –The acceptance level must be highenough so as to communicate with theaudience. Only therein lies the essenceof being a celebrity, because oneshould not forget that consumers arewell-informed and educated – It woulddefinitely be difficult to make falsepromises to today’s educated andjudgemental consumers.One should notforget thatconsumers are wellinformedandeducated – It woulddefinitely be difficultto make falsepromises to today’seducated andjudgementalconsumers.December 2010 Vol. 7, Issue 2[ 31 ]

SAMPLE Q – RATING TABLETO BE FILLED BY RESPONDENTSQ. 1) Have you heard of the celebrity/ Are you familiar with this celebrity?Q. 2) Tick any one – Rate them :a) One of my Favourites (b) Very Good (c) Good (d) Fair (e) PoorNAMEQ.1 –Have youHeard?Yes/NoOne of myfavouritesVeryGood Fair PoorGoodShah Rukh KhanAmir KhanAmitabh BachchanSachin TendulkarAishwarya Rai BachchanSourav GangulyM.S. DhoniIrfan PathanPriyanka ChopraAbhishek BachchanPreity ZintaKareena KapoorKatrina KaifYuvraj SinghRahul DravidDeepika PadukoneRanbir KapoorSushmita SenIshant SharmaVirendra Sehwag[ 32 ] Rai Management Journal

REFERENCESBOOKS –• Cloe, E. Kenneth; Baack, Donald, IntegratedAdvertising, Promotion, and MarketingCommunications, Pearson Prentice Hall,2007.• Shah, Kruti; D’ Souza, Alan, Advertisingand Promotions: An IMC Perspective, TataMcGrawHill, 2009.• Belch, E. George; Belch, A. Michael,Advertising and Promotion: An IntegratedMarketing Communications Perspective,Tata McGrawHill, 2003.• Kotler, Philip, Marketing Management,Prentice Hall, 2003.• Hawkins, I. Del; Best, J. Roger; Coney, A.Kenneth; Mookerjee, Amit, ConsumerBehaviour: Building Marketing Strategy,Tata McGrawHill, 2004.WEBSITES –• http://www.bdnews24.com/details.php?id=57522&cid=26• http://www.indianexpress.com/oldStory/41124/• http://en.wikipedia.org/wiki/Q_Score• http://www.indiantelevision.com/tamadex/y2k8/sep/tam38.phpDecember 2010 Vol. 7, Issue 2[ 33 ]

Human Resource Management in IndianIndustries: Motivating Businesses toSustain Economic Development intothe FutureIn addition to the financial and physical resources an organisation has, it also needs an efficientlyfunctioning human work force. Motivational practices play a very important role in the development ofemployees and their efficiency in working, thus affecting the organisation as a whole. Furthermore,comprehensible perceptions of employees’ motivational needs are very hard to derive in a quickly evolvingeconomy such as in India. This is an area where understanding of the processes at work is very limitedand thus this research provides an important addition to the existing body of knowledge. This paperexplores current motivational practices that are being employed by Indian organisations with the aim ofassessing their readiness for the future motivational requirements of employees. It also focuses onidentifying the attributes that might play a major role in the development of novel management practices.The research is based upon interviews and questionnaires conducted with managers from themanufacturing, service, construction, banking and finance sectors in India. The results were analysed toproduce a clearer perspective on present and possible future management practices. Proposals weredeveloped from the results to assist organisations who seek to keep themselves ready for the futuremotivational needs of their workforce. This work will be of value to a wide range of organisations in Indiaas well as those involved in the global economy beyond India. The proposals will assist managers tobecome aware of changing employee needs and help them identify factors needing to be considered in theformulation of motivational business practices that will carry them forward well into the future.Keywords: Financial and physical resources, management practices and motivation.Venkat Bakthavatchaalam*Andrew Fox**Motivational practicesplay a very importantrole in the developmentof employees and theirefficiency in working,thus affecting theorganisation as a whole.1.0 INTRODUCTIONGlobalisation has clearly created ahuge difference in the socio-economicconditions of India. It has changedthe face value of the organisationswith a huge downpour of money,technology and know-how into thenation, which has resulted in developmentacross all domains of industry.Sectors such as manufacturing,services, construction, banking andfinance etc. have all benefited froman increasing pool of locally producedgraduates and an abundanceof cheap, but highly skilled labour(Hulton, et.al. 1999, Sen et.al. 1997,Smith 2007). These changes haveenabled the formation of a number ofglobal organisations in India andone of the essential questions needingto be answered is, how sustainableare the current managementpractices in these dynamic companiesand what are the vital componentsneeded to keep Indian organi-*Department of Engineering,University of Plymouth, UK,**Department of Engineering, University of Plymouth, UK[ 34 ] Rai Management Journal

sations moving forward?In order to understand the issues to beaddressed, when seeking answers tothe questions posed above, this paperfocuses on the motivational practicesemployed by Indian organisations.Motivational practices are animportant element of any humanresource management system andhave their own well establishedliterature and some globally acceptedguiding principles, as defined by thetheories of Herzberg, Maslow, andMcClelland.There is little research available thatexplores motivational theories in thecontext of evolving economies, and theIndian economy in particular, so astudy of the Indian motivationalpractices, its organisational features,reasons for its development and itssustainability is much needed. Sincemost of the management practices usedin India seem to be borrowed fromforeign countries, the effectiveness ofsuch practices will be explored in thispaper and opinion gathered on theissue of developing future motivationalpractices based on an indigenous“Indian” management model.2.0 RECENT ORGANISA-TIONAL DEVELOPMENTSIN INDIAThe Post-Liberal developments inIndian organisations are complex andthe nation as a whole is undergoingmajor transformations to catch upwith the other developed economies ofthe world (Bhalla, 2002). Indianeconomic developments have beenpowered by changes andadvancements in the technical andDecember 2010 Vol. 7, Issue 2technological sides of theirorganisations, but futuredevelopments may hinge moresquarely on their ability to motivatean increasingly complex anddemanding workforce.In the 1990s, India opened itself to theglobal market by investment andtrade liberalisation policies, whichIndian industrial companies tookadvantage of to great effect. Forinstance, vehicle production in Indiarose by a 104.9% during the 1990s andthe Information and ComputingTechnology (ICT) sector grew by over50%, aiding in the development of anew pool of entrepreneurship andemployment (Humphrey et.al. 2003,Joseph et.al 2005). Thesedevelopments have been linked to avariety of factors such as the growthin importance played to science andtechnology related education, R&Dand financial based venture capital(Florian, 2004).The radical restructuring and thestrong performances shown by theautomotive and ICT industries haveattracted funds from major globalinvestors, providing enormousopportunities and encouraging a hugeexpansion of entrepreneurial activity(International Finance Corporation,2007). Indian ICT companies haveestablished a world leading standardin the provision of out-sourcedbusiness services, which has beenachieved almost entirely by local firms(Kumar, 2001). Since the 1990s,nearly half of the total growth seen bythe Indian economy can be attributedthe manufacturing and ICT sectors(International Finance Corporation,2007).The radicalrestructuring and thestrong performancesshown by theautomotive and ICTindustries haveattracted funds frommajor globalinvestors, providingenormousopportunities andencouraging a hugeexpansion ofentrepreneurialactivity.[ 35 ]

The pressing needfor Indianorganisations toenhance theirmotivationalpractices stems notjust from theadvanced businessmodels that they areusing, but also fromthe fact that theiremployees are gettingbetter educated, moredemanding andmore mobile.The above evidence, along with thestudies by Morris (2004), Kumar(2001) and others, does not onlyindicate the existence of vibrantorganisations, but portrays howsensitive the Indian companies are tofuture changes in the global economy.Therefore, true sustainability in sucha paradigm becomes more complexand more dynamic, especially in therapidly evolving Indian organisations(Newman 2005, Smith 2007).The pressing need for Indianorganisations to enhance theirmotivational practices stems not justfrom the advanced business modelsthat they are using, but also from thefact that their employees are gettingbetter educated, more demanding andmore mobile (Arora et.al. 2002,Census Data 2001, Florian 2004).Social changes are making theconventional motivational practicesless effective, hence it becomesessential to enhance motivationalpractices if the growth in productivityis to be sustained.It can be reasoned that the majorfactors underpinning Indian economicdevelopment as a whole are thegrowth of the Indian middle classes,the rising literacy rate amongst thegeneral population and the readyavailability of skilled and semi-skilledlabour. Indian companies have notachieved this development themselvesand the Government continues to playan important role, in policy making,the development of criticalinfrastructure, etc (Bhatnagar et.al.1997, McKinsey Quarterly Report2007, Press Information Bureau ofIndia 2008, Singh et.al. 2005). Whatthis review reveals is that, insustaining the recent trends ofgrowth, dynamism and development,the progress made in adapting themanagement systems of the Indianorganisations is an area that wouldbenefit from more illumination andscrutiny.2.1 Motivational theories inhuman resource managementA famous study by Katz and Kahn(1978) portrayed that, to performeffectively, employees within anorganisation have the followingbehavioural requirements.• People must not only be attractedto join a company, but also toremain in them.• Employees must perform the taskfor which they are hired, do it in adependable manner, but should beencouraged to think beyond thetask and to engage in creative,spontaneous and innovativebehaviour.To enact such a holistic motivationalpolicy, an organisation would need acomprehensive understanding of therole functions as well as a deepunderstanding of the motivationalneeds of the employee. Whereas therole function may be simple toanalyse, employee motivation remainsa complex phenomenon that affectsand is affected by a multitude offactors (O’Neil et.al. 1994). This isparticularly relevant in a rapidlyevolving and globally sensitiveeconomy, such as India, where themotivating factors of employeeschange and evolve equally rapidly(Bakthavatchaalam, 2008).[ 36 ] Rai Management Journal

When studying the essentials of anorganisation’s motivational system,some fundamentally acceptedprinciples are that any system shouldinclude needs assessment, behaviouralassessment, goals setting andfeedback mechanisms. There arenumerous models to explain how sucha system may be enacted, but theprinciples outlined by Maslow,Herzberg and McClelland underpinalmost all modern motivationaltheories.Maslow’s hierarchal theory: Maslow’stheory is one of the most famoustheories of motivation and has beenwidely adopted in a multitude oforganisations. He identified ahierarchical pattern in the factors orneed levels that tend to motivate anindividual. If one level is satisfied, itno longer motivates the individual andhe tends to move to the next level. Thefive essential platforms identified byMaslow (1943) are,The physiological needsSafety and security needsSocial needsEsteem needsSelf ActualisationHerzberg’s Motivation-Hygienetheory: Herzberg’s theory wasdeveloped in 1959 and was in contrastto the other prevalent models. Itsuggests that the factors that cause jobsatisfaction and dissatisfaction are incontrast to each other and are notuniscalar. Herzberg describedmotivating factors as “satisfiers” andhygiene factors as “dissatisfies”(Herzberg, 1968) The emphasis ofHerzberg’s theory is that the absenceof hygiene factors does not ensure jobsatisfaction and vice versa. In otherwords, dissatisfaction was a result ofthe absence of factors creatingsatisfaction. The motivation factorsinclude achievement, recognition, thework itself, responsibility,advancement and growth, whereas thehygiene factors are the companypolicy, supervision, relationship withboss, work conditions, salary andrelationship with peers (Herzberg1993). Herzberg (1968) alsodistinguished between motivation andmovement, challenging theestablished ideas about motivationand incentives. Herzberg consideredthat financial rewards create only amovement and was not the cause ofmotivation in the employees. Laterstudies by Jones et.al. (2005) foundthat factors with more intrinsicsatisfaction are more effective thanpure monetary incentives, reaffirmingHerzberg’s theory that when anorganisation is formulating its HRmotivational policies, it shouldconsider both the motivators and thehygiene factors appropriately.McClelland’s learned needs theory:The theory states that needs arelearned from previous experiences,events acquired from the environmentand culture. These learned needsinfluence the way an individualexpects to motivate and achieve hisgoal. Individuals with a particularneed behave differently from thosewho do not seek it. Most of these needscan be classified under three divisions(Cherrington, 1991).The motivationfactors includeachievement,recognition, the workitself, responsibility,advancement andgrowth, whereas thehygiene factors arethe company policy,supervision,relationship withboss, workconditions, salaryand relationshipwith peers.December 2010 Vol. 7, Issue 2[ 37 ]

The need for achievement:The need for affiliation:The need for power:Having looked at few of the renownedtheories of motivation, there is a needto understand the basics of howIndian organisations may haveapplied the principles included inthese theories. What follows is anoutline of a study conducted in 2008with exactly that aim.3.0 METHODOLOGYThe results for this paper are drawnfrom a questionnaire survey involving40 managers from variousorganisations in three differentcategories of organisation, namelymanufacturing organisations, servicesector organisations, andorganisations from other sectors. Theother organisations comprisedbanking, finance and constructionoriented organisations.The research used a mixed methodapproach, involving interviewing anda questionnaire survey (May2001,Oppenheim 1992). Data collection wasdone in three phases. Initially, pilotinterviews with managers from acrossall three sectors facilitated a basicunderstanding of the domain to bedeveloped. Issues identified from thepilot study were used to formulate abroader, largely quantitative,questionnaire survey that sought togather specific data on existingpractices. Finally, the survey resultswere explored in more depth throughqualitative, semi-structuredinterviews to explore the attitudesand perceptions of managers, inIndian organisations, to the futureneeds of motivational systems.The target population comprised of arandom sample of managers fromacross the nation. The sampleincluded small, medium and largeorganizations, newly established andlong established organisations, localand foreign owned organizations.Questionnaires were emailed to thetarget organisations and the responserate was 56%, showing a good level ofinterest in the research and a desireamongst participants to understandand improve current managementpractices.The major limitation for this researchis the limited population size, whichwas not sufficiently large to develop aholistic picture relevant to the wholeIndian economy, but lessons learnedare thought to be applicable to a widecross-section of industries andorganisations.4.0 RESULTSThe research sought to discover theimportance given by the organisationstowards motivational practices. Fig. 1illustrates a significant finding,namely that although only a smallproportion thought that motivationtheory was not important, 100% ofthose that ranked it as not importantcame from the service sector. The restof the sectors were fairly evenly splitin relation to whether motivationalpractices were highly or moderatelyimportant, manufacturers seem torate the practices most highly.[ 38 ] Rai Management Journal

The effectiveness of the currentmotivational practices in thevarious organisations was alsoquestioned and revealed that mostorganisations considered theirmotivational practices to bemoderately effective. The results alsoshowed that the manufacturing andservices organizations had a muchbetter view of their motivationalpractices in comparison to the othersectors. The others sectors only rankedtheir motivational practices asmoderately effective (see Fig 2).Fig.1: Importance of Motivation Theories in the OrganisationFig.2: Effectiveness of Motivation Practices(results expressed as % of responses)December 2010 Vol. 7, Issue 2[ 39 ]

The research was interested to knowhow organisations viewed employeeneeds in relation to a hierarchyscale as defined by Maslow. Themost highly ranked need was social,which came top of the poll formanufacturing and service sectorsand second for other sectors. Thesecond most important need wasesteem, but there was no realconsensus on this and each sectorrated it differently. Interestingly thesafety need was ranked third overall,but manufacturing rated this muchlower than the service and othersectors. There seemed to be generalagreement that self actualisationneeds ranked fourth and physiologicalneeds ranked fifth in terms ofimportance (see Table 1 for details).To further analyse the pattern shownfrom the employee needs question,respondents were asked to rank theimportance of a number ofmotivational factors. Whilstrespondents listed a range of “other”factors as important, the resultsrevealed a general trend towardsregarding company policies and jobsecurity to be most important. Withinthe mid-scale responses, the threesectors revealed importantdistinctions. Manufacturing ratedgood conditions of work as high. Incontrast the service sector ratedpromotion and growth prospects ashigh and finally the other sectorsrated freedom at work as high (see Fig3).Needs of Employees in the OrganisationScoresNeedsManufacturing Service OthersMin Max RangeAvg.Avg.Avg.Score Min Max Range Score Min Max Range ScorePhysiologicalneeds3 2 1 2 5 1 4 2.7 1 5 4 3Safety needs 1 4 3 2.4 1 5 4 3.4 3 5 2 4Social Needs 1 5 4 3.8 1 5 4 3.7 1 5 1 4Esteem needs 1 5 4 3.6 1 4 3 2.9 2 5 3 4.5SelfActualisation1 5 4 3.2 1 5 4 2.7 2 5 3 3.5Table 1: Needs of Employees in the Organisation (In Scores)[ 40 ] Rai Management Journal

Fig.3: Ranking of Motivational Factors in the OrganisationsAn important question for thisresearch focussed on the perceptionorganisations had of thesustainability of the currentmotivational practices. It isinteresting to see that all sectors werein general agreement on this point,with 60% perceiving current practicesas sustainable and well suited forfuture applications (Fig 4).Fig.4: Perception of the sustainability of current motivational practicesDecember 2010 Vol. 7, Issue 2[ 41 ]

A further question asked if themotivational techniques used atpresent will need to be modifiedto keep up with the pace ofdevelopment in the Indianeconomy. The results revealed thaton an average, 89% of theorganisations agreed in a need formodification in the currentmotivational techniques (Fig 5). Thisresult provided an interestingcontrast to the answer to the previousquestion and highlighted something ofa contradiction in the thinking ofmanagers within the organisationssampled.A final point for this research, and oneof most importance regarding theconclusions to be drawn by the paper,related to the question of shouldIndia develop its ownmotivational techniques orshould it still keep borrowingfrom foreign cultures. The responseto this question was mixed, asillustrated in Fig 6.Fig. 5: Need for Changes in Motivational Techniques according to theOrganisations (in %).Fig. 5: Domestic or borrowed practices (results displayed as % of responses)[ 42 ] Rai Management Journal

It seems clear thatIndian organisationswould benefit bydevoting resources tothe developmentindigenousmotivationalpractices, best suitedto the cultural andsocio-economic needsof their employees,rather than relyingupon borrowedpractices.and less of what the managementperceives to be important. One of thesignificant findings of the research isto have traced the locus of theemployee needs and that of theorganisational practices. This wasdone by placing these two overMaslow’s pyramid. It was seen thatthe employee needs have shifted inspectrum from the physiological,safety needs to that of the social andesteem needs. Whereas theorganisations have failed to keep inphase with that of the evolvingemployee needs. The organisationsshould take careful consideration ofthese before formulating futuremotivational practices.This paper has also revealed a lack ofliterature related to the developmentof indigenous management practicesin Indian, but some of the reasons forthe absence of domestic technologieshave become clearer as a result of thisresearch. From the interviews theunwillingness of Indian managementto develop and utilise domestictechnologies was found to bespringing from a pre-conceived notionthat imported technologies are betterthan domestic technologies. Newdomestic technology being developedwould require adequate testing andknow-how and the effectiveness ofindigenous system could be obscurefor a long time. Imported technologiesmay not fit the organisation’srequirements completely, but areperceived as having been well testedand researched.Research by Gopalan (2005) andSmith (2005) has revealed thattechnologies, no matter howeffectively they are transferred, nevercompletely fit in another culture.Hence, it seems clear that Indianorganisations would benefit bydevoting resources to the developmentindigenous motivational practices,best suited to the cultural and socioeconomicneeds of their employees,rather than relying upon borrowedpractices. However, it is evident fromthis research that there is a definitecontrast between what current theoryis suggesting and what managersperceive to be the chief elements offuture practice. It is unclear at thisstage if the development of indigenousmanagement practice is sufferingbecause of the lack of knowledge of thetechnological development process, alack of confidence by managers toexplore new methods or simplybecause manages have not consideredthe possibility of developingindigenous practices.6.0 CONCLUSIONThis research sought to assess howmotivational practices are applied inIndian organisations and to drawlessons about how these practices maydevelop in the future. Certainpoints/issues were made clear by thisstudy, such as the various types ofmotivational requirements inaccordance to the position of theemployee, but the results alsorevealed that organisations in Indiaconsidered motivation practices to behighly important and the practicesare on average yield effective results.It was seen that the needs of theemployees and the importance givento motivational factors were quiteequally spread, but managersaccepted that the motivationaltechniques need to be altered in thefuture. The research literature[ 44 ] Rai Management Journal

predicts a major shift in theemployees’ motivational requirementsin the future and managers shouldtherefore carefully consider formingorganisational policies that encouragemotivational practices which wouldhelp the employees attain theirevolving motivational requirements. Itcan be clearly visualised that theorganisations are very sure of thedemand for new managementpractices, but they are less clear on thesource from where the futuremanagement practices might develop.Whilst some industries in India havedemonstrated a confidence to developindigenous management techniques, agreater proportion will continue to relyon management practices borrowedfrom foreign cultures.REFERENCES• Arora, A & Athreye, S. (2002) The softwareindustry and India’s economic development,Information Economics and Policy No.14,pp: 253–273• Bakthavatchaalam, V.P. (2008) Applicationsof Motivational Practices in EvolvingEconomies: A Case Study of IndianOrganisations, University of Plymouth, U.K;Unpublished Thesis• Bhalla, S.S. (2002) Imagine There's NoCountry: Poverty, Inequality and Growth inthe Era of Globalization, New York, USA,Institute for International Economicspublishers.• Bhatnagar, S.C. & Madon S. (1997) TheIndian software industry: moving towardsmaturity, Journal of InformationTechnology, Vol. 12, No. 4, pp. 277-288.• Census Data, ( 2001) Government of India.• Cherrington, D.J. (1991) Need theories ofMotivation, in Motivation and workbehaviour, ed, Steers.R.M. & Porter .l.W.,N.Jersy, USA: Mc.Graw Hill.• Florian, A. (2004) Culture, Innovation, andEconomic Development: The Case of theSouth Indian ICT Clusters, Innovation,learning, and Technological Dynamism ofDeveloping Countries, ed. Mani.S. &Romijn.H. United Nations university press.• Gopalan, S. & Stahl, A. (2005) Applicationsof American Management Theories andPractices to the Indian BusinessEnvironment: Understanding the Impact ofNational Culture, in Management in India:Trends and Transition ed. Davis. H.J.Chatterjee, S.R. & Heuer, M. SagePublishers• Haslam, S.A. ( 2000) Organizations: thesocial identity approach, London: Sage• Herzberg, F.I. (1993) The motivation towork, Transaction publishers, New Jersey,USA• Herzberg, F.I. (1968) One More Time: Howdo You Motivate Employees?, Best ofHarvard Reviews, pp: 87507-87514• Hulton, C.R. & Srinivasan, S. (1999) IndianManufacturing Industry – Elephant orTiger, New Evidence on the Asian Miracle,NBER Working Paper No. W7441, NationalBureau of Economic Research.• Humphrey, (2003) Globalisation and supplychain networks: the auto industry in Braziland India, Global networks, Vol. 3, Issue 2,pp 121-134• International Finance Corporation, (2007),Annual Report, cited at:http://www.ifc.org/ifcext/annualreport.nsf/AttachmentsByTitle/AR2007_English/$FILE/AR2007_English.pdf, Date cited:12.07.08• Joseph, K.J. Abraham, V. (2005) Moving upor Lagging behind?, An Index of TechnicalCompetence in India’s ICT Sector ed.Saith.A, VijayaBaskar.m, ICTs and IndianEconomic Development, London: Sage• Katz, D. & Kahn, R. L. (1978) The socialpsychology of organizations, New York:WileyDecember 2010 Vol. 7, Issue 2[ 45 ]

• Kumar, N. (2001) Soft Ware IndustryDevelopment: National and InternationalProspects, Economic and Political Weekly,36(44)• Maslow, A.H. (1943) A theory of HumanMotivation, Psychological review, Vol.50, pp370-396• • May, T. (2001) Social Research;Issues, methods and process, 3rd Ed,Maidenhead, Open University Press• Morris, (2004) The future of work:organizational and internationalperspectives, International Journal ofHuman Resource Management, Vol. 15, No2, pp. 263-275.• Newman L. (2005) Uncertainty, innovation,and dynamic sustainable developmentSustainability: Science, Practice & Policy1(2), pp: 25–31.• O’Neil, H.F. & Drillings, M. (1994)Motivation Theory and Research, NewJersey: Lawrence Erlbaum Publishers.• Oppenhein, A.N. (1992) QuestionnaireDesign, Interviewing and AttitudeMeasurement, New Ed, London,Continuum.• Press Information Bureau of India, (2008),Government of India,http://pib.nic.in/release/release.asp?relid=40476 , Cited on: 17. 07.2008.• Sen, A. & Dreze. J, (1997) Indiandevelopment, selected regional perspectives,New York: Oxford University press.• Singh, & Nirvikar, (2005) The Idea of SouthAsia and the Role of the Middle Class,SCCIE Working Paper No. 05-08.• Smith, D. (2007) The Dragon and TheElephant: China, India and the New WorldOrder, London: Profile Books Ltd.• Taylor, P. Bain, P. (2005) India Calling ToThe Far Away Towns, Journal of Work,Employment & Society, Vol. 19, No. 2, pp:261-282.• Tracking the growth of India’s middle class,(2007) McKinsey Quarterly Report,McKinsey Global Institute[ 46 ] Rai Management Journal

Restaurant Industry in Ghaziabad, IndiaGunjan Malhotra*The industrial sector of any State is the backbone of its progress and growth and the restaurants industryis not an exception. With the upcoming of the MNC in the restaurant industry in India a new kind ofcompetition has started both in Delhi and NCR region. In this paper an attempt has been made to see thenature and working of the restaurants industry in Ghaziabad. The paper only covers the suppliers viewpoints about this industry and what makes them to stay in the business. The different kinds of competitionthey are facing and what they think that their customer wants. While answering these issues we find thatbeing the NCR region people in Ghaziabad like travelling to Delhi on the weekends and thus therestaurants in Ghaziabad are not much developed or upto the standard as desired by the people. There aremany restaurants which opened in the last five years which are able to attract the customers simply byproviding and understanding the needs and desire of their respective customers. The study recommendsthat these restaurants should provide more promotional measures to their customers so as to attract themon the weekdays as well.Keywords: Restaurant industry, customer and business.I INTRODUCTIONThe opening of the Indian economy tothe outside world has encouragedmany multinational corporations toenter it’s economy in a big way. Thishas accelerated the pace of economicgrowth. These globalisation andprivatisation polices have broughtmajor changes in the consumptionpatterns of the citizens. There hasbeen an increase in demand forvarious products in the economy andthe earning capacities also changed.This led to the increase in thedisposable income of households.Moreover the considerable change hasbeen noticed in the lifestyles ofconsumers who are now willing to eatout more than ever before. The majorrestaurants players that entered the*Assistant Professor, Institute of Management Technology, IMT,Ghaziabad, IndiaIndian markets at that time wereMcDonalds, Pizza Hut, KFC etc toexploit the opportunities offered byeconomic boom and expandingmarkets. The existing Indianrestaurants like Nirula, Sagar Ratnaetc were giving competition toMcDonalds, Pizza Hut and KFC andare expanding at a fast pace.Restaurateurs are scrambling to opennew outlets, create cheerful, brightinteriors to build customers loyalty ina fiercely competitive market.Various studies have been conductedto analyse the trend of the restaurantsand the feasibility and likeability ofthe consumers to utilise the same. Theup gradation of the Indian states hasboosted the tourism industry whichfurther led to the opening up of manyThe opening of theIndian economy tothe outside worldhas encouragedmany multinationalcorporations to enterit’s economy in a bigway.December 2010 Vol. 7, Issue 2[ 47 ]

table 1. On an average, restaurantscovered in our study in Ghaziabad are5.38 years old. This indicates that twothirdof the restaurants are very newin the city.Cuisines servedThe information regarding differentcuisine served in these restaurantshave been studied. The respondentspreference of cuisines served areindicated in table 2. It is observed thatNorth Indian food is served the mostand the least served cuisine is SouthIndian. Around 32 restaurants in thecity prefer serving North Indian food,followed by Chinese cuisines. Therestaurant owners believe that theSouth Indian cuisine is not costeffective. According to the study thefuel consumption for its preparationrequires more time and at times ittakes whole day to prepare it andsecondly the limited amount of spaceof the restaurants restricts servingSouth Indian food.the growth of economy. It’s found thatonly 2.56% of the people above 45years of age or others prefer visitingthe restaurants in Ghaziabad.Time of maximum visit bycustomerTable 4 indicates the time when therestaurants experience maximum orlarge number of customer visits. It isclear from the table that 89.73% ofrestaurants experience maximumcustomer visits in the night. And thusthe restaurant are using somepromotional schemes like ghazalnights (champion restaurant) in thenight so as to provide the greatexperience to the customers and thusincrease their satisfaction level. Only2.56% of the customers visit during 11am - 1 pm which comprise of school orcollege going customers more. Thus ingeneral customers prefer to visitduring the evenings as they feel morerelaxed and there is no work pressurewith them.Age group of the customersThe profile of customers visiting therestaurants is shown in table 3. Thestudy of Ghaziabad restaurantsreveals that young families in the agegroup of 25yrs – 35 yrs frequently visitthese restaurants. Around 58.97% ofyoung families prefer visiting theseeating joints. This represents thatdata is consistent with thedemographic profile of the youngIndian. Moreover the disposableincome between 25-35 years of age isrising consistently. This gives themfreedom to spend the liquid money intheir hands and in turn contributes toSize of the restaurantsTable 5 indicates the size of therestaurants in Ghaziabad city. Thetable shows that nearly 41% of therestaurants are small in size whileonly 23% restaurants are large inarea.The restaurants in Ghaziabad weredivided in small, medium and largecategories based on the size or area ofthe restaurant. Most of therestaurants in the city provides onlyfood and thus are small in size. Most ofthese small restaurants are in thecommercial areas and thus due to highDecember 2010 Vol. 7, Issue 2[ 49 ]

cost of land and rents paid by them,they have a limited space which is oneof the reasons why the the number ofrestaurants in the city is small.Location of restaurants inGhaziabadTable 6 indicates restaurants situatedin different areas such as, malls orresidential area or traditional marketarea or on highways in Ghaziabadcity. The study reveals that nearly80% of the restaurants are incommercial areas which includemarket area and the malls. There arearound 7% restaurants on thehighways in the city. The restaurantsin the market areas include RDC (RajNagar district centre), AmbedkarRoad and Bajariya etc. Restaurants inthe Malls include Pacific Mall,Galaxie Mall, and MMX etc. Therestaurants in the Residential areasinclude Raj Nagar, Kavi Nagar,Shastri Nagar etc. Highwayrestaurants include Mohan Nagar &G.T. Road etc.Change in food preferencesof the customersThe restaurateurs are asked that ifthere is any change in consumer tasteor food preference of the customer inthe past five years. Around 80% ofrespondents feel that there is nochange in the food preference while20% of them feel that customers havestarted giving preferences for pizzas,burgers and continental food as well.The table 7 shows that most of therestaurateurs think that there is nochange in the taste or food preferenceof the customers. Most of theserestaurants are new as they openedwithin one year and thus alreadyaccommodated new food trends andfew which are old introduced fewchanges like Bikaner introduced“Salads” offering. Other changes areaccording to the seasonalrequirements (like Gajar ka Halwa).Thus consumer preference for thevariety of food served Ghaziabad cityhas changed over the study period.Impact of multinationalchain restaurantsThe distribution of the respondents onthe basis of impact of multinationalchain restaurant on their business isshown in table 8. The study revealsthat 79.47% of the local restaurateursin Ghaziabad feel that the entry ofmultinational chain restaurants hasnot resulted in reduction of theircustomers. The reason behind thisseems that the MNC mostly providesthe fast food offerings while most ofthe restaurants are not providing thesame and thus the impact is very less.They do not belong to the samecompetition spectrum with the MNCentering this city.Competitors advantageThe respondents were also askedabout the most prominent advantageof the competitors which has directimpact on their sales in the city. Theirresponse is shown in Table 9. About36% of the respondents feel that thecompetitor’s location has biggestinfluence on their business. As thecustomer choose the restaurant on theconvenience basis. Differentiation inthe services provide by the restaurant[ 50 ] Rai Management Journal

is also a major factor which effect theoverall market pull and thus most ofthe restaurant are concentrating onthese two segments. This is alsodepicted in pie-chart distribution ofthe factors as answered by therespondents.Change in the Concept ofrestaurants’ atmosphereThe concept of atmosphere/consumerentertainment in the changes broughtabout by the different restaurateursover the last five years is shown in thetable 10. The table reveals thatdifferent restaurateurs have notincorporated any changes in theatmosphere, according to respondentsas most of them are new so they didnot need to introduce any changes asper now. Where as, old restaurantowners have significantly changedtheir interior to accommodate thechanging taste and preference of thecustomers.Additional ServicesProvidedThe respondents were asked if theywere providing additional servicessuch as home delivery, catering,credit/visa cards, 52% of therespondents revealed that they areproviding additional services. Table 11indicates additional services providedaccording to the years ofcommencement of the restaurants inGhaziabad city. The table shows thatnearly all the restaurants are takingleeway on providing extra services tothe customers. The most preferred isthe hosting of the parties for whichthey book the section of the restaurantfor the event.Strategy for promotion ofrestaurantThe respondents were asked whichtype of promotion strategies they areusing to increase their sales. They aregiven various options including type ofmedia and other tactical promotionactivities like discounts etc. Thegeneral trend is to provide discountsby restaurants as peoples inGhaziabad are cost sensitive andespecially the student segment istargeted by this promotion strategy.Most of the restaurants in theCommercial complex like malls are notdoing the promotion as they arecounting on the promotion strategy ofthe malls as clear from the analysis(41.02%).IV FINDINGSIn order to find out the effect oflocation on the sales of the restaurantsduring weekends we have formulatedthe null hypothesis - the sale onweekends is dependent on the localityof the restaurant (table 13). We haveincorporated the distribution of theresponses for the same and aredepicted in table 14. We have analysedthe chi-square test in this situationand found that the calculated value ofchi-square χ2 test is 7.08. The tabularvalue χ2, chi-square is 7.815 at 0.5level of significance. Since thecalculated value is less than thetabular value so we accept our nullhypothesis and state that the sales onthe weekends in GhaziabadDecember 2010 Vol. 7, Issue 2[ 51 ]

Though MNCchain restaurantshave entered inmarkets ofGhaziabad buttheir impact on localrestaurant isnegligible because asthey are few innumbers to makeany tangible impact.restaurants are dependent on thelocation where the restaurant is setup.Another hypothesis formulated for thestudy is - the effect of MNCrestaurants on the sale of the localrestaurants is independent of the typeof the restaurant. The analysis of chisquaretest shows that the calculatedvalue of chi-square χ2 is 1.019. Thetabular value of χ2, chi-square is5.911 at 0.5 level of significance. Herethe calculated value is less than thetabular value so we accept our nullhypothesis. This means that the affectof MNC restaurants on the sale of thelocal restaurant is independent of thetype of the restaurant in the city.V. CONCLUSION &FUTURE WORKThe Ghaziabad restaurant industry isprimarily new and being a NCR areathere is not enough scope of therestaurants in this city of UP. BeingNCR region the effect of MNC on localrestaurants has been focused in Delhiand not because the cuisine providedby them is different. The competitionamong the restaurants of the region istotally different than Delhi. Althoughthe study has seen a visible growth inthe number of restaurants inGhaziabad, as the disposable incomeof the city has grown and spendingcapacity of the people have increased.North Indian food is amongst thefavourite cuisines in the menu of thepeople residing in this city. Snacksand Chinese cuisines are next inpreference. The study also shows thatbecause of the increase in the younggeneration (age group between 25-35years) in the city many fast food jointshave opened instead of restaurants.The most pleasing time to visitrestaurants or these fast food joints isthe evening times. There is no drasticchange in the appearances ofrestaurants, since most of therestaurants are new which alreadytake care of new trends. Therefore thepromotional strategies are not thatimportant even though few oldrestaurants have changed andupdated the interior of theirrestaurants. Sales of the restaurantare dependent on the location followedby services and price and thusrestaurant owners make theirdecisions keeping these factors inmind. Most of the restaurants inGhaziabad are offering discounts tothe female parties (kitty parties) asthe word of mouth marketing is verystrong and they spend a lot of time inthe restaurant and thus increase thesale of the restaurant.Though MNC chain restaurants haveentered in markets of Ghaziabad buttheir impact on local restaurant isnegligible because as they are few innumbers to make any tangible impact.Moreover with the change in lifestyleof the people, their willingness to eatout (or in restaurants) hassubstantially increased the marketsize in this city. This is also reflectedin the corresponding change in theatmosphere of the restaurants.Perhaps it would be incorrect to saythat in future also these MNCs willnot have any influence on thebusiness of the local restaurateurs. Asthe number will increase the impactmay become visible. It would beprudent for a local businessman todevise his marketing strategy after[ 52 ] Rai Management Journal

careful analysis of the market andsubsequent positioning of therestaurant. Marketer will need tobrace himself to prepare a suitablepromotion strategy that hitherto ismissing. As the MNC like McDonaldsinclude Indian cuisine items in theirmenu, the impact will be on the salesof local restaurants.The restaurants in Ghaziabad shouldadopt the extensive promotionalstrategy in order to compete with theMNC which are changing theirbusiness strategies to compete inIndian environment. They can go forthe contract basis employment as thedemand of services are not uniformthroughout the day and thus they cansave on the operating cost and thisamount can be used to increase theservices of the restaurant.Diversification in the restaurant is notvisible in Ghaziabad only fewchampions like, Bikaner are using it inorder to distinguish. So they can go forsome exclusive services to create aniche market segment. Ghaziabad isbecoming an education hub withthirteen engineering colleges and sixmanagement colleges. The restaurantstherefore don’t ignore this importantmarket segment as well. Althoughthey provide discount to students butlack in the atmosphere and foodpreference sought by the students. Therestaurants can organise food festivalslike to increase the general awarenessof customers, which they can do withthe help of two or more restaurantsand thus increase the overall marketand their share. This will increase theoverall spending on the food and willhelp the restaurants and otherassociated industries.VI. REFERENCES• Brooks, Steve; Brumback, Nancy; Mehegan,Sean (2005), Rethink those menus andpromotions because people have less moneyto spend, Restaurant Business, Dec2005, Vol.104 Issue 16, p17-17, 2/3p. .• Giannetto, David (2008), 7 Ways toStrengthen Your Business, RestaurantHospitality, Jul2008, Vol. 92 Issue 7, p18-18,1p.• CurtisDuffy, (2008), Menu Trends recipes.Restaurant Hospitality, Jul2008, Vol. 92Issue 7, p44-52, 6p.• Sanson, Michael (2006), Do You Have theAnswers Your Customers Seek?, RestaurantHospitality, Oct2006, Vol. 90 Issue 10, p8-8,1p.• Rowe, Megan (2006), Sustainability Beyondthe Plate., Restaurant Hospitality, Oct2006,Vol. 90 Issue 10, p20-21, 2p;• Bill Taylor, Gautam Sinha, Taposh (2006),Research Methodology: A Guide forResearchers in Management and SocialSciences, Prentice-Hall of India PrivateLimited, New Delhi.• Wordpress, 2006, http://waiterbell.wordpress.com/2006/01/31/enhanceconsumer-experiences-bytuning-in-to-tableservice-nations-restaurant-news-may-2005.Last accessed on January 31, 2008.• Medindia, 2006 http://www.medind.nic.in/jaq/t06/i6/jaqt06i6p479.pdf. Lastaccessed on February 2008.December 2010 Vol. 7, Issue 2[ 53 ]

VII TABLESTable 1: Distribution of sample respondents on the basis of years of operationYears of Operation No of Restaurants Percentage1-4 26 66.675-10 8 20.51>10 5 12.82Table 2: Distribution of sample respondents on the basis of cuisine servedCUISINESNo of RestaurantsChinese 27North Indian 32South Indian 13Continental 17Other snacks 21Table 3: Profile of the customers (based on the age group)Type of Customers No of Restaurants % of Restaurants15 yrs – 25 yrs 7 17.9425 yrs – 35 yrs 23 58.9735 yrs – 45 yrs 8 20.51Others 1 2.56Table 4: Time of visit by maximum customersTime of visit No of Restaurants % of Restaurant11 am – 1 pm 1 2.561 pm – 3 pm 3 7.697 pm – 9 pm 19 48.719 pm – 11 pm 16 41.02[ 54 ] Rai Management Journal

Table 5: Size of the restaurants in GhaziabadSize of the Restaurant No of Restaurants % of RestaurantSmall 16 41.02Medium 14 35.89Large 9 23.07Table 6: Location of the restaurants in GhaziabadLocation of restaurant No. of Restaurants % of RestaurantMarket Area 16 41.02Malls 15 38.46Residential Area 5 12.82Highways 3 7.69Table 7: Change in taste or food preference of the customResponses No of respondents % of respondentsCompletely Agree 1 2.56Agree 8 20.51Neutral 16 41.02Disagree 14 35.89Completely Disagree 0 0.0Table 8: Impact of multinational chain restaurants on local restaurants businessin GhaziabadResponses No of respondents % of respondentsCompletely Agree 1 2.56Agree 7 17.94Neutral 4 10.25Disagree 15 38.46Completely Disagree 12 30.76December 2010 Vol. 7, Issue 2[ 55 ]

Table 9: Impact of competitors advantage in restaurant business inGhaziabadFactors No. of respondents % of respondentsCompetitors Price 10 25.64Location 14 35.89Promotion Strategy 3 7.69Service 12 30.76Table 10: Changes in the environment of the restaurants in GhaziabadChanges in restaurant’senvironment/atmosphereNo of restaurants% of RestaurantsAroma 2 5.12Music 6 15.38Dress of Waiters 4 10.25Furnishing 7 17.94Interiors 11 28.2Menu 7 17.94Did not apply 24 61.53Table 11: Additional services provided by Ghaziabad restaurantsAdditional Servicesbeing providedNo of restaurants% of RestaurantsHome Delivery 17 43.58Catering 19 48.71Space for hosting parties 23 58.97Credit Card Facility 19 48.71Organise events on special days 10 25.64[ 56 ] Rai Management Journal

Table 12: Strategy for promoting restaurants in GhaziabadType of Promotion Activities No of Restaurants % of RestaurantAdvertisement in Newspapers 10 43.47Advertisement in Cable TV 9 39.13Discount to target segment 16 69.56Free Home delivery 10 43.47Pamphlets 11 47.83Discount on weekdays 2 8.7Table 13: Impact of weekend sales in Ghaziabad restaurantsSale on Weekends No of restaurants % of RestaurantsIncrease 30 76.92No Change 9 23.08Table 14: The distribution of the response on the basis of the location inGhaziabadLocation Yes No Change TotalMarket Area 9(12.3) 7(3.69) 16Malls 13(11.53) 2(3.46) 15Residential Area 5(3.84) 0(1.15) 5Highway 3(2.3) 0(0.7) 3Total 30 9 39June 2010 Vol. 7 Issue 1[ 57 ]

A Study on Exporters Problems inGarment IndustriesS. Venkatachalam*P. Palanivelu**The paper presents the problems of exporters in garment industries, conducted at Tirupur district inTamilnadu. The cotton textile industry is frequently plagued by labour problems. The strike of the textileworkers causes losses amounting to millions of rupees not only to the workers and industry but also to thenation in terms of excise and other taxes and exports. It is very important to address labour problems inevery organization. Exporters give more concentration on labours issues and it is an easy way to reduceproblems like high labor cost, labor law rest, trade union activities, high labour absenteeism, high labourturnover and lack of awareness with regard to quality, as well as possible exporters. It is very importantto solve all these problems for developing this industry.Keywords: Exporters, garment industry and trade.Exporters give moreconcentration on laboursissues and it is an easyway to reduce problemslike high labor cost,labor law rest, tradeunion activities, highlabour absenteeism, highlabour turnover and lackof awareness with regardto quality, as well aspossible exporters.INTRODUCTIONTirupur is a textile district ofTamilnadu, and is emerging as amajor hub for production of knittedgarments. The city contributes over56% buyers from 35 countries whofrequently visit Tirupur. Tirupurcan deliver customized samples inless than 12 hours and half a millionpieces in a few days. Thegovernment of India in its Export /Import policy has recognized the cityas the “Town of Export Excellence”.As the Indian knitted garmentproduction is reserved for smallscaleindustry, it is facing someproblems, which are inherent tosmall-scale operations not availableto these exporting units. Theexporters are producing goods on thebasis of orders frombuyers/importers. Most of theexports units are managed byfamilies. They belong toproprietorship, partnership andprivate limited companies. So theexporters do not have corporateimage and as a result they do nothave their own brands in theinternational market.The exporters are now in the processof forming consortium throughwhich some common problemsrelating to pollution, infrastructure,brand building, etc are addressed.Despite these limitations, theclothing export industry in India has*Faculty, School of Commerce and Management, Karpagam University, Coimbatore, India**Controller of Examinations, Karpagam University, Coimbatore, India[ 58 ] Rai Management Journal

...there will be atextile boom inIndia in the comingyears following thedismantling of theMulti-FibreAgreement oninternational textilestrade.and frankly. The interview schedulehad been pre-tested and validated soas to meet the accuracy andreliability.Area of the StudyArea of the study refers to Tirupur,which is known for hosiery garmentmanufacturing and exporting. It isone of the districts of Tamilnadu witha population size of over 7 lakhs andsituated 50 kms east of Coimbatore.The municipal area of the town isspread over 27.20 sq. kms.Sampling DesignFor the purpose of the study, Tirupurwas considered as the area of thestudy. Tirupur has got 478 hosierygarment-exporting units, out of which239 units (50%) were selected for thestudy. For the purpose of selection ofthe sample, convenient randomsampling was administered in thestudy.Statistical Tools forAnalysis• Average rank analysis• Percentage analysis• Diagrams and chartsLIMITATIONS OF THESTUDYThe study has consumed lot of timeand involved several problems andbecame a challenge for the researcherto complete the data collection. Theinferences of the study are subject tothe limitations, which are inherent toboth primary and secondary data.However adequate care has beenexercised to collect unbiased data.The problems include difficulty inmeeting the head of the exportingunits and the reluctance on their partin providing the data etc.Review of literature:K Palaniraman (2006) 1 , Tirupurcan be our Textile Valley," points outK Palaniraman, a garmentmanufacturer in India's textiles hotspotin Tamil Nadu. There is robustlogic in Palaniraman's argument.Manufacturers like him believe thatjust like the technology boom thatswept across cities like Bangalore inthe last decade; there will be a textileboom in India in the coming yearsfollowing the dismantling of theMulti-Fibre Agreement oninternational textiles trade.Palaniraman has seen Tirupur'sgrowth over the years. In thebeginning, in the 1970s, he recalls, heoperated from a one-room shed anddid knitting himself. Today, heemploys dozens of workers and hasimported machinery for knitting anddyeing jobs. Palaniraman is all gearedup to meet the new challenge: producethe best quality technical textiles fora global marketplace.Gregory M. Rose and AvivShoham (2006) 2 examines the exportperformance consequences of amarket orientation and the potentialmoderating impact of the competitive,technological, and marketenvironment. Market orientation was[ 60 ] Rai Management Journal

positively related to three dimensionsof export performance: change inexport sales, export profits, andchange in export profits. The impact ofmarket orientation on exports profitsand change in export profits wasstronger in a technologically turbulentenvironment. Overall, this studysynthesizes two important streams ofresearch, assesses the moderatingimpact of the environment, andempirically establishes a relationbetween market orientation andexport performance.Raja & Shanmugham, (2006) 3 told“The situation looks alarming in theorder flow has not stopped but isthreatening due to cut-throatcompetition from countries such asIndonesia, Vietnam, Cambodia andBangladesh,” the Managing Partner ofWarsaw International. The exportersin this knitwear hub hitherto operatedon wafer-thin margin of five to sevenper cent. ‘This is being furthersqueezed. So many units have startedto decline order booking or confirmorders selectively. They confirm only ifit provides “The situation looksalarming. The order flow has notstopped but is threatening due to cutthroatcompetition from countries suchas Indonesia, Vietnam, Cambodia andBangladesh,” the Managing Partner ofWarsaw International,Duraisamy (2006) 4 said theexporting community was in need of alot of information in this regard. TheTextiles Committee (TC) deputydirector, S. Periasamy, said the needof the hour was to equip the industryto produce high value garments. Thekey strategy should be investment inresearch and development, diversioninto new lines of production in fashiongarments. The Cluster DevelopmentAgent of the TC, G. Venugopal, said itwould help the industry to improvetheir unit value realization. Theworkshop was attended by 120persons, including 60 students.L.N. Revathi (2008) 5 Garmentexporters in Tirupur seem to befighting a losing battle. A steep declinein orders coupled with falling marginsare supposedly compelling theexporting community to either give into buyers’ demand or decline orderbooking. “It is not easy. The situationlooks grim and is deteriorating by theday,” an industry insider preferringanonymity said. Industry sourceswere, however, not able to quantify thedrop in export volumes. They had inearly November admitted to a reversalin trend with exports slipping from Rs11,000 crore in 2006-07 to Rs 9,950crore the following year. They hadthen anticipated a further drop of 10per cent this fiscal compared to the2007-08 level. Now, they are not sureof achieving the targeted Rs 8,950crore this fiscal. 2008.Jaikumar (2008) 6 said that theexporters in this knitwear hubhitherto operated on wafer-thinmargin of five to seven per cent whichis being further squeezed. So manyunits have started to decline orderbooking or confirm orders selectively.They confirm only if it provides roomfor sustainability. “Our primarycriterion is sustainability,” he said andpointed out that “players must staycontent with turnover by increasingproductivity.”Rahul Mehta (2008) 7 , President,CMAI said that, “the year 2006 hasbeen a tumultuous year for the IndianDecember 2010 Vol. 7, Issue 2[ 61 ]

apparel industry, be it export ordomestic. Newer players, newer setsof rules, dramatic changes, and majorshake outs all these and more madethe year one of the most challengingthe industries has witnessed in a longtime. The year 07 will witness thesame turbulence, perhaps moreintensely”.Major Problems of HosieryGarment ExportersRaw materials, Maintenance ofQuality of the Knitwear, Delay inDelivery Time, No business toCustomer Contact (B to C), Existenceof Unhealthy Competition, Shortageof Skilled Labour Problems inNegotiating the Price, Trade UnionActives, Problems Regarding Subcontractors,Seasonal Nature of theBusiness, Lack of InfrastructuralFacilities, Problems in Supply ofMachinery Spare, Difficult ExportFormalities, Publicity of WorkingCapital and High Rates of Interest,Problems Relating to PollutionControl.Table-1: Growth rate of exports of Indian apparelPeriod Restrained market Non-restrained market1980-1984 1.25 32.81985-1989 11.5 11.91989-1994 7.5 22.81995-2000 4.8 7.82000-2005 N2 N2Overall 8.83 17.9Sources: Tirupur Exporters Association (TEA)Chart - 1[ 62 ] Rai Management Journal

Table 2: Employment within the textile and apparel industry in India.No Sector Employment in million1 Handcrafts 7.10 (18.64)2 Sericulture (silk industry) 6.00 (16.00)3 Ready made garments 3.00 (07.87)4 Woolen sector 1.20 (03.15)5 Hand loom 12.40 (32.05)6 Decentralized power loom 6.80 (17.85)7 Man-made fibre/Filament yarn 0.60 (17.85)8Cotton/man-made fibre/yarn textile /millsector1.14 (02.99)9 Jute 0.40 (01.05)10 Total 38.10 (100.000)Note: Figures in Parenthesis are the important share of employment in the sector.ANALYSISA structured interview schedule wasadministered to the sample of 239exporters for the analysis andinterpretations of “performancerelated issues of hosiery garmentexporting units in Tirupur”. Thecollected data was classified, tabulatedand interpreted using statistical toolsin tune with the objectives of thestudy. In addition to the primary data,secondary data was also used.Table 2: Distribution of respondents based on Forms of OrganizationForm Number of Respondents PercentageSole proprietorship 75 31.38Partnership 148 61.92Private limited company 12 5.03Public limited company 4 1.67Total 239 100December 2010 Vol. 7, Issue 2[ 63 ]

It is clear from table 5 that soleproprietorship and public limitedcompany, has given top priority tohigh labour absenteeism as animportant problem. Partnership firmshave given top priority to high labourturnover as important problem;private limited companies have giventop priority to lack of awareness withregard to quality as an importantproblem faced by the exporters. It isconcluded that majority of the forms oforganization have given top priority tohigh labour absenteeism as animportant problem faced by theexporters with regard to labour.It is clear from table 6 thatmanufacturing exporters have giventop priority to high labourabsenteeism as an important problem,merchant exporters have given toppriority to high labour cost as animportant problem and manufacturerand merchant exporters have giventop priority to high labour turnover asan important problem faced byexporters regarding labour. It isconcluded that all the 3 categories ofexporters like manufacturer exporters,merchant exporters and manufacturesand merchant exporters have givenhigh labour absenteeism, high labourcost and high labour turnover areimportant problems faced by exportersregarding labour.Table 6: Ranking of various problems faced by the exporters based onCategory of organizationCategory FactorHighlabourcostLabourlawrestTradeunionexcessHighlabourabsenteeismHighlabourturnoverLack ofawarenesswith regardto qualityManufacturingexporterMerchantexporterManufacturingand merchantexporterAR 3.53 3.89 3.48 2.62 2.73 4.93FR 3 5 4 1 2 6AR 2.41 3.68 3.45 3.14 3.36 5.18FR 1 5 4 2 3 6AR 3.01 3.98 3.95 3.71 2.40 5.01FR 2 5 4 3 1 6AR-Average rank, FR-Final rank.December 2010 Vol. 7, Issue 2[ 65 ]

Table 7 Ranking of various problems faced by the exporters based onExperience of organization.ExperienceProblemsHighlabourcostLabourlawrestTradeunionexcessHighlabourabsenteeismHighlabourturnoverLack ofawarenesswith regardto quality

Table 8: Ranking of various problems faced by the exporters based onStatus of organizationStatusProblemHighlabourcostLabourlawrestTradeunionexcessHighlabourabsenteeismHighlabourturnoverLack ofawarenesswith regardto qualityExport houseTrading houseStar tradinghouseSuper startrading houseAR 3.15 3.84 3.60 2.74 2.63 4.99FR 3 5 4 2 1 6AR 3.33 4.14 3.44 3.44 2.83 4.92FR 3 5 4 4 2 6AR 1.40 3.80 3.40 3.40 4.20 6.00FR 1 4 3 3 5 6AR 3.33 5.00 4.33 4.33 1.33 3.67FR 2 5 4 4 1 3AR-Average rank, FR-Final rank.It is clear from table 8 thatorganizations with different statuslike export house and super startrading house, have given top priorityto high labour turnover as animportant problem, trading house hasgiven top priority to high labour costas an important labour problem. It isconcluded that majority of theturnover is an important problemfaced with regard to labour.December 2010 Vol. 7, Issue 2[ 67 ]

Table 9: Distribution of respondents based on the risks associated withthe export garments.RisksNumber of respondentsRank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6Non acceptance of goods bythe buyers29 36 98 50 19 7Not meeting the schedule 53 101 40 27 8 10Quality related problems 103 53 32 23 20 8Payment related problems 35 33 34 101 28 8Customs formalities relatedproblems13 7 26 28 139 26Buyers country risks 6 9 9 10 25 180It is clear from table 9 that out of totalrespondents taken for the study 103(43.09%) respondents have given 1strank to quality related problem and53 (22.17%) respondents have given2nd rank to not meeting the scheduleand 53 (22.17%) to quality relatedproblems. 98 (41%) respondents havegiven 3rd rank to non acceptance ofgoods by the schedule and so on for4th, 5th and 6th rank. It is inferredthat, quality related problems, notmeeting the schedule, non acceptanceof goods by the buyers are theimportant risks associated withgarment exports.AVERAGE RANK ANALYSIS-RISKS ASSOCIATED WITH EXPORTSTable 10 : Ranking of various risks associated with exports Form of organizationForm of organizationRisksNonacceptanceofgoods bythe buyersNotmeetingthescheduleQualityrelatedproblemsPaymentrelatedproblemsCustomsformalityrelatedproblemsBuyercontrolriskSoleProprietorshipPartnershipPrivate limitedcompanyPublic limitedcompanyAR 3.15 3.84 3.60 2.74 2.63 4.99FR 3 5 4 2 1 6AR 3.33 4.14 3.44 3.44 2.83 4.92FR 3 5 4 4 2 6AR 1.40 3.80 3.40 3.40 4.20 6.00FR 1 4 3 3 5 6AR 3.33 5.00 4.33 4.33 1.33 3.67FR 2 5 4 4 1 3AR-Average rank, FR-Final rank.[ 68 ] Rai Management Journal

It is evident from table 10 that theforms of organizations like soleproprietorship, partnership, publiclimited company have given toppriority to quality related problems asthe important risk associated withexports and private limited companyhave given top priority to not meetingthe schedule as risk associated withexporters. It is concluded thatmajority of the organizations havegiven top priority to quality relatedproblems as an important riskassociated with exports.It is clear from table 11 thatmanufacturer exporters have giventop priority to not meeting theschedule followed by quality relatedproblems as the risks associated withexports. Merchant exporters havegiven top priority to payment relatedproblems followed by quality relatedproblems as the risks associated withexports. Manufacturer and merchantexporter have given highest priority toquality related problems followed bynot meeting the schedule as the risksassociated with exports. It isconcluded that majority of the exportsunder different categories have giventop priority to not meeting theschedule, payment related problemsand quality related problems as therisks associated with export.Table 11: Ranking of various risks associated with exportsForm of organizationRisksNonacceptanceofgoods bythe buyersNotmeetingthescheduleQualityrelatedproblemsPaymentrelatedproblemsCustoms formalityrelatedproblemsBuyercontrolriskManufacturingexporterMerchantexporterManufacturingand merchantexporterAR 3.19 2.36 2.44 3.31 4.39 5.31FR 3 1 2 4 5 6AR 2.95 2.82 2.55 2.50 4.73 5.45FR 4 3 2 1 5 6AR 2.89 2.46 1.95 3.57 4.52 5.60FR 3 2 1 4 5 6AR-Average rank, FR-Final rank.December 2010 Vol. 7, Issue 2[ 69 ]

Table 12: Problems faced in exporting garmentsForm of organizationRisksCompetitionFromothercountriesCompetitionfrom fellowexportersQualityExportdocumentationproblemDifficulties intimelyexecutionof theordersExcessiveformalitiesin realizingpaymentsTariffbarriersDifficulties inrealizingexportincentivesLackof brandimageBuyersriskExport houseAR 2.08 2.71 3.58 5.05 5.87 6.67 7.05 7.22 5.45 8.82FR 1 2 3 4 6 7 8 9 5 10Trading houseAR 2.22 3.28 3.56 6.08 5.47 6.83 7.17 6.92 5.11 8.30FR 1 2 3 6 5 7 9 8 4 10Star tradinghouseAR 5.60 3.20 4.40 4.80 4.20 6.20 5.40 7.80 4.00 9.40FR 7 1 4 5 3 8 6 9 2 10Super startrading houseAR 3.00 5.33 4.00 7.67 5.67 5.33 5.67 6.33 4.67 7.33FR 1 4 2 5 5 4 5 6 3 7AR-Average rank, FR-Final rank.[ 70 ] Rai Management Journal

Table 12 shows that the respondentsunder the export house, trading househave given highest rank tocompetition from other countriesfollowed by competition from fellowexporters as the marketing problemsfaced in exporting garments. Therespondents of the star trading househave given highest rank tocompetition from other countriesfollowed by quality as the marketingproblems faced in export garments. Itis concluded that the respondents ofexport house, trading house and superstar trading house have given thehighest rank to competition fromother countries and the respondents ofstar trading house have given thehighest rank to competition fromfellow exporters as the marketingproblems faced in exporting garments.The following points summarizethe findings of thestudy:1. Majority (61.92%) of the exportersbelong to partnership firms.2. Majority (55.65%) of the exportersbelong to manufacturer exporters.3. Majority of the forms oforganization have given toppriority to high labourabsenteeism as an importantproblem faced by the exporterswith regard to labour.4. According to the 3 categories ofexporters like manufacturerexporters, merchant exporters &manufactures and merchantexporters have given top priorityto high labour absenteeism, highlabour cost and high labourturnover as important problemsfaced by exporters regardinglabour.5. Majority of exporters have giventop priority to high labourabsenteeism as an importantproblem.6. Majority of the turnover is animportant problem faced withrespect to labour.7. Quality related problems, notmeeting the schedule, nonacceptance of goods by the buyersare the important risks associatedwith garment exports.8. Majority of the organizations havegiven top priority to qualityrelated problems as an importantrisk associated with exports.9. Majority of the exports underdifferent categories have given toppriority to not meeting theschedule, payment relatedproblems and quality relatedproblems as the risks associatedwith export.10. The respondents of export house,trading house and super startrading house have given thehighest rank to competition fromother countries and therespondents of star trading househave given the highest rank tocompetition from fellow exportersas the marketing problems facedin exporting garments.December 2010 Vol. 7, Issue 2[ 71 ]

RECOMMENDATIONSOn the basis of findings of the studyand the problems identified in thestudy, following recommendations aremade:Value addition forSustainable GrowthTirupur has recorded highest share inall India exports. However, it is foundthat the exporters are morespecialized in basic items ofgarments. Therefore it isrecommended that they should focuson value additions such asembroidery, designs, emblems,symbols, logos etc., on the garmentswhich will help them to improve theperformance of their business. Thisvalue addition will enable the exportunits to sustain growth momentumand face competitions from exportersof foreign countries.Development in DutyDrawback SchemeThe study reveals that most of theexporters wish to continue the dutydrawback scheme. Enhancement inthe rates of duty drawback will be ofgreat help to exporting units forbetter competitive edge over theexporters of other countries. Hence itis recommended that the governmentof India should bring suitablemeasures for enhancement of rate ofduty drawback.Trade ExhibitionsThis study reveals that trade fairsplay an important role for theexporters to secure export orders.The trade exhibitions were organizedonly during seasons. As trade fairsare found to be effective in securingorders, it is recommended that apermanent trade exhibition centersshall be established in Tirupur.Universal BrandDevelopmentThe study reveals that majority ofexporters do not have their ownbrands for their products. Majority ofthem were small exporters. Theycould not build their own brandsusing to smallness of units andfinancial constraints. Exporting inthe brand name of the buyers is ausual norm. As a long-term measure,efforts may be taken to build acommon brand name for productsfrom Tirupur, so that a separateidentify for the products can be builtand also it is possible for theexporters to fetch a better price.CONCLUSION:The global textile market possesses aworth of more than $400 billionpresently. In a more globalizedenvironment, the industry has facedhigh competition as well asopportunities. It is predicted thatGlobal textile production will grow by25 percent between 2002 and 2010and Asian region will largelycontribute in this regard. Theindustry has now become one of thelargest employment providers.Garments designed andmanufactured to individualspecifications and trends are exported[ 72 ] Rai Management Journal

to more than 100 countries worldwide.The cotton textile industry isfrequently plagued by labourproblems. The very long strike of thetextile workers caused lossesamounting to millions of rupees notonly to the workers and industry butalso to the nation in terms of exciseand other taxes and exports. Labourproblems are very important in everyorganization. Exporters are moreconcerned about labours issues as it isan easy way to reduce problems likeHigh lobour Cost, lobour law rest,Trade union activities, High labourabsenteeism, High labour turnoverand lack of awareness with regard toquality. Exporters are also able tosolve these problems as it is veryimportant for them to develop theirindustry.REFERENCES• K. Palaniram, (2006) 1 Journal of businessresearch, vol 55 march 2006.• Gregory M. Rose and Aviv Shoham, (2006) 2Journal of business research, vol 55 march2006.• Mr Raja M. Shanmugham, (2007) 3 toldBusiness Line, Nov 2007.• S. Duraisamy, (2007) 4, “Competitiveness ofIndian Textiles & Garment Industry: SomePerspectives,” a presentation, IndianInstitute of Management, December 2007.• L.N.Revathi (2008) 5 Business daily fromThe Hindu group of publication January 3,2008.• Jaikumar.R, (2008) 6 Garment exporterschallenges in a liberalized era JIMS 8m,7(4), 7-13.• Rahul Mehta, (2008)7 The Hindu businessline dec 15 2008.Reports• Apparel Export Promotion Council (1997)Hand Book of Export Statistics, (1995, 1996,1997) New Delhi.• Hand Book of Export Statistics,1998,1999,2000 New Delhi• Hand Book of Export Statistics ,2001,2002,2003 New Delhi• Readymade Garment Exports from India ,1999- 2004, Tirupur• Department of Scientific and IndustrialResearch, Government of India (1993):Technology Evaluation and Norms Study inGarment Industry, New Delhi.• Indian Institute of Technology, 1990 AStudy of Indian Garment Exports –Problems and Prospects – Minor Project,New Delhi.• Readymade Garment in Maharashtra. Astudy of Export Prospects(1978), New DelhiBooks• Jain.S.K (1998): Export Performance andExport Marketing Strategies: A study ofIndian Textiles Common WealthPublications, New Delhi.• Kar. P.P (2000): Apparel Technology andSystem in India, Global Business Press,New Delhi.• Khanna, SriRam (1985): InternationalTrade in Textiles, Sage Publications, NewDelhi.• Koshy, Darlie. O (1997): Garment Exports:Winning strategies, Prentice – Hall of IndiaPvt Ltd., New Delhi.• Kothari C.R. (2005): Research Methodology– Methods and Techniques, Neo AgeInternational Pvt Ltd., New Delhi.• Misra, S. (1993): India’s Textile Sector – APolicy Analysis, Sage Publications, and NewDelhi.December 2010 Vol. 7, Issue 2[ 73 ]

Journals• AEPC Times (1987) Production Planning ofExport of Readymade Garment .no.9, 6-9.• Fabric Availability for Garments and itsProblems (1989), 3(10) :12-14• Stiffer Challenge for Clothing(1989), 3-4 (4)12-39• Apparel (1989a) : Indian Garment Exportsoffer 1992,8(3):15-20• Apparel (1989b) : Apparel MarketingStrategies for the 90, (9/10) ; 27-31• Probable Implications of Integrated EECMarket(1990) no 7:61-63• Apparel Fort Nightly (1995 a) : TheChanging Global Scenario in ApparelIndustry ISO 9000 – The Need of the Hour,II (3) :7-12[ 74 ] Rai Management Journal

An Empirical Study on Indian HealthInsurance IndustryRisk and uncertainties are a part of everybody’s life. It is a condition in which there is a possibility of anadverse outcome rather than the desired one. for. There exist several techniques for meeting the problem ofrisk, of which insurance is the most practical method for handling major risk. Insurance is based on theprinciples of risk pooling. The principle of insurance works on the concepts of large number of peopleexposed to a similar risk, who make a contribution to a common fund and those who suffer losses due tothe occurrence of any uncertainties or risk are compensated from this fund. It is the transfer of financialresponsibility for the risk at the point of occurrence and conventionally involves the insurer in acommitment to pay, provided the terms and conditions of the policy are met, payment of the premiumsecures a source of funds in the event of loss. Liberalization of insurance business in India has made a seachange in the insurance industry. The market is opened for the private players and the vast potential inthe health business is explored steadily. The private insurance industry, has woken up to ground realitiesand is in the process of implementing many alternatives like agent, adjustors, asset manager, assurors,actuaries, accountants and administrators. Realizing the unlimited potential in Indian groups, privateinsurance companies concentrate in strategic deployment of technology for integrating office operations,and gaining customer confidence through improved service, which is the need of the hour. With thesecircumstances, the researchers felt necessary to know the respondent awareness of these private companiesand their opinion / perception towards the existing private companies. The study area was confined toErode City and the primary data was collected from 100 customers by using a structured questionnaire.The results of the survey indicate that in spite of being aware of various private companies the reasonbehind taking health insurance policy was family protection and tax saving.Keywords: Liberalization, private players, insurance industry and health business.K. Balanaga Gurunathan*M. Mohanasundari**INTRODUCTIONRisk is described, as any situationwhere there is uncertainty about theoutcome. Most of the people prefer toavoid risks like illness, accident,damage of property etc. by takinginsurance policies. Insurance is basedon the principle of risk pooling. Awell-regulated insurance industrywhich moves with the times byoffering its customers tailor-madeDecember 2010 Vol. 7, Issue 2products to satisfy their health needsis, therefore, essential to progresstowards a worry-free future. Whilethe public sector insurance companiesmade enormous contribution in thespread of awareness about insurance,and expanded the market, it wasrecognized that their reach was stilllimited, the range of products offeredrestricted and the service to theconsumer inadequate. It was alsorecognized that India has a vast*Professor, K.S. Rangaswamy College of Technology, Tiruchengode, Tamil Nadu, India**Lecturer, Kongu Engineering College, Perundurai, Tamil Nadu, IndiaLiberalization ofinsurance business inIndia has made a seachange in theinsurance industry.The market is openedfor the private playersand the vast potentialin the health businessis explored steadily.[ 75 ]

The development ofhealth insurance inIndia is a reflectionof broader policychanges that arebeing felt in theIndian economy.potential that is waiting to be tappedand this could be achieved whensufficient competition is generatedand it is exposed to the developmentsin the rest of the world. Thereforeinsurance sector was opened up forprivate sector participation withprovision for limited foreign equityexposure, which has at present 15private players in the market. Thisprivate entry has thrown opened ahuge array of opportunities, many ofwhich will be in unrelated fields andmay give a bigger push to thedevelopment of the national economyas a whole.Health Insurance IndustryHealth insurance in a narrow sensewould be ‘an individual or grouppurchasing health care coverage inadvance by paying a fee calledpremium’. In its broader sense, itwould be any arrangement that helpsto defer, delay, reduce or altogetheravoid payment for health careincurred by individuals andhouseholds. Given theappropriateness of this definition inthe Indian context, this is thedefinition, we would adopt. Thehealth insurance market in India isvery limited covering about 10% ofthe total population.The development of health insurancein India is a reflection of broaderpolicy changes that are being felt inthe Indian economy. Many economicfunctions that had been restricted tothe public sector since independenceare now being opened to privatesector involvement, including theconversion of organizations run bygovernment to private or semi-privateentities that theoretically mustsurvive without direct governmentsupport. The financial sector is noexception.As a part of its financial sector reformagenda, the Indian Governmentliberalized the Indian insuranceindustry by the enactment of theInsurance Regulatory andDevelopment Authority (IRDA) Act bythe Indian Parliament in 1999. Thisled to the opening up of the sector forparticipation of private insurancecompanies. Prior to liberalization, theinsurance sector consisted of thegovernment-owned Life InsuranceCorporation of India that had amonopoly on life insurance businessand the General InsuranceCorporation of India and its four nonlifesubsidiaries namely, NationalInsurance Co., New India AssuranceCo., Oriental Insurance Co. andUnited India Insurance Co. The newact did not provide for independenthealth insurance companies and thenew market has continued theestablished practice of selling healthinsurance products through theexisting public and new privateinsurance companies.The results of liberalization havebeen significant. Since 1999, IRDAhas licensed 24 new private insurancecompanies, of which 21 have foreignequity participation. Major globalplayers like Aegon, Fortis, FutureGenerali, Principal and Dai-ichi havetied-up with Indian partners to set upinsurance operations. Table-1 showsthe performance of non-life insurers.[ 76 ] Rai Management Journal

Table-1: Gross Premium from Business in India – Non-Life InsurersInsurerPremium (Rs. Crores)Policies issued2007-2008 2007-2008 2007-2008 2007-2008Public16831.85(3.52)18030.75(7.12)38547040(13.47)45137181(17.09)Private10991.89(27.12)12321.09(12.09)18703219(47.36)21922906(17.21)Total27823.74(11.72)30351.84(9.09)57250259(22.69)67060087(17.13)Note: Figures in brackets indicates growth over previous yearSource: IRDADEVELOPMENT OFPRIVATE HEALTHINSURANCEWhile the new law establishing theframework for the private insuranceindustry did not create a separatelegal structure within which privatehealth insurance would operate, itanticipated a modern broadly definedhealth insurance market through theestablishment of an independentregulator of companies. Inimplementing regulations in 2000 forthe registration of insurancecompanies, IRDA defines healthinsurance as: the effecting of contractswhich provide sickness benefits ormedical, surgical or hospital expensebenefits, whether in-patient or outpatient,on an indemnity,reimbursement, service, prepaid,hospital or other plans, includingassured and long term care.There is some debate whether theregulatory definition of healthinsurance actually enables either lifeDecember 2010 Vol. 7, Issue 2or nonlife companies to write healthinsurance policies. However, inpractice, both do. Since liberalization,most health insurance policies havebeen written by non-life insurancecompanies whereas life-insurers sellhealth insurance in the form of healthriders to their life policies. Of late thisline of differentiation has dimmed.Non-life insurers have introducedlong-term policies and benefit planscovering critical illnesses and policiesthat provide cash payments if aninsured person is hospitalized withcertain illnesses.Although most insurers are coveredunder the new insurance Act, Section118 of the Insurance Act, 1938,exempts the application of the Act toany trade union registered under theIndian Trade Union Act, 1926; or toany provident fund to which theprovisions of the Provident Funds Act,1925, apply; or to any insurancebusiness carried on by the CentralGovernment or a State Governmentrelating to properties belonging to it or...IRDA defineshealth insurance as:the effecting ofcontracts whichprovide sicknessbenefits or medical,surgical or hospitalexpense benefits,whether in-patient orout-patient, on anindemnity,reimbursement,service, prepaid,hospital or otherplans, includingassured and longterm care.[ 77 ]

The Insurance Actof 1999 requiredthat all companiesselling insurancemust be for-profitand, as a result,except for exemptedorganizations, thereare no non-for-profitcompanies that arelicensed, with oneexception: in theprivate sector, theCHNHBAAssociation...undertakings owned wholly or mainlyby the State Government; or toproperties belonging to any semi-Government bodies; or any board orbody corporate established by theState Government under any statute;or any industrial/commercialundertaking in which the StateGovernment has substantial financialinterest, whether as shareholder,lender or guarantor. To date, thereare twenty-eight exempted entitiesunderwriting insurance, specificallyin the area of State Governmentproperties.The Insurance Act of 1999 requiredthat all companies selling insurancemust be for-profit and, as a result,except for exempted organizations,there are no non-for-profit companiesthat are licensed, with one exception:in the private sector, the CHNHBAAssociation (formerly known as TheCalcutta Hospital & Nursing HomeBenefits Association Limited), whichhas been operating since 1948, wasgrandfathered into the Act andallowed to keep operating as a mutualinsurance company.In addition to insurance companies,businesses are allowed to operatetheir own health plans withoutregulation and many small and somelarge companies do so in spite of taxincentives to do otherwise.Interestingly, some importantexamples of expanded coverage flowfrom the exempted, mutual and selfinsuredcompanies.The absence of stand-alone, for-profitinsurance companies is notable. Manyreasons have been given for this;including excessive capitalrequirements and unfair competitionby existing companies that can crosssubsidize their heath business.However, recently the Star Healthand Allied Insurance Co. became thecountry’s first stand-alone healthinsurance company when it launchedits operations in May, 2006. TheChennai-based health insurer wasfinanced largely by a consortium ofIndian promoters with a 10 per centequity stake held by the Dubai-basedOman Insurance Company. In theabsence of a provision in theInsurance Act, 1938, for registrationof stand-alone health or anyspecialized insurer, the company hassought a non-life license andundertaken to write only three linesof business, i.e., health, accident andtravel insurance, to be marketed onan individual and group basis.CURRENT SCENARIOIn mid 80’s most of the hospitals inIndia were Government owned andtreatment was free of cost. With theadvent of Private Medical Care theneed for Health Insurance was feltand various Insurance Companies(New India Assurance, NationalInsurance Company, OrientalInsurance & United InsuranceCompany) introduced MediclaimInsurance as a product.According to recent news reportHealth insurance continues to be thefastest growing segment with annualgrowth rate of 55%. Health Premiumhas risen to Rs. 3300 crores in 2006-2007. As per the recent reports fromvarious agencies the Health sectorhas the potential to become a Rs.35000 crore premium by 2010.[ 78 ] Rai Management Journal

On August 15, 2007, the PrimeMinister has announced Rs 2000Crores for Health Insurance for poorcitizens. We foresee that this amountwill be partly in form of subsidytherefore during calendar year 2008we can expect Health Insurancepremium to touch figure in the rangeof Rs 10,000 Crores.In 2001 with entry of various privateInsurance companies now thecustomers have choice of buying thisinsurance from 16 insurancecompanies.Table-2: Gross Direct Premium Income in IndiaCompanyTotal (Rs. Crores)Market Share (in per cent)2007-2008 2008-2009 2007-2008 2008-2009National 4007.23 4279.90 14.40 14.10New India 5276.92 5508.83 18.97 18.15Oriental 3808.14 3964.25 13.69 13.06United 3739.56 4277.77 13.44 14.09Sub-Total 16831.85 18030.75 60.49 59.41Royal Sundaram 694.41 803.36 2.50 2.65Reliance 1946.42 1914.88 7.00 6.31Iffco-Tokio 1128.15 1374.06 4.05 4.53Tata AIG 782.64 823.92 2.81 2.71ICICI Lombard 3307.12 3402.04 11.89 11.21Bajaj Allianz 2379.92 2619.29 8.55 8.63Cholamandalam 522.34 685.44 1.88 2.26HDFC Ergo 220.60 339.21 0.79 1.12Future Generali 9.81 186.49 0.04 0.61Universal Sompo 0.48 30.14 0.00 0.10Shriram - 113.76 - 0.37Bharti AXA - 28.50 - 0.09Raheja QBE - - - -Sub-Total 10991.89 12321.09 39.51 40.59Grand Total 27823.74 30351.84 100.00 100.00Note: ‘-‘ indicates not in operationSource: IRDADecember 2010 Vol. 7, Issue 2[ 79 ]

Advent ofliberalization lead tothe imminent entryof global players inthe insurance sectorthat the Indiancompanies began tofeel the winds ofchange and startedgearing up to meetthe challenge.STATEMENT OF THEPROBLEMAdvent of liberalization lead to theimminent entry of global players inthe insurance sector that the Indiancompanies began to feel the winds ofchange and started gearing up tomeet the challenge. Various foreignprivate health insurers flocked theIndian Insurance Industry to tap theuninsured potential market. In therun to capture their share, theseprivate players have stepped into newmarketing techniques like innovateoffers, customer centric products,sound risk management practices soas to enhance service standards andto leave a landmark in service sector.Currently the industry hold 15private players and 4 major corporatehouses such as Hindujas, Ranbaxy,Pantaloon and BILT, have alreadyannounced plans to enter the segmentin the coming months. Nearly 86%Indian live without an insurancecover as they tend to believe thatnothing will happen to them and thattheir saving will take care of theirthings in adverse situation.According to NCAER survey declaredthat ‘though 74% of the households inthe state of Lucknow were aware ofhealth insurance facilities, not morethan 15% were actually availing thesefacilities’. A recent survey conductedacross 8 cities covering 1250customers by VOICE revealed, TataAIG as the winner in terms ofcustomer satisfaction in the healthinsurance category. This is India’sfirst-ever customer satisfaction forthe insurance sector. Based on theprevious studies on research surveysit is necessary to know therespondents awareness in theseprivate companies, their influencingfactors in selecting a particularprivate company, theiropinion/perception of servicesrendered towards the respondentsholding private policies in the existingprivate companies.OBJECTIVES OF THESTUDYThe following are the broad objectivesof the study:• To study the profile, purpose andinvesting practices of thecustomers holding policies inprivate health insurancecompanies• To study the awareness of thecustomers about the privatehealth insurance companies• To study the factors thatinfluences the customers inselecting the particular productsin private health insurancecompanies• To study the customers’opinion/perception towardsservices provided by the privatehealth insurance companies.METHODOLOGY OF THESTUDYThe area of the study was restrictedto Erode city. Primary data wascollected from 100 customers by usinga structured questionnaire.Convenient sampling method hasbeen administered in this study. The[ 80 ] Rai Management Journal

data collected from the respondentshas been systematically analyzed andthe results are presented withsuitable interpretations based ondifferent objectives.The following statisticaltools have been used:(a) Percentage analysis,(b) Chi-square analysis,(c) Average Rank analysis, and(d) Average Score analysis.ANALYSIS ANDINTERPRETATIONObjective-1:To study the profile, purpose andinvesting practices of the customersholding policies in private healthinsurance companies.The statistical tools used to analyzeare percentage analysis and averagerank analysis.The results are given in the form oftables with suitable interpretations.The detailed analysis was carried at5% level of significance and the resultswere presented here.December 2010 Vol. 7, Issue 2[ 81 ]

Table-3: Average Ranking of benefit factors acquired through investing inPvt. Life Insurance Policy – Personal factorsGenderAge GroupEducationOccupationIncome per monthMarital StatusFamily TypeEarning MembersFamily Size% BonusTaxSavingsFamilyProtectionMale 68 1 16 51Female 32 0 10 22Below 25 13 0 1 1225 to 50 78 1 20 57Above 50 9 0 5 4School 13 0 0 13College 51 0 11 40Professional 36 1 15 20Agriculture 12 0 0 12Business 23 1 6 16Employed 50 0 8 42Professional 15 0 12 3Below 10000 9 0 0 910000 to 20000 27 0 6 2120000 to 30000 31 0 4 27Above 30000 33 1 16 16Single 29 0 2 27Married 71 1 24 46Joint Family 40 0 11 29Nuclear Family 60 1 15 441 19 0 3 162 78 1 22 553 3 0 1 23 36 0 14 224 48 1 10 37>=5 16 0 2 14[ 82 ] Rai Management Journal

Profile, purpose and investingpractices of the customersBased on the percentage analysis, thefollowing are the outcome:• 68% of the respondents are malerespondents and their age group isbetween 25 and 50 years• 51% of the respondents’ educationis at the college level.• 50% of the respondents comeunder employed category• 40% of the respondents monthlyincome of the family is aboveRs.30,000 and majority (47%)number of earning members in thefamily is 2 members.• 60% of the respondents are undera nuclear family and 71% aremarried.• 84% of the respondents family sizeconstitutes 4 members.• 72% of the respondents have takenpolicy in private health insurancecompanies.Based on the percentage rank analysisthe following is the outcome:Chart-1: Average Rank Analysis – Purpose of taking Health Insurance Policy(in %)December 2010 Vol. 7, Issue 2[ 83 ]

Table-4: Average Ranking of benefit factors acquired through investing inPvt. Life Insurance Policy – Personal factorsGenderAge GroupEducationOccupationIncome per monthMarital StatusFamily TypeEarning MembersFamily Size% BonusTaxSavingsFamilyProtectionMale 68 1 16 51Female 32 0 10 22Below 25 13 0 1 1225 to 50 78 1 20 57Above 50 9 0 5 4School 13 0 0 13College 51 0 11 40Professional 36 1 15 20Agriculture 12 0 0 12Business 23 1 6 16Employed 50 0 8 42Professional 15 0 12 3Below 10000 9 0 0 910000 to 20000 27 0 6 2120000 to 30000 31 0 4 27Above 30000 33 1 16 16Single 29 0 2 27Married 71 1 24 46Joint Family 40 0 11 29Nuclear Family 60 1 15 441 19 0 3 162 78 1 22 553 3 0 1 23 36 0 14 224 48 1 10 37>=5 16 0 2 14[ 84 ] Rai Management Journal

The Percentage Rank Analysis isapplied to identify the priority of therespondents on the various aspectsconsidered in the study. It isunderstood from CHART NO 1 thatrespondent have given 1st rank forfamily protection which they considerto be the highest priority among theother factors like saving, tax relief,critical illness, etc. The table No1clearly indicates that majority of thepersonal factors of the respondentshave ranked savings as 1st rank whileinvesting in private investing inprivate insurance company, followedby high security, tax savings andfamily protection.Objective-2:To study the awareness of thecustomers about the private healthinsurance companies.Thestatistical tools used to analyze arePercentage Analysis, Chi-squareanalysis, Average Score analysis andAverage rank Analysis. The resultsare in the form of tables with suitableinterpretations.Awareness of the respondentsBased on the Percentage Analysis thefollowing are the outcome among the15 private Insurance Companies,• Respondents (62%) are fully awareof Bajaj Allianz InsuranceCompany, (25%) ICICI Lombard,(4%) Max New York. Theremaining per cent of therespondents are not aware ofApollo DKV, Aviva, Tata AIG,Birla SunLife, HSBC HealthInsurance etc.• Respondents (70%) have shownawareness of private companiesthrough advertisement especiallythrough newspapers andmagazines.Based on the Chi-square analysis, theoutcome is as follows:Chi-square test is used to test whethera variable has a significant influenceover the other. For this purpose, thefactors considered in the study areclassified into two groups. The firstgroup contains personal factorsnamely gender, age, education,occupational status, income level,marital status, family type, earningnumber, family size. The second groupcontains variables for analysisnamely, Source of awareness andpurpose of taking a policy. Each of thepersonal factors is compared with thestudy factors and chi-square test isapplied and the results are given inthe following tables with suitableinterpretations.Based on the purpose of the followinghypotheses are formulated.Hypotheses: The personal factors ofthe respondents have no significantinfluence over each of the studyfactors.It is clear from table-5 that age,income level, marital status andearning member have significant oversource of awareness. Family type andearning member of the respondent hasa significant influence of over themedia. Family type has significantinfluence on the purpose of taking aDecember 2010 Vol. 7, Issue 2[ 85 ]

health insurance policy from theprivate insurance companies. It isconcluded from the table thatirrespective of the various personalfactors taken for the study, there issignificant influence on the purpose ofowning a policy from the privateinsurance company.Table-5: Chi-square values – Personal Factors and Study FactorsS. No.Study FactorsPersonal FactorsInfluence ofMediaPurposeSources ofAwareness1 Gender 9.744 4.217 2.6172 Age 7.496 5.586 7.3233 Education 9.720 13.299 7.8844 Occupation 50.881 32.860 16.0855 Income 27.233 28.211 9.4946 Marital Status 3.385 3.306 0.8717 Family Type 0.595 0.176 3.0758 Earning Members 2.418 3.872 6.9799 Family Size 18.752 3.227 4.592[ 86 ] Rai Management Journal

Based on the Average PercentageAnalysis the following are the outcomeamong the 15 private insurancecompanies,Table-6: Average Percentage-Personal factors with level of awareness of differentPvt PlayersPersonal FactorsPrivate Players%BajajAllianzICICILombardMaxNewYorkMetLifeIndiaGenderAge GroupEducationLevelOccupationIncome permonthMaritalStatusFamily TypeEarningMembersFamily SizeMale 68 39 19 4 6Female 32 23 6 0 3Below 25 13 13 0 0 025 to 50 78 45 22 3 8Above 50 9 4 3 1 1School 13 9 3 0 1College 51 31 13 3 4Professional 36 22 9 1 4Agriculture 12 9 3 0 0Business 23 11 7 0 5Employed 50 34 11 3 2Professional 15 8 4 1 2Below 10000 9 9 0 0 010000 to 20000 27 15 8 3 120000 to 30000 31 21 8 0 2Above 30000 33 17 9 1 6Single 29 23 4 0 2Married 71 39 21 4 7Joint Family 40 26 4 4 6Nuclear Family 60 36 21 0 31 19 11 7 0 12 78 50 17 3 8>=3 3 1 1 1 03 36 21 10 0 54 48 28 13 3 4>=5 16 13 2 1 0December 2010 Vol. 7, Issue 2[ 87 ]

Table-7 shows the level of awarenessof the respondents on the variousprivate entry companies. It isconcluded that highest score is givento Bajaj Allianz followed by ICICILombard, Max New York andMetLife.Table-7: Average Percentage – Media of awareness level of the respondentsPersonal FactorsMedia of awareness%AdvertisementsAgentsDirectMarketingFriends &RelativesGenderAge GroupEducationLevelOccupationIncome permonthMaritalStatusFamily TypeEarningMembersFamily SizeMale 68 22 30 13 3Female 32 12 15 0 5Below 25 13 4 9 0 025 to 50 78 28 31 11 8Above 50 9 2 5 2 0School 13 5 8 0 0College 51 19 21 9 2Professional 36 10 16 4 6Agriculture 12 6 6 0 0Business 23 8 5 9 1Employed 50 15 32 2 1Professional 15 5 2 2 6Below 10000 9 3 6 0 010000 to 20000 27 10 14 0 320000 to 30000 31 13 16 2 0Above 30000 33 8 9 11 5Single 29 6 15 5 3Married 71 28 30 8 5Joint Family 40 14 19 4 3Nuclear Family 60 20 26 9 51 19 6 10 2 12 78 26 34 11 7>=3 3 2 1 0 03 36 8 13 8 74 48 21 24 2 1>=5 16 5 8 3 0[ 88 ] Rai Management Journal

OBJECTIVE-3:To study the factors that influence thecustomers in selecting a particularproduct in private insurancecompanies. The statistical tools usedto analyze are average rank analysisand average percentage analysis. Theresults are displayed in the form ofcharts with interpretation. Selectingthe particular product in privatehealth insurance companies.It is understood from Chart-2 that therespondents have given first rank totax benefits which they consider to bethe priority among the other factorslike bonus and premium amount.OBJECTIVE-4:To study the customers’ opinion /perception towards services providedby the private health insurancecompanies. The statistical tools usedto analyze are percentage analysis.The results are given in the form oftables with suitable interpretation.The following is the outcome of thecustomers’ opinion/perception towardsservices based on the percentageanalysis the following is the outcome:• Majority of the respondents prefercash as a convenient mode ofpayment.• Majority of the respondents wereof the opinion that the servicerendered by the agents or theadvisors is good followed by 45% asnormal rating to agents’ services.• Respondents felt that there is afair promptness when the claimsare settled to the policyholders.Chart-2: Average ranking of factors for selecting the particular policyDecember 2010 Vol. 7, Issue 2[ 89 ]

Table-7: Percentage Analysis – Opinion on Agents’ Services%Help tofill formsObtainingMedCertificateCollectPremiumAllGenderAge GroupEducationLevelOccupationIncome permonthMaritalStatusFamily TypeEarningMembersFamily SizeMale 68 1 0 29 38Female 32 0 1 13 18Below 25 13 1 0 6 625 to 50 78 0 1 32 45Above 50 9 0 0 4 5School 13 0 0 6 7College 51 0 0 17 34Professional 36 1 1 19 15Agriculture 12 0 0 6 6Business 23 1 0 6 16Employed 50 0 0 20 30Professional 15 0 1 10 4Below 10000 9 0 0 2 710000 to 20000 27 0 0 10 1720000 to 30000 31 1 1 17 12Above 30000 33 0 0 13 20Single 29 0 0 12 17Married 71 1 1 30 39Joint Family 40 0 0 14 26Nuclear Family 60 1 1 28 301 19 0 0 13 62 78 1 1 28 48>=3 3 0 0 1 23 36 0 1 14 214 48 1 0 23 24>=5 16 0 0 5 11[ 90 ] Rai Management Journal

FUTURE CHANGEEXPECTEDAt present when the Health Insurancemarket is growing there are largenumbers of proposals underconsideration with IRDA, InsuranceCompanies, Government Agencies &Corporate bodies. According tonewspaper reports some of these are:-(1) Licenses are now being issued toHealth Insurance companies byIRDA. Star Health was the firsthealth insurance co. which hasbecome operational in early 2006.Apollo DKV started operations inAus 2007. Max, Fortis, Dr ReddyLab has plans to enter thisbusiness.(2) In view of increase in medicationcosts the sum assured limit of Rs.5,00,000 has been increased to Rs.10,00,000. New India is workingon proposal to increase the sumassured limit to Rs 25,00,000. Thisis a welcome step.(3) In view of high claims ratio shouldthere be limit on amount payableon specific disease or treatment.According to recent news item,which appeared in newspaper onJune29, 2005 the proposal is tolimit it at Rs.1,62,000 for heartailment. Customers have reactedunfavourably to this news item.This will be major deterrent tocustomers to go in for HealthInsurance of Rs.5,00,000 or SayRs.10,00,000. This proposal iscontradictory to point 2. Generalopinion emerging is that if this isdone then many customers willreduce their coverage from Rs.5,00,000 to Rs. 2,00,000.(4) Insurance companies arebecoming restrictive in issue ofhealth insurance policies and areconsideringa) Minimum sum assured of Rs. 1lakh.b) Maximum age at entry of 50years or so. Those havingpolicies in force will howevergo on getting renewal ofpolicies. There is a proposal ofintroducing concept of loadingfor senior citizens who areabove 60 years.c) Insurance premium mayincrease by 100% in nearfuture say in 2008 due toPrimeMinister'sannouncement of Rs.2000Crores health insurance planfor poor.(5) Hospitals / Pharma Co's maybecome promoters / investors inhealth insurance companies. Itmay result in better healthcaremanagement as resources can beeffectively utilized for the welfareof the society.(6) Some projections are indicatingthat by 2010 Health Insurancepremium will touch Rs.25,000Crores.(7) Stricter norms will be introducedfor TPA's.(8) Concept of Co pays to getstrengthened so that seniorcitizens have no problem in gettinginsured.December 2010 Vol. 7, Issue 2[ 91 ]

A large number ofpeople in India arenot finance savvyand would like toplay safe and avoidthe vagaries of themarket movementsso that they can plantheir future incomeflows and not beworried about thefatal accidents.CONCLUSION:A large number of people in India arenot finance savvy and would like toplay safe and avoid the vagaries of themarket movements so that they canplan their future income flows and notbe worried about the fatal accidents.The new private insurers coming inwith the liberalization of the sectorare adding more channels ofdistribution in the Indian marketparallel to the existing ones. Themantra is ‘innovation anddiversification’.Today in the liberalized insurancemarkets, every new health insurersells through one or more ‘alternativedistribution channels’ that ensuresaccessibility of the insurance productsto the rural people. The privatecompanies no longer rely solely orexcessively on the agent network, thathas given new way to a range of newdistribution channels –telemarketing, direct marketing,corporate agents and developmentofficers and directly on the internet.Utilizing the extensive network forselling insurance will over a period oftime bring about an increase ininsurance density in private healthinsurance companies. Besidesimproving insurance penetration inrural areas, a large unexploitedpotential exists that were estimatedat 740 million spread over 7 lakhsvillages across a wide variety ofregions in India are still to beexplored.REFERENCES:Books:• Emmett J Vaughan, Risk Management,John Wiley & Sons, 1997.• Harold D Skipper and W Jean Kwon, RiskManagement and Insurance: Perspectives ina Global Economy, Wiley India, 2008.Journals:• Dr. B. Kalpana & Dr. B. Sadhana,Insurance a Ray of Hope, Journal ofContemporary Research in Management,Jul-Sep 2008, p.125-140.• IRDA Annual Reports 2005-06, 2006-07,2007-08, 2008-09.• Govt. of India, Report of Committee onReforms on the Insurance Sector (MalhotraReport), Ministry of Finance, New Delhi.• Private Health Insurance in India: Promise& Reality, US Agency for InternationalDevelopment, India, Feb 2008.• Insurance Chronicle, ICFAI UniversityPress, 2010, pp.65-70.• Randall P Ellis, Moneer Alam, IndraniGupta, Health Insurance in India –Prognosis and Prospectus, Economic andPolitical Weekly, Jan 22, 2000, pp.207-217.Websites:• www.irda.org• www.healthinsuranceindia.org[ 92 ] Rai Management Journal

Random walks in stock market prices,with special reference to Indian Oil andGas StocksNeha Mishra*This study, which is essentially a literature review, intends to explain the behavior of stock prices in theIndian stock market. This paper applies Run test to test the Random Walk in the Indian stock marketprices. The empirical results demonstrate that the share market price in all the stocks considered underthe study, show Random walk.Keywords: Stock market and capital market.INTRODUCTIONThe capital market plays a pivotal rolein the allocation of economic resourcesinto productive activities of theeconomy, which are possible only ifthe securities traded in the marketsare priced appropriately. A capitalmarket in which stock prices fullyreflect all available information can betermed as efficient. Eugene Fama(1960) classified the market efficiencyinto the following three categoriesdepending on the information set thatis fully reflected in the security prices.a. Weak - Form of Efficiency,popularly known as Random WalkTheory states that the currentstock prices reflect all theinformation that is contained inthe historical sequence of prices.b. Semi - Strong Form ofEfficiency, which states that*Faculty, Venkteshwar Institute of Technology, Indore, Indiacurrent market prices not onlyreflect all information content ofhistorical prices but also reflect allthe information, which arepublicly available about thecompanies being studied.c. Strong - Form of Efficiency,which states that current marketprices reflect all informationwhether it is publicly available orprivate information (insidersinformation).In an efficient market, when a newinformation item is added to themarket, its revaluation implicationsfor security returns areinstantaneously and unbiasedimpounded in the current marketprice. So, the price change is Random.This research has tested the efficiencyof the Indian stock The study analysesnine companies in the Indian Oil andIn an efficientmarket, when a newinformation item isadded to the market,its revaluationimplications forsecurity returns areinstantaneously andunbiased impoundedin the currentmarket price.December 2010 Vol. 7, Issue 2[ 93 ]

Gas sector, to capture the movementof share price in the year 2009-2010,using the Run Test. The Indian Oiland Gas companies which wereselected for the analysis were Abanoffshore Ltd, Bharat Petrolieumcorporation Ltd, Cairn Ltd, Essar oilLtd, GAIL ,Indian oil, ONGC,Reliance Naturals Ltd and RelianceIndustries Ltd.LITERATURE REVIEWA Random Walk Down Wall Street,written by Burton Malkiel in 1973,has become a classic in investmentliterature. Random walk theory jibeswith the semi-strong efficienthypothesis in its assertion that it isimpossible to outperform the marketon a consistent basis. Malkiel putsboth technical analysis andfundamental analysis to the test andreasons that both are largely a wasteof time. In fact, he goes to greatlengths to show that there is no proofto suggest that either can consistentlyoutperform the market. Any successoutperforming the market withtechnical analysis or fundamentalanalysis can be attributed to ladyluck. If enough people try, some arebound to outperform the market, butmost are still likely to underperform.Many studies have been done on theEfficient Market Hypotheses,some ofthem are discussed here.Barnes (1986) examined 30companies and 6 sector indices for thesix years ended 30 June 1980. Usingmonthly data, the serial correlationand runs tests results exhibit a highdegree of efficiency in the weak form,with little departure from the randomwalk hypothesis. Further spectralanalysis confirms the earlier findingsthat the KLSE is fairly efficient.Laurence (1986) used daily closingprices adjusted for cash and stockdividends, splits and rights issues, of16 individual stocks traded on theKLSE over the sample period of 1June 1973 through 31 December 1978.Results from serial correlation andruns tests suggest only slightlydeviation from perfect weak-formefficiency. Using data for 6 sectorindices and the all-share index from1975 to 1982, Saw and Tan (1989)found that the Malaysian stockmarket is inefficient in the weak formwhen weakly data were used, butpockets of market efficiency existedwhen monthly data were used.Annuar et al. (1991) conducted theweak form test on 82 individual stockswhich were continuously traded onKLSE from 1975 to 1989, using theunit root methodology to account forcyclicality in price series andcontrolling thin trading effect.Overall, about 87% of the total sampleof 82 stocks possess unit root,implying that there is a 13% chancethat a security price is inefficient overthe fifteen-year period. Though thefindings suggest the market isgenerally weak form efficient, pocketsof inefficiency are observed for sharesthat suffer liquidity problem. Annuaret al. (1993) addressed similar issuebut using indices data in place ofindividual stocks, covering sampleperiod from January 1977 throughMay 1989, with weekly and monthlyintervals. The results from unit rootanalysis, serial correlation test and Qstatistics strongly suggest that theKLSE is weak form efficient, though,once again, pockets of inefficiency are[ 94 ] Rai Management Journal

eported forsome indices.Kok and Lee (1994) analyzed thestock prices behaviour of 32 companieslisted on the Second Board of KLSEover the period 2 January 1992 to 30December 1994. The results fromvarious statistical tests- runs test,serial correlation test, Ljung-Box-Pierce Q test and Von Neumann’sratio test, suggest that informationbased on historical prices is fullyreflected in current price within aweek but may not be fully impoundedin current price within a day. Thus,the Second Board of KLSE is weakformefficient with respect to weeklydata. Though daily price series areserially correlated, the magnitude oftheir correlations is not large enoughto devise any mechanical trading rulesfor profitable investment timing. Kokand Goh (1995) utilized daily, weeklyand monthly closing prices of 7 KLSEstock indices over a period of nineyears from 1984 to 1992. Using similarmethodologies as Kok and Lee(1994), the authors found serialdependencies in successive pricechanges for all KLSE daily stockindices. However, the significantcorrelations found are very small thatit is unlikely to have any economicvalue, and this led the authors toconclude the market is weak formefficient. When weekly data wereused, the efficiency of the Malaysianstock market has improved from aweak-form inefficient market in themid 1980s to a weak-form efficientmarket by the late 1980s and early1990s. Finally, the results frommonthly data provide conclusiveevidence of weak form efficiency,suggesting that market efficiencyimproves with longer temporalaggregation of sample data. Unlikeother studies, Kok and Goh (1995)proceeded to address the issue of meanreversion using long-horizon returns.Though the variance ratio testprovides evidence of mean reversion, itis not statistically significant to rejectthe long run random walk hypothesis.The evidence of non-linearity hasstrong implication on the weak-formEMH for it implies the potential ofpredictability in financial returns.Specifically, if investors could haveprofitably operated a trading rule (netof all transactions costs) that exploitsthis detected non-linearity, it would beat odds with the weak form EMH,which postulate that even non-linearcombinations of previous prices arenot useful predictors of future prices(Brooks, 1996; Brooks and Hinich,1999; McMillan and Speight, 2001).However, Hsieh (1989) argued that thestandard statistical tests such asserial correlation test, runs test,variance ratio test and unit root testsmay fail to detect non-linear departurefrom the random walk hypothesis.Motivated by this concern, Lim et al.(2003c) re-examined the random walkhypothesis as all those earlier KLSEstudies in favour of EMH haveimplicitly disregarded the presence ofnon-linearity, which will have seriousconsequences of making incorrectinferences and policyrecommendations, as highlighted byLiew et al. (2003). Using the Brock-Dechert-Scheinkman (BDS) test,which has been proven to be quitepowerful in detecting departures fromi.i.d. behaviour in some Monte Carlosimulations (see, for example, Brock etal., 1991; Hsieh, 1991)2, Lim et al.(2003c) found the inadequacy ofrandom walk model to describe theDecember 2010 Vol. 7, Issue 2[ 95 ]

price behaviour of KLSE since somecycles or patterns show up morefrequently than would be expected ina true random series. As those earlierstudies have ruled out the possibilityof linear dependencies, the departurefrom random walk might be due to thepresence of non-linear serialdependencies. Indeed, Lim et al.(2003b, d) and Lim and Tan (2003)provided convincing evidence thatnon-linearity plays a significant rolein the underlying dynamics of theMalaysian stock market.HYPOTHESIS OF THESTUDYThe following hypotheses are to betested in this study1. H0 : The movement of share priceis not random.2. H0 : The Indian share market ifnot efficient.RESEARCH DESIGNSCOPE OF THE STUDYThe present study tests theinformational efficiency of the IndianStock Market in the Weak Form ofEfficient Market Hypothesis (EMH).The study is restricted to the Indiancompanies included in the Oil andGas Index of Bombay Stock Exchange.There are 10 companies included inthe index.But because ofunavailability of data (for HindustanPetroleum Corporation Ltd), the totalnumber of stocks considered for thestudy was 9.The same study can beapplied to other sectors also or for allthe companies listed in BSE and NSE.Sample selection and datacollectionThe research object requires a set oflisted Oil and Gas companies whichadequately represents the Oil and Gassector of Indian stock market.Towards this end, samples fulfillingthe criteria below are drawn from theBSE listed companies ( as per 15thJune 2010 list).The study is fullybased on the secondary data sourcessuch as www.finance.yahoo.com.Selection criteria for thesampleOBJECTIVESThe objectives of the present study areas follows1) To examine the Random walks inthe share price of the Indian Oiland Gas stocks.3) To test for the existence of weakform of Indian stock marketefficiency.While selecting the sample , thefollowing criteria have been taken intoconsideration:1. Companies should belong to thelist of Oil and Gas index.2. Weekly stock prices of thecompany should be available forthe financial year 2009-2010 (1stApril 2009 – 31st March 2010).3. Securities should be activelytraded.[ 96 ] Rai Management Journal

SAMPLEFrom the list of Oil and Gas index,only nine stocks were able to fulfill allthe criteria considered for the study.The list of companies selected for theare Aban offshore Ltd, BharatPetrolieum corporation Ltd, CairnLtd, Essar oil Ltd, GAIL , Indian oil,ONGC, Reliance Naturals Ltd andReliance Industries Ltd.Tools used for the Analysis:Runs Test for Serial Randomness ofStock price is applied for the analysisof the weekly closing price of thecompanies. Runs Test for SerialRandomness.In this study the weekly price ofstocks were arranged in thechronological order from April ’09 toMarch ’10.Then the week price whichhas increased as compared to thepreceding week is symbolized as ‘ + ‘and the week price which hasdecreased as compared to thepreceding week is symbolized as ‘ –‘.Now the Run is given to the symbols1, 2 , 3 etc. When the symbol changesthe run also change.For Example,For the following series +, + ,-,-,-,-,-,-,+,+,+ the runs are1,1,2,2,2,2,2,2,3,3,3.Then the total number of runs iscalculated for the individual stock andis represented by R.The no. of ‘+’ symbols are denoted asN1 and the no. of ‘-‘ symbols aredenoted as N2.Now,The mean is calculated by followingformulaµ = 2* N1 * N2 +1N1+ N2The standard deviation is calculatedas belowσ= 2 N1* N2 (2 N1* N2- N1 – N2 )(N1+ N2) 2(N1+ N2 -1)Now the upper and lower limit forindividual stock is calculated as:Upper limit= µ+1.96* σLower limit= µ-1.96* σWhere 1.96 is the Z value at 5%significance level.RESULTS ANDINTERPRETATIONAfter calculating the upper limit andlower limit, it should be observed thatthe observed runs must lie within therange of the upper and lower limit forthe stock to show the Randommovement of its price.December 2010 Vol. 7, Issue 2[ 97 ]

The following observation is made:Table 1.COMPANY NAMERUNSOBSERVED N1 N2 µ σ UPPERLIMITLOWERLIMITAban Offshore 25 30 22 25.384 12.137 49.17 1.59Bharat PetroleumLtd25 29 23 25.65 12.4 49.96 1.347Cairn 26 27 25 25.96 12.706 50.855 1.056Essar Oil 31 26 26 26 12.745 50.98 1.019Gail 24 29 23 25.65 12.401 49.96 1.347Indian oil 18 28 24 25.846 12.59 50.52 1.166ONGC 28 28 24 25.84 12.59 50.525 1.166Reliance Naturals 31 25 27 25.96 12.706 50.866 1.056RIL 28 31 11 16.238 6.035 28.066 4.4In table1 we can see that all the ninestocks of Oil and Gas Index showrandom movement in the share price.CONCLUSIONThe result of the study proves that theIn stock market price follow a randomwalk and Indian market is efficientand reflect all the informationcontained in the historical sequence ofprices.LIMITATION OF THESTUDYThe following are the limitation of thepresent study1) This study is restricted with onlyIndian Oil and Gas sector.2) The study is done for a very shortduration of one year.REFERENCE• Annuar, M.N., Ariff, M. and Shamsher, M.(1991) Technical analysis, unit root andweak-form efficiency of the KLSE. Banker’sJournal Malaysia, 64 (April), 55-58.• Annuar, M.N., Ariff, M. and Shamsher, M.(1993) Weak-form efficiency of the KualaLumpur Stock Exchange: an application ofunit root analysis. Pertanika Journal ofSocial Sciences and Humanities, 1, 57-62.• Annuar, M.N. and Shamsher, M. (1993) Theefficiency of the Kuala Lumpur StockExchange: a collection of empirical findings.Selangor, Malaysia: Universiti PutraMalaysia Press.[ 98 ] Rai Management Journal

• Barnes, P. (1986) Thin trading and stockmarket efficiency: the case of the KualaLumpur Stock Exchange. Journal ofBanking Finance and Accounting, 13, 609-617. Reprinted in I. Ibrahim and O. Yong(eds.) Understanding the behaviouralpatterns of stock prices: a collection ofreadings on selected far eastern stockmarkets, pp.65-72. Kuala Lumpur: LeedsPublications.• Saw, S.H. and Tan, K.C. (1989) Test ofrandom walk hypothesis in the Malaysianstock market. Securities Industry Review,15(1), 45-50.• Brooks, C. and Hinich, M.J. (1999) Crosscorrelationsand cross-bicorrelations inSterling exchange rates. Journal ofEmpirical Finance, 6(4), 385-404.• Brock, W.A., Hsieh, D.A. and LeBaron, B.(1991) Nonlinear dynamics, chaos, andinstability: statistical theory and economicevidence. Cambridge: MIT Press.• Brooks, C. (1996) Testing for non-linearity indaily sterling exchange rates. AppliedFinancial Economics, 6, 307-317.• Kok, K.L. and Lee, F.F. (1994) Malaysiansecond board stock market and the efficientmarket hypothesis. Malaysian Journal ofEconomic Studies, 31(2), 1-13.• Kok, K.L. and Goh, K.L. (1995) Malaysiansecurities market. Petaling Jaya, Selangor:Pelanduk Publications.• Lim, K.P., Azali, M. and Habibullah, M.S.(2003a) Non-linear dynamics in bilateralMalaysian ringgit- U.S. dollar spot rate.Jurnal Analisis, forthcoming.• Lim, K.P. and Tan, H.B. (2003) Episodicnon-linearity in Malaysia’s stock market.Proceedings of the 1st InternationalConference of the Asian Academy of AppliedBusiness 2003, 10-12 July 2003, KotaKinabalu, Sabah, Malaysia, pp.314-323.• Lim, K.P., Habibullah, M.S. and Lee, H.A.(2003d) Non-linear dependence inMalaysia’s stock market. Proceedings of theNational Conference on ManagementScience and Operations Research 2003, 24-25 June 2003, Melaka, Malaysia, pp.169-183.• Laurence, M. (1986) Weak-form efficiency inthe Kuala Lumpur and Singapore stockmarkets. Journal of Banking and Finance,10, 431-445.December 2010 Vol. 7, Issue 2[ 99 ]

Impact of Dividend Announcements onStock Returns: A Study across PopularSectors In IndiaS.V. Malhotra*Parul Bhatia**Investors generally resort to investing in stocks of banking, information technology, telecom and retailcompanies. This is observed if we randomly check the trading frequency of these stocks at stock exchanges.The stock prices react to announcements made over the stock exchanges on daily, monthly, quarterly andyearly basis. The magnitude of variation however varies with the type of news, company, industry, stocketc. The present study is focused on the year 2008-09 to find out over all significant change in abnormalstock returns due to announcement of dividends by sample companies which are frequently traded andlisted with NSE India. Event study methodology using daily returns along with the constant mean returnmodel has been used. The study thrives to empirically investigate the declaration of dividendannouncement effect on abnormal stock returns by applying z-test and t-test.Keywords: Dividend, announcement effect, mean return and event study.The two keydeterminants for theperformance of asecurity/share are riskand return.IntroductionInvestment as a term is related toseveral closely related meaningsfrom the field of finance, economicsand business managementassociated with savings andconsumption. Investing is activelyredirecting the resources from beingconsumed today to creating benefitsin future i.e. use of assets togenerate income or profit fortomorrow. There are variousinvestment options available whichare helpful in developing risk-returntrade off. One of the most importantforms is equity shares. The two keydeterminants for the performance ofa security/share are risk and return.Return refers to the motivating forceinspiring the investor in the form ofrewards for undertaking theinvestment. Returns on investmentdo not come for free. They are alwayssurrounded by probabilities oflosses. This probability of losingpossible income from the investmentis technically known as risk. If aninvestor makes investment hisincome will be of two types: fixedregular income and capital gain. It isgenerally said that shareholders arenot interested in fixed regularincome i.e. dividends, rather theyare more keen for capital gains. But,empirical studies have proved thatdividend announcements havesignificant impact on share prices.* Director, Gurukul Institute of Management, Chandigarh, India**Lecturer, IILM B-School, New Delhi, India[ 100 ] Rai Management Journal

Thus, this paper has incorporateddividend announcement both in preannouncement and postannouncement face as the mainvariable.Dividend declaration depends uponthe existing rate of growth and rate ofreturn of the particular company. Thedeclaration of dividend by everycompany undergoes a formal process.There are three important datesinvolved in the process: declarationdate, date of record and payment date.The declaration date signifies theintention of the board of directors ofthe company to pay dividends to itsshareholders. The date of record alsoreferred to as ex-dividend date whichrefers to record of owner of the sharebefore this date. The dividend will beprovided to the shareholder who holdsthe share before this due date. Itmeans that if the share is sold afterex-dividend date, dividend will still beavailable with the previous owner ofthe share. The payment date refers tothe date of disbursement or actualpayment of the dividend. Thus, exdividenddate is the real base forstudying the impact of dividenddeclared. The present study focusesupon finding out dividendannouncement effects on stock returnsof the companies in various segmentsof the Indian economy. The stocksfrom four different sectors frequentlytraded at National Stock Exchange inIndia have been taken and theirrespective stock prices are included inthe total sample size to find out theimpact of dividend announcements onabnormal stock returns.REVIEW OF LITERATUREDecember 2010 Vol. 7, Issue 2The researchers and academicians inIndia as well as abroad have madecontribution in their researches ondividend policies and announcementeffect of dividends on stock prices. Al-Obaidan Abdullah M. (2008)contributed in major with quantitativeand relevant measures of theinformation content of dividends inbanks located in emerging markets.Brown Lawrence D. (2008) related theinformativeness of earnings anddividend announcements to theirtiming relative to the fiscal quarterend to which the earnings pertain.Eriotis Nikolaos (2007) discoveredthat existence of a long term dividendpolicy stood partly unaffected by thelevel of current period earnings.Hazak Aaro (2007) presented atheoretical model on dividend policyfor distributed profit taxation which isthe corporate taxation regime ofEstonia. Henry Elaine (2006)examined market reactions to firm’searnings announcements. The studyextended the examination to include abroad range of concurrent disclosurecontained in earnings press releases,the financial disclosures captured asaccounting ratios and verbalcomponents of disclosure which werecaptured using elementary computerbased content analysis. Hochberg YaelV. (2003) examined the effects ofventure capital backing on thecorporate governance of the firmfollowing the IPO. The studyconducted three independent sets oftests which examined effectively howgovernance and monitoring differedfor venture and non-venture backedfirms. How Janice C. Y. (2007)observed that in a relatively lesslitigious environment like Australia itwas common to find IPO firms thatvoluntarily provided forecasts in theirDividend declarationdepends upon theexisting rate ofgrowth and rate ofreturn of theparticular company.[ 101 ]

prospectus. 158 Australian industrialIPOs listed from 1991 to 1997 wereused in the study to examine theimpact of the disclosure and accuracyof earnings and dividend forecasts onequity pricing. Hribar Paul (2004)examined how institutional investorsrespond to accounting restatements.The study showed that transientinstitutional investors defined asinstitutions with shorter investmenthorizons and higher portfolioturnover significantly reduced theirholding in a restating firm at leastone quarter prior to the quarter of therestatement. Jegadeesh Narasimhan(2002) examined the relation betweenrevenue surprises and future stockreturns. The study investigated howanalysts updated their earningsforecasts followed by announcementsof revenue and earnings surprises.The results indicated that the stockprice reaction on the earningsannouncement date was significantlyrelated to both revenue surprises andearnings surprises. Kanniainen Juho(2007) examined stochasticity of stockreturn volatility by questioning theassumption that the conditionalexpectations of future dividends reactto the same new information. Thestochastic evolutions of conditionaldividend expectations werecharacterized by extending theinformation process to dividendpaying stocks. Kanwal Anil (2008)observed profitability as always beenconsidered as a primary indicator ofdividend payout ratio. Apart fromprofitability, numerous other factorslike cash flows, corporate tax, salesgrowth and market to book valueratio were also considered rampant.Koerniadi Hardjo (2008) examined intheir study whether managersdeliberately used accruals to conveyinformation regarding firm futureprofitability. The contemporaneousearnings and dividend announcementdata was used as research setting asit reduced the possibility ofopportunistic income smoothing bymanagers and hence increased thevalidity of the inference on theaccrual signaling hypothesis. KumarPraveen (2006) derived a conditionalCAPM in a general equilibrium modelwhere investors faced estimation riskon mean returns and learnt frominformation of uncertain quality orprecision. In equilibrium, the loadingon market risk augmented thestandard beta with the random orinformation dependent conditionalcovariance matrix of the unknownmean returns. Minnick Kristina L.(2004) examined the cross sectionaldeterminants of the decision to takewrite offs. A hand collected dataset onwrite-offs was used that was muchmore comprehensive than existingwrite-off datasets. It was found thatquality of governance was positivelyrelated to write-off decisions in thecross section. The results alsosuggested that poor governancecompanies waited to take write-offsuntil it became inevitable while wellmonitoredcompanies took write-offssooner. Narayanamoorthy Ganapathi(2003) identified previouslyundocumented source of predictablecross-sectional variation inStandardized Unexpected Earnings’autocorrelations viz. the sign of themost recent earnings realization andpresented evidence that the marketignored this variation (loss effect). Itwas possible to earn returns higherthan from the Bernard and Thomasstrategy by incorporating this feature.Padgett Carol (2007) tested thesignaling and free cash flow[ 102 ] Rai Management Journal

hypotheses of the information contentof share repurchases using UK openmarket share repurchases betweenJanuary 1999 and December 2004.The five day mean announcementabnormal return of the sample waslow at 1.28% but it was statisticallysignificant at the 5% level. Rees Lynn(2001) examined the importanceattached to revenue forecasts by firmsand the market and whether theseforecasts were value-relevantconditional on earnings forecasts. Thestudy was divided into parts. First, itexamined whether the capital marketreaction to earnings and revenueannouncements had an associationwith revenue forecast errorsconditional on earnings forecasterrors. Second, it investigatedexistence of differential valuationeffects associated with meeting orexceeding analysts’ revenueexpectations over and abovemeeting/exceeding analysts’ earningsexpectations. Sadka Ronnie (2005)investigated the components ofliquidity risk that were important forasset pricing anomalies. Firm-levelliquidity was decomposed intovariable and fixed price effects andwas estimated using intraday data forthe period 1983-2001. The unexpectedsystematic variations of the variablecomponent rather than the fixedcomponent of liquidity were shown tobe priced within the context ofmomentum and post earningsannouncement drift portfolio returns.Servaes Henri (2008) studiedresponses of industry when anotherfirm in the same industry was put to ahostile takeover attempt. The studydocumented two major responses: firstthe industry peers cut their capitalexpenses, free cash flows, cashholdings, increased their leverage andpayouts to shareholders. Second, theyincreased the quality of financialreporting. After the control threat,there was an evidence of less earningsmanagement, more timely lossrecognition and more value relevanceof accounting earnings. Shu Tao(2008) analyzed the impact of tradercomposition i.e., the fraction of totaltrading volume of a stock accountedfor by institutional trading on thecross section of stock returns. Thestudy found that trader compositionhad significant effects on stockreturns beyond institutionalownership. Specifically, major stockmarket anomalies such as returnmomentum, post earningsannouncementdrift, value premiumand investment effect were muchstronger in stocks with lower fractionof institutional trading volume.Subramani Mani R. (2002) examinedthe returns to e-commerce events inthe period from 1999 to 2000 whichemployed a set of short time windows(1 day, 5 days, 10 days bracketing theevent) as well as a set of long eventwindows (6 months, 9 months and 1year from the event). The resultsreflected little consistency betweenabnormal returns in short 1 day, 5days and 10 days event windows. Incontrast, the abnormal returnsobserved in 6, 9 and 12 monthswindows were reasonably consistent.Zhu PengCheng (2008) examined theshort term stock performance of asample of Indian firms who acquiredU.S. firms in the period 1999-2005.The event study showed that Indianstock market reacted positively to theacquisition announcement. Authorsfound out that the positive abnormalreturn lasted for only three days afterwhich the returns became negative.December 2010 Vol. 7, Issue 2[ 103 ]

The research work carried so farrelated to announcement effects hasnot stressed upon any key sector ofthe economy. Moreover, significantresults as to the relationship betweenannouncements and their impact onstock returns have not beendiscovered. Dividend announcementsin particular have been studied byvarious eminent scholars yet theyhave not brought in a commonconclusion in relation to the impact ofdividend announcements on stockreturns or stock volatility before andafter declaration of dividends. Also,sector wise study for dividendannouncements has not been carriedover in particular till now. Thus, thepresent study contributes towards theimpact of dividend announcements onstock returns vis-à-vis the analysis ofstock price variations before and afterdividend declaration.OBJECTIVES OF THESTUDY1. To investigate the impact ofdividend announcements ofsample companies frequentlytraded at NSE India.2. To analyse significance ofdividend announcements onabnormal stock returns in the preand post period announcement ofdividends.3. To analyse the performance of acompany within and among thevarious sample sectors.RESEARCH METHODOLOGYThe study has focused on four sectorsof the Indian economy; Banking,Information Technology, Telecom andRetail to analyse the performance ofstock in these sectors over dividendannouncements. Stratified samplingtechnique has been used for selectingthe sample in the study by dividingthe whole sample into four subgroups.Each stratum consisted of top 7companies at random with highesttrading volume in the respectivesector. In total, 28 companies hadbeen selected on the basis of tradingvolume, i.e., 7 companies for eachstratum.The hypothesis in the present studyassumed that there can be asignificant impact of the dividendsdeclared on the abnormal stockreturns of the respective companies’stocks. The information aboutdividends announced reaches thecommon investors over the stockexchanges. Thus, like other normaland abnormal announcements therecan be variations in the investors’expectations on account ofannouncement of dividends. This isdue to the fact that dividends form animportant component of investors’earnings from the equity stocks alongwith capital appreciation. Due tochange in investors’ confidence andexpectations from a particular stockthere can be changes in expectedreturns of the same stock and hencecan impact its abnormal stockreturns. The hypothesis has beentested in the present study with thehelp of t-test and z-test.[ 104 ] Rai Management Journal

The present study addresses itsobjectives and testable hypotheses byusing event study methodology. Eventstudy is concerned with how tomeasure the effects of takeovers,restructuring transactions and otherevents on the firm. An event study isconcerned with the impact of aparticular firm-specific corporateevent on company security prices. Thismethodology to study the impact ofevent is extended for the presentstudy. The relevant event here isdividend announcements. This eventis taken as the base for conducting anevent study to find out the impact ofdividend announcements. Thedividends declared by the samplecompanies in the financial year 2008-09 are taken as the main event to thestudy.Event window refers to the total timeperiod revolving around the eventwhich is taken as the main time frameto study the impact of the respectiveevent. The present study has taken anevent window of 61 days in totalincluding the event date, i.e., the dateon which dividends were announcedfor the respective sample stocks of thecompanies. So, the total event windowwas broken into two parts. First partwas composed of stock prices beforethe dividend was announced and thesecond part was composed of stockprices after the dividend wasannounced. The event date, i.e., thedate when dividend was announcedwas termed as t=0, middle of the eventwindow. First part of the eventwindow was composed of 30 days stockprices (-30) and the second part of theevent window was also composed of 30days stock prices (+30). Thus, the totalevent window was (-30) – t – (+30)where -30 represented preannouncement phase, t representedthe event date and +30 representedpost announcement phase.The event study has been used to findout the impact of dividendsannouncements on the respectivestock prices of the sample companies.The present study here has focused ondaily stock prices of the samplecompanies stocks. The daily stockprices of all the 28 companies includedin the sample are taken from the NSEwebsite (www.nseindia.com) forfurther processing. The returns arefurther calculated in detail withnormal, average, abnormal andcumulative returns. The normalreturns of all the sample stocks arecalculated as:Rit = (Pt – Pt-1)/Pt-1,where, Rit = Current Day NormalReturn, Pt = Current Day Stock Price,Pt-1 = Previous Day Stock Price.The abnormal returns for all thestocks have been calculated using theconstant mean return model.After obtaining the mean returns forall the sample stocks the abnormalreturns had been calculated with thehelp of following formula:ARit = Rit - E (Rit),where, ARit = Current Day AbnormalReturn, Rit = Current Day NormalReturn, E (Rit) = Expected Return(mean return).June 2010 Vol. 7 Issue 1[ 105 ]

The abnormal returns calculated arefurther converted into cumulativeabnormal returns for application ofstatistical techniques with the help ofconstant mean return model. Thecumulative abnormal returns arecalculated for both before and afterthe event date. The mean CAR iscalculated as:both in pre announcement and postannouncement of dividend. The totalevent window of 61 days stood 30 daysprior to the announcement and 30days after the announcement ofdividends excluding the event date.The t-values are calculated with theformula given below:Mean CAR =where, mean CAR = Mean ofCumulative Abnormal Returns, CARi= Cumulative Abnormal Returns, n =number of days.The standard deviations for all thestocks had been calculated for pre andpost announcement event to find outthe magnitudinal change in the stockreturns. It is calculated as:√CAR/nWhere, CAR = Cumulative AbnormalReturns, n = number of days.STATISTICAL TECH-NIQUES USEDIn consonance to the objectives of thestudy and for testing the hypothesis t-test and z-test has been applied. t-testhas been applied to test the impact ofdividend announcement on abnormalstock returns of the sample companiesThe t-values were further comparedwith the table values at 1%, 2% and5% level of significance to test thesignificance of the results.z-test has been applied for all thesample companies to analyse theresults of the four sectors taken as asample in the study. The z-values arecalculated comprehensively for thetotal event window of 61 days to studythe impact on stock returns amongthe different sectors in the samplecompanies. The significance of z-values were tested at 1%, 2% and 5%level of significance.EMPIRICAL RESULTSThe empirical results for the studywere interpreted with the help ofmainly 4 tools i.e. mean CAR,Standard Deviation, t-value and z-value. Mean CAR in two periods i.ebefore and after dividendannouncement has been comparedwith the other sample companieswithin the sector to find out thatwhich company has maximum meanabnormal returns. Standard[ 106 ] Rai Management Journal

Deviations are similarly compared inthe same sector to locate the companywith maximum variation in abnormalstock returns. The significance of thestocks of the different samplecompanies i.e. Banking, InformationTechnology, Telecom and Retail hasfurther been tested with the help of t-values. The z-values have beencomputed for the complete eventwindow of each sample company toanaylse the performance of a companywithin the sector company and toevaluate the companies among thesector companies. The significance of t-values and z-values have beeninterpreted at 1%, 2% and 5% levels ofsignificance.BANKING SECTORThe mean CAR, standard deviationand t-values before and afterdeclaration of the dividend and z-values for the whole window ofBanking sector comprising of 4 publicsector banks and 3 scheduledcommercial banks has been tabulatedin Table 1.The analysis of Table 1 signifies thatthe maximum CAR was observed forAxis Bank in both the preannouncement and postannouncement period. It may be dueto the fact that the private sectorbanks were offering better returns ascompared to public sector banks in thetime period of study. The mean CARTable 1: Banking SectorName of theBankMean CARBeforePunjabNationalBankIDBIBankUnionBank ofIndiaStateBank ofIndiaAxisBankHDFCBankICICIBank-5.88 -13.71 -6.07 8.47 20.15^ 8.50 -9.54S.D. Before 7.16 8.50 8.51 4.12 10.41^ 3.55 8.16Mean CARAfter-10.86 -0.89 -11.59 -6.09 14.12^ -0.01 -4.38S.D. After 6.04 9.69 10.21 5.72 6.15 4.10 12.49^t-value Before -4.49 -8.83 -3.91 11.24* 10.60* 13.11* -6.40t-value After. -9.84 -0.50 -6.22 -5.83 12.57* -0.01 -1.92z-value -9.38 -5.27 -7.06 1.07 15.02* 5.85* -5.17Note:1. *, **, *** significant at 1%, 2% and 5% level of significance.2. ^ indicates maximum value.December 2010 Vol. 7, Issue 2[ 107 ]

value of HDFC Bank and SBI was alsoobserved positive before theannouncement of dividends. Thesetwo banks have shown betterperformance as compared to the othersample banks before theannouncement of dividends. Themean CAR value of all the otherbanks except Axis Bank after theannouncement of the dividend wasobserved negative. This indicates thatthe stockholders of these banks werenot satisfied with the abnormalreturns after the declaration ofdividends. The maximum standarddeviation was observed in case ofUnion Bank of India in the preannouncement period followed byICICI Bank. In the post period ofdeclaration of dividend high value ofstandard deviation was observed incase of ICICI Bank. The high value ofstandard deviation in case of ICICIBank may be because the bank did nothave good reputation in the marketduring this period as the bank couldhave gone for bankruptcy due to theeffect of US recession and failure ofLehman Brothers Bank at US. The t-values in case of Axis Bank, HDFCBank and SBI were found significantat 1% level of significance in the preannouncementperiod of dividend, butin the post announcement period ofdividend only Axis Bank was observedsignificant at 1% level of significance.It is obvious that the CAR value ofAxis Bank was positive and highest inthe post announcement period ofdividend. The results of the z-valuesfor the complete event window forsample banks show that only AxisBank and HDFC Bank were foundsignificant at 1% level of significance.Table 2: Information Technology SectorName of the Co. TCS WIPRO Infosys HCL Tech M PCS MphasiSMean CAR Before -2.37 1.01 -4.74 6.27^ -12.84 4.06 -6.81S.D. Before 3.53 2.61 6.70 7.24 12.13^ 3.19 4.31Mean CAR After -5.54 -8.34 -4.97 2.28^ -19.43 0.04 -12.01S.D. After 4.46 6.47 4.71 9.01 9.24^ 5.02 5.35t-value Before -3.68 2.12* -3.87 4.75* -5.80 6.98* -8.65t-value After -6.81 -7.06 -5.78 1.39 -11.53 0.04 -12.28z-value -7.14 -4.29 -6.72 4.08* -11.31 3.51* -13.54Note: 1. *, **, *** significant at 1%, 2% and 5% level of significance.2. ^ indicates maximum value.[ 108 ] Rai Management Journal

The remaining banks did not show anysignificance with the exception thatthe z-value of SBI was positive. Thisshows that the SBI’s performance wasbetter among the public sector banks.INFORMATION TECHNOL-OGY SECTORThe analysis of companies inInformation Technology sectorobserved maximum mean CAR forHCL Technologies in both preannouncement and postannouncement period. It may be dueto announcement of net profit of Rs373.3 crore for the second quarterending December 2008, an increase of12.1% compared with the samequarter in 2007-08 and an increase of4.8% sequentially. The company’srevenues growth y-o-y is better thanthat of the top three IT companies –TCS, Infosys and Wipro. PatniComputer Systems has also shownmean CAR 4.06. This shows that theperformance of the company is betteramong the analysed companies inInformation Technology sector. Thestandard deviation among all theInformation Technology analysedcompanies was highest for TechMahindra in both pre announcementand post announcement period. Thiscould be due to the reason that thestock returns for Tech Mahindra werecalculated at a time period when therewas an announcement by US agencyfor stocks which were under pressurein IT sector and this stock was notlisted among the top gainers. Thestandard deviation for the HCLTechnologies Ltd. was also observedhigh showing fluctuations in the stockvalues. In case of Patni ComputerSystems the standard deviation wasnot showing consistency in stockprices. This indicates that PatniComputer Systems abnormal stockreturns had shown consistency ascompared to other companies understudy. The results for t-values werefound significant for WIPRO, HCLTechnologies and Patni ComputerSystems at 1% level of significance inthe pre-announcement period. Thesignificance of t-values in case of HCLTechnologies Ltd., Patni ComputerSystems and WIPRO have got supportfrom the mean CAR as these valueswere observed positive. The t-valueswere not found significant for anycompany in the post-announcementperiod. Only HCL Technologies Ltd.and Patni Computer Systems from ITsector have shown positive t-valuesand the other five companies haveshown negative t-values. This depictsthat the IT sector has been influencedbecause of world depression. The z-values were found significant for HCLTechnologies and Patni ComputerSystems at 1% level of significance. Itreflects that only 2 companies depictedsignificant results for dividendannounced over the abnormal stockreturns over the entire event windowout of 7 companies.TELECOM SECTORThe Telecom sector has been studiedand analysed by taking 7 companiesbeing traded frequently. The meanCAR value of abnormal stock returnsof Telecom sector reveals maximummean CAR for BPL Ltd. for both preannouncement and postannouncement dividend period. It maybe due to the announcement ofDecember 2010 Vol. 7, Issue 2[ 109 ]

Deutsche Bank to pick up stake inBPL Ltd. which built up the investor’sconfidence in this stock to asignificant extent. The standarddeviation among all the companieswas highest for AVAYA GlobalConnect Ltd. in pre announcementperiod. This could be due to the reasonthat the profit before interest anddepreciation for this company hadfallen more than to a double rate i.e.from 84.05 crore to 34.4 crore, thusdecreasing the confidence in thisstock. In the post announcementperiod, the maximum standarddeviation was observed for IDEACellular Ltd. This could be due to thereason that in this period it hadlaunched new tariff plans for itscustomers like “per second calling”but these were not very beneficialbecause the company offered theseplans after Airtel and Vodafone. AsAirtel and Vodafone had alreadylaunched these types of plans, in theabsence of competitive strategies andthe investors may not be very keen toinvest in IDEA Cellular Ltd. The t-value results were found significant at1% level of significance for RelianceCommunications Ltd., MTNL, IDEACellular Ltd. and BPL Ltd. in the preannouncementperiod. The MTNL haddepicted the maximum value, it maybe because it is the only company inTelecom sector which is functioning inIndia right from the beginning andthe people have faith in thisorganization. Moreover, the meanCAR in case of MTNL was positivewith very less standard deviationbefore the announcement of dividendshowing consistency in its stockreturns. The results also depicted thatTable 3: Telecom SectorName of theCo.Mean CARBeforeRelianceComm.BhartiAirtelLtd.MTNLIDEACellularLtd.TataTele.AVAYABPLLtd.5.19 -6.08 5.14 7.63 -12.30 4.05 24.55^S.D. Before 3.96 5.37 1.98 5.05 7.97 12.35^ 10.39Mean CARAfter-2.20 0.23 -6.25 5.71 -1.38 -0.47 27.33^S.D. After 11.01 2.39 9.22 18.01^ 4.45 7.23 12.07t-value Before 7.17* -6.20 14.18* 8.28* -8.46 1.80 12.94*t-value After -1.09 0.52 -3.71 1.73 -1.70 -0.35 12.40*z-value 1.44 -4.38 -0.42 4.03* -6.37 1.54 17.98*Note: 1. *, **, *** significant at 1%, 2% and 5% level of significance.2. ^ indicates maximum value.[ 110 ] Rai Management Journal

at this time the Telecom sector had notmuch influence on its stock prices dueto world depression especially in caseof existing companies having betterperformance in service sector. The t-values surprisingly were foundsignificant only for BPL Ltd. at 1%level of significance after the dividendwas announced. This shows thatalthough the depression in the worldhad not much influenced this sector ofindustry but it forced the stock returnsto give a thought to their stocks. The z-values were found significant only forIDEA Cellular Ltd. and BPL Ltd. at1% level of significance for dividendannounced over the abnormal stockreturns.RETAIL SECTORIn the retail sector, the maximummean CAR of abnormal stock returnswas seen for Provogue Retail (India)Ltd. in the pre announcementdividend period. It may be due to theannouncement of expansion plans bythis company during this periodwherein it mentioned to open 50 newretail stores in the country. Thus,investors must have taken it as a goodannouncement and returns went high.In the post announcement period, themean CAR was highest for ZodiacClothing Company Ltd. It could be dueto that the net profit almost doubled to510 crore in September 2008 ascompared to 279 crore in September2007. The mean CAR value of only 4companies i.e. Raymond, Koutons,Provogue Retail (India) Ltd. andZodiac Clothing Company Ltd. wasobserved positive and the value of theother 3 companies i.e. TRENT, TitanIndustries and Pantaloon Retail(India) Ltd. was negative in the preannouncement period. The standarddeviation among all the companieswas highest for Provogue Retail(India) Ltd. in both pre announcementand post announcement period. Thiscould be due to the reason that on onehand it announced its expansion plansbut at the same time came the newsfor stock split 5 for 1 which was lateron not done. The t-value results ofretail sector in the pre-announcementperiod were found significant forRaymond, Koutons and ProvogueRetail (India) Ltd. at 1% level ofsignificance. The t-value in case ofProvogue Retail (India) Ltd. wasobserved highest. The t-value resultsin the post-announcement period werefound significant only for ZodiacClothing Company Ltd. at 1% level ofsignificance. The 3 companies i.e.Raymond, Koutons and ProvogueRetail (India) Ltd. which weresignificant in the pre announcementdividend period did not turn out to besignificant. It is because of the meanCAR value which declinedsignificantly in the postannouncement dividend period due tosevere competition in this industry.The z-value result was foundsignificant only for Provogue Retail(India) Ltd. and Zodiac ClothingCompany Ltd. at 1% level ofsignificance.While comparing sectors amongthemselves, the analysis reveals thatno single sector can be taken as acomplete indicator for dividendannouncement impact on abnormalstock returns. In both the cases, beforeand after announcement samplestocks did not give a concreteconclusion in major to accept thehypothesis. There were cases ofsignificant results in few sampleDecember 2010 Vol. 7, Issue 2[ 111 ]

stocks but they were not sufficient toconclude for all the sample companies.This indicates that the individualcompany matters in performance ascompared to the whole sector.CONCLUSIONIndian share market offers lot ofinvestment opportunities to itsinvestors. The most popular amongthese options are shares. Equityshares provide the investor withreturns and ownership in therespective company. The returns fromequity shares are in the form ofdividends and capital appreciation.The latter refers to the increase in thevalue of a share while the formerrefers to the time to time distributionof profits by the company to itsinvestors. These dividends are themost awaited item for theshareholders of any company and thuscan have an impact on the returns of aparticular stock. In line with thislogic the present study has beenperformed. The empirical studies hadwitnessed that the DPS has a positivesignificant impact on thedeterminants of share prices.It may be interpreted from the resultsthat we cannot generalize that thereis impact of dividend announcementson the stock returns on the sector ofcompanies as a whole as few of thesample companies of a sector whichgot changes in stock returns duringdividend announcement phase may beout of chance factor. The core reasonfor the same could be that allcompanies in general declare almost aTable 4: Retail SectorName ofthe Co.Mean CARBeforeTRENTTitanIndustriesRaymond Koutons ProvogPantalonZodiacClothingCo. Ltd.-6.19 -8.20 2.35 2.26 47.27^ -15.82 1.54S.D. Before 4.52 4.72 3.79 2.56 29.98^ 9.06 5.68Mean CARAfter-2.09 -3.02 -2.24 -4.38 3.62 -6.79 6.98^S.D. After 3.62 6.93 2.42 4.49 13.07^ 7.45 3.06t-valueBeforet-valueAfter-7.50 -9.51 3.39* 4.82* 8.64* -9.55 1.49-3.18 -2.39 -5.08 -5.34 1.52 -4.99 12.50z-value -7.22 -6.94 0.41 -1.67 6.28* -9.40 6.43*Note: 1. *, **, *** significant at 1%, 2% and 5% level of significance.2. ^ indicates maximum value.[ 112 ] Rai Management Journal

constant dividend every year on theface value of the share. So, thedividend values are in general alreadyknown to the shareholders. Thus,stock returns because of this did notget a drastic changeover at the stockexchanges. But the amount of profit ofthe company and retained earningsafter declaring the dividend do affectthe stock prices. Since, the empiricalstudies have evidence that thedividend per share and book value(retained earnings) do have thepositive significant correlation withthe market price of the share. That iswhy some of the companies haveshown significant t-values. Because ofthis however some of the stock pricesexperienced fluctuations due to capitalappreciation in them. The swings asobserved and depicted graphicallyalready in the stock prices may also bedue to change in other factors than thedividend announcements. Theanalysis also reveals that it cannot begeneralized performance of economyon the sector on a whole. Theperformance of a company mattersrather than a sector.REFERENCES• Al-Obaidan Abdullah M. 2008. InformationContent of Dividends in the CommercialBanking Industry of Emerging Markets,International Research Journal of Financeand Economics, Issue 17:1-12.• Brown Lawrence D., Choi Dosoung P. andKim Kwon-Jung 2008. The Impact ofAnnouncement Timing on theInformativeness of Earnings and Dividends,Working Paper Series at Social ScienceResearch Network.• Eriotis Nikolaos, Vasilliou Dimitrios andZisis Vasileios. 2007. A Bird’s Eye View ofthe Dividend Policy of the Banking Industryin Greece, International Research Journal ofFinance and Economics, Issue 11:1-9.• Hazak Aaro 2007. Dividend Decision UnderDistributed Profit Taxation: Investor’sPerspective, International Research Journalof Finance and Economics, Issue 9:1-19.• Henry Elaine 2006. Market Reaction toVerbal Components of Earnings PressReleases: Event Study Using a PredictiveAlgorithm, Journal of EmergingTechnologies in Accounting, Vol. 3:1-19.• Hochberg Yael V. 2003. Venture Capital andCorporate Governance in the Newly PublicFirm, Working Paper Series at SocialScience Research Network.• How Janice C.Y. and Yeo Julian J.L. 2007.The Impact of Forecast Disclosure andAccuracy on Equity Pricing: The IPOPerspective, Working Paper Series at SocialScience Research Network.• Hribar Paul, Jenkins Nicole Thorne andWang Juan. 2004. Institutional Investorsand Accounting Restatements, WorkingPaper Series at Social Science ResearchNetwork.• Jegadeesh Narasimhan. 2002. RevenueGrowth and Stock Returns, Working PaperSeries at Social Science Research Network.• Kanniainen Juho. 2007. On DividendExpectations and Stock Return Volatility,International Research Journal of Financeand Economics, Issue 12:1-17.• Kanwal Anil and Kapoor Sujata. 2008.Determinants of Dividend Payout Ratios-AStudy of Indian Information TechnologySector, International Research Journal ofFinance and Econmics, Issue 15:1-9.• Koerniadi Hardjo and Tourani-Rad Alireza.2008. The Role of Accruals as a Signal inEarnings and Dividend Announcements: NZEvidence, Working Paper Series at SocialScience Research Network.• Kumar Praveen, Boehme Rodney D.,Danielsen Bartley R. and Sorescu Sorin M.2006. Asset Pricing with Estimation-riskand Uncertain Information Quality,Working Paper Series at Social ScienceResearch Network.December 2010 Vol. 7, Issue 2[ 113 ]

• Minnick Kristina L. 2004. Write-offs andCorporate Governance, Working PaperSeries at Social Science Research Network.• Narayanamoorthy Ganapathi. 2003.Conservatism and Cross-SectionalVariation in the Post-EarningsAnnouncement Drift, Yale ICF WorkingPaper no. 03-07.• Padgett Carol and Wang Zhiqi. 2007. UKShare Repurchase Activity: The Effects ofFree Cash Flow and Signaling, ICMACentre Discussion Papers in FinanceDO2007-13.• Rees Lynn and Sivaramakrishnan K. 2001.Valuation Implications of RevenueForecasts, Working Paper Series at SocialScience Research Network.• Sadka Ronnie. 2005. Momentum and Post-Earnings Announcement Drift Anomalies:The Role of Liquidity Risk, Working PaperSeries at Social Science Research Network.• Servaes Henri and Tamayo Ane. 2008.Intra-Industry Effects of Control Threats onInvestment, Financing and FinancialReporting Quality, Working Paper Series atSocial Science Research Network.• Shu Tao. 2008. Trader Composition and theCross-Section of Stock Returns, WorkingPaper Series at Social Science ResearchNetwork.• Subramani Mani R. and Walden Erie A.2002. Employing the Event Study to assessReturns to firms from Novel InformationTechnologies: An Examination of E-Commerce initiative announcements,Working Paper Series at MIS Quarterly,University of Minnesota.• Zhu PengCheng and Malhotra Shavin.2008. Announcement Effect and PricePressure: An Empirical Study of Cross-Border Acquisitions by Indian Firms,International Research Journal of Financeand Economics, Issue 13:1-18.[ 114 ] Rai Management Journal

Organized retail canbe defined as anyorganized form ofretail or wholesaleactivity (both foodand non-food undermultiple formats),which is typically amulti-outlet chain ofstores or distributioncentres run byprofessionalmanagement.Retailing thus, may be understood asthe final step in the distribution ofmerchandise, for consumption by endconsumers. In the complex world oftrade today, retail would include notonly goods but also services that maybe provided to the end consumer. Inthe age where consumer is the kingand marketers are focusing oncustomer delight, retail may beredefined in the first point of customercontact.For the purpose of research theorganised and unorganised sectors ofretail has been defined. According tothe National Accounts Statistics ofIndia the ‘unorganized sector’ includeunits whose activity is not regulatedby any statue or legal provision,and/or those which do not maintainregular accounts 4 . In the context ofthe retail sector, it could therefore besaid to cover those forms of tradewhich sell an assortment of productsand services ranging from fruits andvegetables to shoe repair. Theseproducts or services may be sold oroffered out of fixed or mobile locationand the number of people employedcould range between 10-20 people.Thus the neighbourhood kiryana, thepaanwala, the cobbler, the vegetable,fruit vendor, etc. would be termed asthe unorganized sector. The primarypurpose in defining the scope of theunorganized sector is to understandthe formats or the forms of trade thatwould be understood as unorganizedand therefore, to further theunderstanding of the term organized.Organized retail can be defined as anyorganized form of retail or wholesaleactivity (both food and non-food undermultiple formats), which is typically amulti-outlet chain of stores ordistribution centres run byprofessional management. 5The retail trade sector comprises ofestablishments primarily engaged inretailing merchandise, generallywithout transformation, andrendering services incidental to thesale of merchandiseEvery business has its distinctive wayof organising the very many activitiesthat are involved in delivering itsproducts and service to the endcustomer. In retail parlance, it istermed as retail format. Retail formatcan be termed as combination ofvarious elements of retail mix, to offervalue to the target customers. It is theinterface between retailers and thecustomers. It makes customers to visitthe store to obtain goods and servicesand 6 desired value. It is also definedas the Business Models of retailers.The importance of retail formats canbe gauged from the fact that most ofthe retail organisations equate themwith Strategic Business Units and canhave separate operationalinfrastructure and organisational setupfor them.INDIAN RETAIL MARKETThe retail sector in India is highlyfragmented and mostly owner-run4Unorganized Sector and its contribution in India,Pankaj K P Shreyaskar, Sarvekshana, Journal of theNational Sample Survey Organization, 89th issue Vol. XXVI No 25Benefits of Modern Trade to the Indian Economy, The Rising Elephant, A PWC, CII publication6Madaan K V S, Fundamentals of Retailing,6th edition, Tata McGraw Hill , pp 46-47[ 116 ] Rai Management Journal

“Mom and Pop” outlets. The entiresector is dominated by small retailersconsisting of local kiryana shops,general stores, footwear and apparelshops, hand-cart hawkers andpavement vendors. These togetherform the “unorganised retail” or“traditional retail”. According to theInvestment Commission of India (ICI)estimates, there are over 15 millionsuch “Mom and Pop” retail outlets inthe country.In terms of total retail sales, one canfind a wide range of estimates and thisdefinitely reflects lack of sound officialgovernment data. InvestmentCommission of India had estimatedIndian retail sales figure at US$262bnfor 2006, although market estimatesranged from US$200bn to as high asUS$386bn for that year. According toASSOCAM retail report, the Indianretail market increased from $300bnin 2009 to $410bn (around Rs 19,03,844 crore) in 2010. However theorganised retail is still account formere 5 %( $13mn) of the overall retailmarket in India. Various agencieshave made efforts to project thegrowth rate of the total retail markettill 2013 and the figures hover around13-15.5 percent.In line with India's economic growth,the retail sector in this country is notonly expanding but also modernizing.This new trend began during late1990s and early 2000s. The IndianRetail sector has caught the world’simagination in the last few years. Ittopped the list of most attractive retaildestination for consecutively threeyears from 2004- 2007, ranked secondin 2008 and again ranked first in 2009.India is on third position in 2010Global Retail Development Index(GRDI) developed by A. T. Kearney 7 .Table 1 illustrates position of Indiafrom 2005-2010 in GRDI index.Table 1: Position of India from 2005-2010 in GRDI index.GRDI Rank2005GRDI Rank2006GRDI Rank2007GRDI Rank2008GRDI Rank2009GRDI Rank2010India India India Vietnam India ChinaRussia Russia Russia India Russia KuwaitUkraine Vietnam China Russia China IndiaChina Ukraine Vietnam ChinaUnited ArabEmiratesSaudi ArabiaSlovenia China Ukraine Egypt Saudi Arabia BrazilLatvia Chile Chile Morocco Vietnam ChileCroatia Latvia Latvia Saudi Arabia ChileSource: www.atkearney.comUnited ArabEmirates7Expanding Opportunities for Global Retailers, The 2010 A. T. Kearney Global Retail Development Index,www.atkearney.com, accessed 04/02/10A.T. Kearney’s Global Retail Development Index ranks 30 emerging countries on the urgency for retailers toenter the country. The scores are based on 25 variables across four primary categories: economic and politicalrisk; market attractiveness; market saturation; and time pressureDecember 2010 Vol. 7, Issue 2[ 117 ]

In the midst of the unorganised retailsector's strong dominance, some of themajor industrial houses have enteredinto this sector and have announcedambitious future expansion plans.Transnational corporations have alsojoined hands with big Indiancompanies to set up retail chains.India's Bharti group joined handswith Wal-Mart, the world's largestretailer and Tata group tied up withthe UK based Tesco, the world's thirdlargest retail group. Table 2illustrates the expansion plans ofmajor retails in India.In this scenario, the firms have towork on what attracts consumers andwhat will make them not to shift theirchoice towards competitors. Workingout strategies in this directionrequires a thorough understanding ofthe preferences of the consumers onthe attributes that are considered ofTable 2: Expansion plans of major retails in IndiaCompaniesPresent ScenarioNo. of storesFuture ProspectsTime spanPantaloon RetailIndia Limited1000 stores in 71cities25-30 storesBy the end of2012Shopper’s Stop 27 stores 15 stores 3 yearsSpencer’s 250 stores in 50 cities 30 stores 2011-2012Infinite Retail“Croma”“Reliance” Retail“Vishal” Retail32 stores 100 stores Next 3 years1000 stores in 86cities171 stores in 100cities40 stores By 2012“Easy day” 25 stores 75-100 stores Next 3 yearsMarks &“Spencers”“Tommy Hilfiger”“BhartiWalmart” ‘BestPrice’15 stores 10 stores Next 5 years14 stand-alone storesand 16 shop-in-shopstores50 stores Next 5 years2 stores 15 stores By 2012.Source: Assocham Research Bureau[ 118 ] Rai Management Journal

much significance. The small cities arebecoming the hub of retail activity, therequirement and perception of theconsumer i.e. what they perceiveabout the attributes of a store in theirmind, their preferences andsatisfaction drivers may be differentthan that of major cities and metros.The organized retail segment istapping the small cities as a potentialbecause of the rising income levels inthese cities. Studying the preferencesof consumers in these cities can helpin developing appropriate andcustomized marketing strategies forthese consumers. The present study isan attempt in this direction. Thisstudy focuses on analyzing theconsumer’s preferences of the specificattributes of retail store in variouscities of Punjab.REVIEW OF LITERATURELiterature review onparameters or attributethat affect evaluation ofstore by consumerSeveral attributes have beenidentified in the retail and marketingliterature as reasons for storepatronage and choice.• Martineau (1958) categorizedstore attributes into two maincategories: functional andpsychological. The functionalcategory includes attributes suchas location, assortment of productsand store layout. Thepsychological category representsthe feelings generated by thefunctional elements of the store.The former category has gainedmore attention in the subsequentresearch into store choice than thelatter.• Fisk (1961) identified sixattributes as the most important:location accessibility, merchandisesuitability, value for price, salesefforts and store service.• In their study of departmentstores in Arizona, Kunkel andBerry (1968) proposed a twelvefactorscheme which includes priceof merchandise, quality,assortment, fashion ofmerchandises, sales personnel,sales promotion, advertising, storeatmosphere,locationalaccessibility, service, reputationon adjustments and otheraccessibility factors. In asubsequent study, Berry (1969)identified three general factorsthat predominantly influencedconsumer's store choice regardlessof store type: namely, quality andvariety of merchandise, sales staff,and store atmosphere.• A prominent and widely-citedwork on the topic of store imagewas that of Lindquist (1974).Based on a review of 19 researcharticles, he synthesized theframework of these studies into aset of nine groups: merchandise,service, clientele, physicalfacilities, promotion, accessibility,store atmosphere, institutionaland post-transaction satisfaction.• Doyle & Fenwick (1975), proposethat price, product variety, onestopshopping, quality, location ofthe store, advertisement, generalappearance of the store andDecember 2010 Vol. 7, Issue 2[ 119 ]

convenience are some of majorattributes looked upon by theconsumers while evaluating agrocery store.• Bearden (1977) distinguishedseven attributes as potentiallysignificant for store patronage:price, quality of merchandise,assortment, atmosphere, location,parking facilities and friendlystaff.• Arnold et al. (1983) extended theaccessibility attribute to the easeof mobility through the store andfast checkout• Mason, Mayer, & Ezell, 1994proposed that Reasonable pricesin a retail store induce customersatisfaction as well as buildingcustomer loyalty. In the retailingsector, the store havingreasonable prices will oftencapture a large market share.• Hasty and Reardon (1997)classified store attributes intothree general categories:accessibility (e.g., location, layout,appearance, and knowledgeablestaff), facilitation of sales (e.g.,low-priced specials, promotionaloffers and methods of paymentsaccepted) and auxiliary attributes(e.g., play areas for children andfood court).• Wong & Sohal, (2003) comparedthe relationship betweendimensions of service quality andcustomer loyalty in a retail chaindepartmental store located in acity to that of a country. Theresults showed that servicequality is positively associatedwith customer loyalty, and thatthe most significant predictor ofcustomer loyalty in the city retaildistrict is empathy, while themost significant predictor ofcustomer loyalty in the countryretail district is tangibles.• Solgaard and Hansen (2003)identified several store attributesthat were considered importantfor the consumer's evaluation ofstores. These attributes includemerchandise, assortment,merchandise quality, personnel,store layout, accessibility,cleanliness and atmosphere.• Spiller Bolten and Kennerknecht(2006) identify service andproduct quality as maindeterminants of customersatisfaction. They propose thatcustomers consider freshness offruits and vegetables` as thequality of whole assortment.OBJECTIVES OF THESTUDYThe aim of the study is to identify thefactors affecting consumer preferencerelated to shopping at organised retailstore.RESEARCHMETHODOLOGYThe following research methodologyhas been used in order to achieve theobjectives:[ 120 ] Rai Management Journal

RESEARCH INSTRUMENTA questionnaire was developed on thebasis of the foregoing review of theliterature. The questionnaireconsisted of 29 closed ended questionswhich were framed keeping in mindthe various factors that therespondent may wish to see in a retailoutlet. A five-point Likert-type scaleranging from strongly agrees (1) tostrongly disagree (5) was related toeach of the identified selectionattributes. A preliminary evaluationand refinement of the questionnairewas done of a panel of experts. Thepanel comprised two educationists inBusiness Administration and twoindividuals highly involved inorganised retailing. The participantson the panel reviewed thequestionnaire for content, wordingand readability. Based on theirsuggestions, 7 items were removedfrom the questionnaire and somerewording to a couple of the remainingitems was made. The final version ofthe data collection instrumentconsisted of two parts: Part I includeddetails of demographic characteristicsof the respondents (age, gender, levelof education, employment, maritalstatus, children, nationality andmonthly income) and Part IIcontained a set of questions to obtainthe level of agreement anddisagreement to statement related toshopping at organised retail stores.DATA COLLECTIONThe data was collected outside themajor retail outlets, where therespondents were consumers who hadcompleted their shopping in anorganized retail store and willing torespond to the questions. The data hasbeen collected from five urban cities ofPunjab i.e. Amritsar, Patiala, Mohali,Jalandhar and Ludhiana. These citieswere selected due to high growth oforganised retail in these cities.Theconsumers who have just shopped at aretail outlet were able to generate anappropriate response; Moreover thenon-shoppers responses could beavoided. The survey was collected atselected organized retail stores inselected cities of Punjab.SAMPLE SIZEThe target population of the studyincluded customers who prefer to shopat organised retail stores in Punjab. Asampling frame from which a randomsample could be drawn wasunavailable. However, an accidentalsampling method was chosen to servethe purpose of data collection. Thismethod seemed acceptable andappropriate taken into account theexploratory nature of the study andthe lack of a sampling frame. 50organized retail stores were selectedin five selected cities for datacollection. 100 consumers wereinterviewed from sampled organizedoutlet adopting the Systematicrandom sampling procedure in eachselected urban city of Punjab. Over500 consumers were interviewed atthe selected stores in 5 selected cities.Of the 500 questionnaires distributed,25 were excluded for reasons ofinconsistencies in responses andincompleteness of answers.June 2010 Vol. 7 Issue 1[ 121 ]

STATISTICAL ANALYSESThe 475 usable questionnaires wereanalyzed using SPSS software version14.0. Frequencies were used togenerate a profile of the keydemographic characteristics of therespondents. Descriptive statisticswere utilized to calculate the meanand standard error scores. Anexploratory factor analysis was usedto uncover the underlying factorswhich affect consumer preference.and 8 laks (56%) and the remaining44% were having income more than 8laks. This indicates that therespondents are mostly of the highermiddle income group or Middleincome group and from the serviceclass. There are 183(38.5%) of therespondents in the age group of 18-25,100 (21%) respondents in the agegroup of 26-35. Remaining 192respondents (40.5%) were above 36 ofage. This indicates that most of therespondents were youth.RESULTS AND ANALYSISDemographics characteristicsThe number of male respondents inthe survey were 52% and 48% werefemale respondents. Most of therespondents visiting an organizedretail outlet were graduates and hadeducational qualifications above it. 36Percent of the respondents were postgraduates,23 percent hadprofessional degree and 34 percentwere graduates and the remaining 7%were undergraduates.Most of the respondents were selfemployed/unemployedor belong toother professions (36%); whereas, theother respondents were from variedprofessions such as civil services(14.7%), educational (15.5%), medical(23.8%), financial services(10%).What can be seen from this isthat most respondents belong totertiary sector and very few tomanufacturing sectors.As reflected in our survey mostrespondents have income between 3Factor analysisAs the first step, the suitability of thedata collected for using factoranalysis was thoroughly checked. Thesample is greater than 100 asmentioned above. The proportion ofthe respondents and the variablesused in is more than 5:1 (475respondents and 22 variables), thenthe correlations matrix was checked,there was enough high correlations toproceed with factor analysis.Prior to running the factor analysis,the Kaiser-Meyer-Olkin (KMO)measure of sampling adequacy andthe Bartlett's test of sphericity wereperformed. The generated score ofKMO was .77, reasonably supportingthe appropriateness of using factoranalysis to explore the underlyingstructure of supermarket image. TheBartlett's test of sphericity was highlysignificant (p< .000), rejecting thenull hypothesis that the 22 importantattributes are uncorrelated in thepopulation. Using principalcomponents with varimax rotation,only attributes with factor loadings of.5 or greater on a factor were regardedas significant. The factor analysis[ 122 ] Rai Management Journal

generated four factors explaining63.7% of the variability in the originaldata. The Cronbach's alphas, whichmeasure the internal consistency ofeach of the identified factors, fellwithin an acceptable range.The communalities are presented inTable 3. Communalities represent theproportion of the variance in theoriginal variables that is accounted forby the factor solution. The factorsolution should explain at least half ofeach original variable’s variance, sothe communality value for eachvariable should be 0.50 or higher. Ascan be seen from the table all thevariables used have a communalityhigher than 0.50. Table 3 shows thecommunalities.Table 3: Communalities TableExtractionV1 out of stock 0.503V2 variety of grocery items 0.585V3 products are easy to locate 0.573V4 under one roof 0.505V5 home delivery 0.734V6 good music and soothing colours on walls 0.549V7 salespeople are helpful 0.582V8 is sufficient lighting 0.518V9 Neighborhood 0.529V10 clean and free from clutter 0.594V11 open till late hours 0.603V12 advertise regularly 0.584V13 many billing counters 0.571V14 Fair price 0.683V15 matter of pride 0.624V16 good quality 0.665V17 many brands are available 0.557V18 displays are attractive 0.565V19 return or replacement policy 0.551V20 billing system is reliable 0.662V21 trolleys and baskets are available 0.609V22 maximum choices 0.646Extraction method: Principle Component AnalysisDecember 2010 Vol. 7, Issue 2[ 123 ]

The Table 4 gives the 6 extracted factors that explain 56 percent of the totalvariations.Table 4: Extracted FactorsTotal% ofVarianceCumulative%Total% ofVarianceCumulative%Total% ofVarianceCumulative%1 5.14 23.363 23.363 5.14 23.363 23.363 2.805 12.75 12.752 2.365 10.752 34.115 2.365 10.752 34.115 2.285 10.386 23.1363 1.349 6.13 40.245 1.349 6.13 40.245 2.044 9.29 32.4254 1.227 5.576 45.821 1.227 5.576 45.821 1.927 8.758 41.1845 1.117 5.078 50.899 1.117 5.078 50.899 1.641 7.46 48.6436 1.008 4.581 55.48 1.008 4.581 55.48 1.504 6.837 55.487 0.932 4.235 59.7158 0.879 3.997 63.7129 0.82 3.727 67.43910 0.755 3.431 70.8711 0.729 3.312 74.18212 0.712 3.235 77.41613 0.669 3.039 80.45614 0.639 2.905 83.36115 0.602 2.735 86.09616 0.564 2.565 88.66217 0.54 2.495 91.15718 0.48 2.495 91.15719 0.417 1.893 97.22120 0.432 1.963 95.32821 0.341 1.548 98.769Extraction Method: Principal Component Analysis.[ 124 ] Rai Management Journal

Table 5 : Rotated matrixComponent1 2 3 4 5 6products are never out of stock 0.688variety of grocery items 0.606many brands are available 0.693store offers maximum choices 0.529everything you need under oneroof0.536Not over crowed 0.586Good layout 0.654displays are attractive 0.577clean and free from clutter 0.643good music and soothing colours 0.559Advertise regularly 0.560Recommended by friends 0.663home delivery 0.552many salespeople 0.673comfortable air conditioned environment0.764return or replacement policy 0.779trolleys and baskets are availablemany billing counters for a fastercheck outCompetitive price 0.854discounts 0.560stock good quality items 0.845Fresh groceries 0.6650.5940.5667Extraction Method: Principal Component Analysis.Rotation Method: “Varimax with Kaiser Normalization”.December 2010 Vol. 7, Issue 2[ 125 ]

The most significant factor thatdetermines the retail outletpreference is the shoppingavailability and variety of products.This is the most important factorlooked at by the consumers accordingto the results of factor analysis. Theconsumers prefer that retail storeshould have large variety of brandsfor grocery items. Availability ofitems even in late hours is alsoimportant.The second factor can be called the“services” .The consumers preferstores that offers free home delivery.They prefer stores with many salesexecutives to help. Other factors likesufficient parking space, availabilityof baskets and trolleys and fact checkout are equally important forconsumers.The third most important factor is“ambience” of store. Consumers prefershopping at stores which are not overcrowded and where products are easyto locate. They prefer stores which areclean with attractive displays andsufficient lighting.The fourth most important factor isthe “discounts” and “fair prices”.People do look into savings on theirtotal billing at the end of shopping.The consumers would like to beinformed in advance about thediscounts and special offers so thatthey can get the best buy.The fifth factor is “quality of food” and“grocery items”. They prefer storeswhich stock fresh and good qualityitems.The sixth factor which is importantfor consumers is “promotion ofstores”. Consumer prefers storesrecommended by their friends andrelatives. They like to visit storeswhich advertise (newspaper,television, radio) regularly.Factor descriptionAvailability and varietyServiceAmbienceDiscounts and priceQuality of itemsPromotionVariables includedProducts are never out of stock, variety of groceryitems are available, many brands are available,everything you need under one roofHome delivery, many salespeople, comfortable airconditioned environment, return or replacementpolicy, trolleys and baskets are available, manybilling counters for a faster check outNot over crowed, Good layout, displays are attractive,clean and free from clutter, good music andsoothing coloursDiscount offers, competitive pricingFreshness, good qualityAdvertisement, recommendation[ 126 ] Rai Management Journal

CONCLUSIONThe study focused on finding out themajor attributes of the retail stores asperceived by the consumers in Punjab.The methodology adopted was astructured questionnaire and theanalysis was done using “principalcomponent method”.The study shows that there are sixmajor factors that consumers prefer asfar as the retail stores are concerned.These factors include availability &variety, service, ambience, discounts& price, quality of products, andpromotion.The knowledge of these factors is veryuseful to retailers and the strategiststo plan the policy and formulatestrategies accordingly for customerretention and improving loyaltytowards their store. The changingconsumer need can be understood andplans be accordingly implemented.The consumers are more inclined toget an experience of their shopping.Purchasing what they require is thedrive for coming to retail store, but inthe process they want a wonderfuloverall shopping experience. This maybe mainly to relieve them from theday-to-day stressful life. The consumersdo not want the shopping alsoto be another pain. The shopping placeshould be convenient, a place wherethey can relax, and can also lay theirhands on whatever they wanted.These retail outlets should focus onimproving their service focusing onimproving the convenience of the consumers.They should try to attractnew consumers and also retain theexisting ones by adopting promotionaloffers, adding value to their shoppingexperience and overcoming theirshortcoming on these attributes.REFERENCES• Amy Wong, Amrik Sohal, (2003) "Assessingcustomer-salesperson interactions in a retailchain: differences between city and countryretail districts", Marketing Intelligence &Planning, Vol. 21 Iss: 5, pp.292 – 304• Argentina Spiller A, Bolten J andKennerknecht R (2006), “CustomerSatisfaction and Loyalty as Success Factorsin Organic Food Retailing”, paper presentedat 16th Annual World Forum andSymposium “Agribusiness, Food, Health,and Nutrition”, IAMA Conference,• Bearden W O (1977), “DeterminantAttributes of Store Patronage: Downtownversus Outlying Shopping Centers”, Journalof Retailing, Vol. 53, No. 2.• Berry, L. J. (1969), The Components ofDepartment Store Image: A Theoretical andEmpirical Analysis, Journal of Retailing,45, 3-20.• Benefits of Modern Trade to the IndianEconomy, The Rising Elephant, A PWC, CIIpublication• Doyle P and Fenwick I (1975), “How StoreImage Affects Shopping Habits in GroceryChains”,Journal of Retailing, Vol. 50,annual issue.• Expanding Opportunities for GlobalRetailers, The 2010 A. T. Kearney GlobalRetail Development Index,www.atkearney.com, accessed 04/02/10.• Fisk, G. (1961), A Conceptual Model forStudying Customer Image, Journal ofRetailing, 37, 1-8.• Hasty, R. and Reardon, J., (1997). RetailManagement. New York: Mcgraw Hill• Martineau, P. (1958), The Personality of theRetail Store, Harvard Business Review.• Lindquist, J. D. (1974), Meaning of Image: ASurvey of Empirical and HypotheticalEvidence, Journal of Retailing, 50, 29-38.December 2010 Vol. 7, Issue 2[ 127 ]

• Mulhern, F., and Leone, R., 1991. ImplicitPrice Bundling of Retail Products: A MultiproductApproach to Maximizing StoreProfitability. Journal of Marketing. 55(October), 63-76.• Mason, J., Mayer, M., and Ezell, H., 1994.Retailing, fifth edition. Illinois: Irwin.• Marketing Management, Philip Kotler,12thedition, pg 504• Madaan K V S, Fundamentals ofRetailing,6th edition, Tata McGraw Hill ,pp 46-47.• Retailing Management, Levy, Michael andWeitz Barton A.,6thedition• Solgaard, H. S. and Hansen, T. (2003), AHierarchical Bayes Model of Choice betweenSupermarket Formats, Journal of retailingand Consumer Services, 10, 169-180.• The North American IndustryClassification System (NAICS),www.census.gov/naics• Pankaj K P Shreyaskar,Sarvekshana(2006) Unorganized Sectorand its contribution in India, , Journal ofthe National Sample Survey Organization,89th issue Vol. XXVI No 2,• Walters, R., 1991, Assessing the Impact ofRetail Price Promotions on ProductSubstitution, Complementary Purchase,and Inter-store Sales Displacement.Journal of Marketing. 55 (April), 17-28APPENDIX-IQuestionnaireName of respondent:Gender:Age: 18-25 25-35 35-45 45-60 >60Educational Qualification:City:Give your comment on the following statementsas per the 5-itmes Likert Scale as below.• Strongly disagree, 2. Disagree, 3. Neitheragree nor disagree, 4. Agree, 5. Strongly agree• You prefer to shop at stores where productsare never out of stock (even in late hours).• You prefer neighbourhood stores to shopFood & Grocery items.• You visit the stores which advertiseregularly.• You would prefer a shop where variety ismore.• You prefer home delivery of Food & Groceryitems.• You prefer to shop at stores recommended byyour friends and relatives.• You prefer shopping at stores wheresalespeople are helpful.• The products available during discountoffers are not of good quality.• You would like to shop in comfortable airconditioned environment.• You would prefer a store that keepseverything you need under one roof.• You avoid shopping at stores withinsufficient parking spaces.• You avoid shopping at stores which are overcrowed.• You prefer to shop at stores which offerreturn and replacement policy.• You prefer to shop at stores which are opentill late hours and on weekends.• You like to shop at stores where products areeasy to locate.• You like to shop at stores where displays areattractive.• You prefer to shop at stores which are cleanand hygienic.• You love to shop from stores which giveattractive discount offers.• Availability of trolleys and baskets makesyour shopping easy.• You prefer going to stores which have manybilling counters for a faster check out.• You love to shop at stores where there is somegood music and soothing colours on walls.• You love to shop at stores where there issufficient lighting.[ 128 ] Rai Management Journal

A Study on the Assessment of MarketingFeasibility to Locate An Organised RetailStore at A Targeted PlaceR. Kasilingam*S. Sudha**Estimating the market potential for a new business or business expansion is critical in determining theeconomic feasibility of a venture. Estimating the market potential will determine whether the market islarge enough to support the business. A target market can be thought of as the customers who are morelikely to purchase and are generally described using demographic variables. The market potential for aretail establishment provided an estimate of the maximum sales potential for a specific retail operation ina given market. Detailed analysis of market potential is necessary before deciding to locate store at aparticular place. Therefore this study is conducted mainly to assess market feasibility. The data is collectedfrom people who are residing at the targeted place. From the study it is found that most of the people preferto go to organised retail store rather than kirana store. More than 50 percent of the people are ready tospend Rs.4000 to Rs.6000 per month to purchase things from organised retail store. People are visiting aretail store by allocating separate time rather than purchasing things while coming back from office.Therefore it is concluded that the particular retail store can open a store at the targeted place.Key Words: Marketing feasibility, Preference for organised retail store, Market potential for organisedretail storeINTRODUCTIONRetailing consists of those businessactivities involved in the sale of goodsand services to consumers for theirpersonal, family or household use. Itis the final stage in a channel ofdistribution, which comprises all ofthe businesses and people involved inthe physical movement and transferof ownership of goods and servicesfrom producer to consumer. Retailinginvolves interpreting needs of theconsumers, developing goodassortments of merchandise andpresenting them in an effectivemanner so that consumers find it easyand attractive to buy. Whatever theform of retailing, a retail marketingstrategy defines the execution of themarketing process and facilitation ofcustomer satisfaction. This retailmarketing strategy involves selectinga retail target market (i.e. the*Reader, Department of Management Studies, Pondicherry University, Kalapet, Pondicherry, India**Asst. Professor, Department of Management Studies, St.Joseph’s College of Engineering, Chennai, IndiaRetailing involvesinterpreting needs ofthe consumers,developing goodassortments ofmerchandise andpresenting them in aneffective manner so thatconsumers find it easyand attractive to buy.December 2010 Vol. 7, Issue 2[ 129 ]

carefully/exactly identified group offinal consumers that a retailer seeksto satisfy) and then implementing thecorresponding retail marketing mix(i.e. a combination of product. price,promotion and distribution strategiesthat will satisfy the retail targetmarket). The choice of a store locationhas a profound effect on the entirebusiness life of a retail operation. Abad choice may all but guaranteefailure, a good choice succeeds. Inselecting a store site, manystoreowners believe that it's enoughto learn about the demographics("people information" like age,income, family size, etc.), thepopulation, the kind of competitionthey will be facing, and about trafficpatterns in the area they areconsidering. Beyond a doubt thesefactors are basic to all retail locationanalysis. Once tentative locationspotted using these factors, only halfthe job will be over. It is always betterto look into several other aspects ofthe location before making a finalcommitment to set up a store at theparticular location to insure success.I. OBJECTIVESThe primary objective of this study isto find out the market feasibilityto locate an organised retail storeat targeted location. Thesecondary objectives of the studyare• To identify the place of purchaseof the respondents• To determine the preferred retailstore of the respondents• To know about the purchasebehaviour of customers withrespect to organised retail store• To identify the satisfaction ofcustomers with respect to servicessuch as parking, availability ofproducts, staff co-operation,discounts and offers, homedelivery and location convenience.• To identify the respondents’preferred items of purchase in anorganized retail store• To analyze the customerexpectation from the retail outlet.II. RESEARCH METHOD-OLOGYThe main purpose of the study is tofind out the market feasibility oflocating heritage store in Teynampetarea in Chennai city. Hence the studypopulation comprises of peopleresiding in Teynampet area. Onlyconvenience sampling has been usedbecause most of houses are lockedduring day time. In many housesthough people are there, they are notwilling to give answers for thequestions. To collect data wellstructured questionnaire was used.Most of the questions were closedended. The sample size is 200.III. REVIEW OF LITERA-TURERetailing in India is receiving globalrecognition and attention and thisemerging market is witnessing asignificant change in its growth and[ 130 ] Rai Management Journal

investment pattern. It is not just theglobal players like Wal-Mart, Tescoand Metro group are eying to capturea pie of this market but also thedomestic corporate behemoths likeReliance, KK Modi , Aditya Birlagroup, and Bharti group too are atsome stage of retail development.Reliance, announced that it will invest$3.4 billion to become the country'slargest modern retailer byestablishing a chain of 1,575 stores.The last couple of years have beenrosy for real estate developers and theretailers are finding suitable retailspace in prominent locations. Theindustry is buoyant about growth andthe early starters are in expansionmood. There is increasedsophistication in the shopping patternof consumers, which has resulted inbig retail chains coming up in mostmetros; mini metros and towns beingthe next target. Consumer taste andpreferences are changing leading toradical alteration in lifestyles andspending patterns which in turn isgiving rise to new businessopportunities. Companies need to bedynamic and proactive whileresponding to the ever-changingtrends in consumer lifestyle andbehavior.The generic growth is likely to bedriven by changing lifestyles and bystrong surge in income, which in turnwill be supported by favorabledemographic patterns. Rapid growthin international quality retail spaceand announced development plansproject in which at least 150 newshopping malls will be opened by nextyear has brought joy to shoppers dueto which shopping malls are becomingincreasingly common in large cities.The number of department stores isDecember 2010 Vol. 7, Issue 2growing at a much faster pace thanoverall retail, which is 24 per centannually. Supermarkets have beentaking an increasing share of generalfood and grocery trade over the lasttwo decades.Development of mega malls in India isadding new dimensions to thebooming retail sector. Shoppingexperience in the nation ofshopkeepers is changing very fast.There is significant development inretail landscape not only in the metrosbut also in the smaller cities. EvenITC went one step ahead torevolutionize rural retail bydeveloping ‘Choupal Sagar’ a ruralmall. On one hand there are groups ofvisionary corporate workingconstantly to improve upon urbanshopping experience and on the otherhand some companies are trying toinfuse innovative retail experienceinto the rural set up.Ting Zhu, Vishal Singh (2007) made aresearch on the importance ofgeographical differentiation in storelocation decisions of firms in the retaildiscount industry. They have usednovel data set that includes the storelocations and accompanying marketconditions for all stores belonging tothe Wal-Mart, K-mart, and Targetchains. They have also studied thefactors that influence the entry andlocation decisions of these firms. Themodel involves an incompleteinformation game between the threeplayers where each firm has privateinformation about its ownprofitability. A key feature of themodeling approach is that it permitsasymmetries across firms in theimpact of exogenous marketcharacteristics and competitiveThere is increasedsophistication in theshopping pattern ofconsumers, whichhas resulted in bigretail chains comingup in most metros;mini metros andtowns being the nexttarget.[ 131 ]

interaction effects. Variations in theexogenous firm specificcharacteristics, such as the distancesfrom the market to firms'headquarters and the nearestdistribution centers, serve asexclusion restrictions and provide thesource for model identification.Parameter estimates of the payofffunctions are used to predict theequilibrium market structure under avariety of market conditions thatprovide insights into the competitivelandscape of the industry. Resultsshow that all firms exert a strongnegative impact on competitors whenthey are in close proximity, but theeffect decreases with distance torivals.Abdullah Dasci, Gilbert Laporte(2006) developed a simple model todetermine the location strategies oftwo retail firms planning to open anumber of stores in a geographicalmarket. Firms try to maximize theirprofit under a leader-follower typecompetition in which the number ofstores is made endogenous by theintroduction of fixed costs. A novelmethodology is developed in whichfirms' strategies are defined in termsof their location densities. Thismethodology leads to a model that issolvable analytically and to severalresults on competitive locationstrategies. First, it is shown that ifthe follower decides to enter amarket, he enters at least as stronglyas the leader. Second, the leader caneffectively deter entry even if he isseverely cost-disadvantaged.However, in some cases the leader isbetter off by allowing the follower toenter the market. Third, the leadermay also let the follower enter themarket in some situations where hehas a cost advantage. It is also shownthat in situations where both firmsenter the market, their locationstrategies are quite insensitive tomodel parameters.According to Bohan, Gregory T.,Cahill, Michael (1992), retails thatare performing poorly in the marketoften try to reposition themselves inorder to survive. This is finding a wayof turning retail into a competitiveproperty, thereby enhancing theinvestors' financial rewards.Overbuilding in the 1980s resulted inoversupply in many market areas.Other recent influences includedifferent life styles, the physicaldeterioration of retails built in the1950s and '60s and the influence ofmarket segmentation. Benefits versuscost should be the majorconsideration when deciding whetherto reposition.Debbas, Paul E., Levenson, Maurice(1998) expressed their views aboutmost department store chains in theUS which had lower same-store salesthan what was expected for the 4thqtr of fiscal in 1997, with lowerwomen's clothing sales as one of theprimary factors. However, discountstore chains, such as Family DollarStores Inc and Dollar General Corp,expanded their relative shares of themarket. Investors need to considerindividual stocks as this industrydoes not have attractive potentialthrough the years 2000-2002.According to Gerstein and David A(1997) the future prospects for retailstore industry are mixed, especiallyfor department stores where women'sapparel sales have been weak in 1997.The outlook for discount stores is[ 132 ] Rai Management Journal

etter, however, as they continue togain a greater share of the market.Retail stocks have outperformed themarket in 1996 and 1997 after a weak1994 and 1995. Investors mustconsider individual stocks, as theindustry is unattractive for the nextthree to five years.Cron, William L (1998) expressedviews on management procedure thatwas established for evaluating theefficiency of 552 individual stores for amulti-store, multi-market retailerusing data envelopment analysis(DEA). The introduction of assuranceregions into a DEA model permitted amore complete designation of inputsand outcomes than usually observedin DEA applications. However, thereare certain limitations to the use ofDEA in the retail industry. One ofthese limitations is that DEA dependson the availability of valid and reliablearchival data.According to Guo Liang Yunchuan Liu(2000), with the progressivedevelopment of Internet and thirdpartyshipping networks,manufacturer’s direct entry intoconsumer market has increasinglybeen raised as a significant concernfor downstream retailers. In thisstudy, they have investigated aretailer's optimal store openingdecision, in the context in which theupstream firm's direct entryconstitutes a potential encroachmenton the retailer's business. Theanalysis captures the endogenouseffects of the channel members' storeexpansion and the direct entry ontheir contractual relationship. Theyhave identified the scenarios likewhen a retailer should deter orembrace its supplier's direct channelentry, and when store expansion isbeneficial or harmful for the retailer.Moreover, they have investigated thestrategic use of storeexpansion/restraint to cope with - todeter or to promote - themanufacturer's direct channel entry.They show that there existequilibrium situations when theprofitability of retailexpansion/restraint is moderated bythe retailer's strategic concerns. Forexample, in the case without retailprocurement arbitrage, the retailermay in equilibrium stay restrained instore opening in order to deter themanufacturer from setting up thedirect channel. With procurementarbitrage, however, the retailer maystrategically add more stores in orderto promote the setup of themanufacturer's direct channel.Arindrajit Dube, T. William Lester(2007) researched about estimates theeffect of Wal-Mart expansion onwages, benefits, and skill-compositionof retail workers during the 1990s.They have exploited the spatialpattern of Wal-Mart diffusion,radiating outward from the originalstore in Benton County, Arkansas, tocontrol for potential endogenity instore openings using bothinstrumental variable and controlfunction approaches. Estimates fromstate and county level data suggestthat store openings reduced both theaverage earnings and health benefitsof retail workers. At the county level,a new Wal-Mart is found to reduceretail earnings, on average, by .5 to .9percent. Moreover, it was found thatchanges in skill-composition explainonly a small part of compensationJune 2010 Vol. 7 Issue 1[ 133 ]

eduction, indicating that the declinein retail wages reflect a reduction inlabor market rents.James Ullmer, (2006 ) developed apredictive model to ascertain thesuitability of local retail markets tosupport new business locations as aprerequisite to designing effectivedevelopment strategies. This paperhas explored the feasibility for theestablishment of new retailenterprises in the twenty-threecounties of Western North Carolina.This paper has used a unique methodinvolving ZIP codes to identify fiftytwodistinct markets. The touristdemand index is developed by usingvisitor information. The number ofactual business establishments in amarket is compared to the predictednumber to determine where marketsare saturated and where newbusiness entry is feasible.IV. PREFERRED RETAILSTOREBefore finding a feasibility of locatingan organized store at a particularplace it is essential to find how muchpercentage people really want to gofor organised retail store rather thankirana store (corner shop).From table 1 it is clear that 45.5percent of the respondents prefermore of retail store and less of Maligaikadai to purchase family requirementthings, 37.5 percent of therespondents prefer only retail store,12 percent of the respondents preferonly Maligai kadai and 5 percent ofthe respondents prefer more ofMaligai kadai than retail store. Fromthis it is clear that most of therespondents prefer organised retailstore more than Maligai kadai forpurchasing family requirements andtherefore it is better to startorganized retail in the targeted area.From table 2 it is clear that somepeople use organised retail store andsome people use Kirana stores. Now itis important to understand what kindof people use Kirana store and whatcharacteristics of people useorganized retail store. For thispurpose chi-square analysis is used.The significance value for therelationship of gender, age, maritalstatus, family size, occupation withTable 1: Place of purchaseFrequencyPercentOnly Maligai kadai (road corner shop) 24 12.0Only retail store 75 37.5More of retail store and less of Maligai kadai 91 45.5More of Maligai kadai and less of retail store 10 5.0Total 200 100.0[ 134 ] Rai Management Journal

place of purchase is greater than 0.05.This means that there is norelationship between age and place ofpurchase. The significant value foreducational level and monthly incomeis less than 0.05. This indicates thatthere is a significant associationbetween education level, familyincome and place of purchase.The correspondence analysis diagramillustrates how family income hasassociation with place of purchase.People who have income betweenRs.30000 to Rs.40000 prefer onlyorganised retail and people withincome above Rs.50000 also prefermore of organised retail than cornershop. The people with income betweenTable 2: Demographic variables and Place of purchaseVariable Value Dof Asymp. Sig. (2-sided)Gender 5.617a 3 0.132Age 11.359a 15 0.727Marital status 7.401a 3 0.060Monthly income 31.306a 15 0.008Family size 18.134a 18 0.447Occupation 21.108a 15 0.133Education level 23.821a 12 0.022Fig. 1: Monthly income and Place of purchaseDecember 2010 Vol. 7, Issue 2[ 135 ]

Rs.10000 to Rs.20000 prefer maligaikadai. This means that people whohave higher income prefer organizedretail store. Thus income has aninfluence on the choice of place ofpurchase.Though most of the people useorganized retail store, some of thepeople still go to maligai kadai. Henceit is essential to understand that whydo some people still prefer MaligaiKadai. From table 3 it is inferred that29 percent of the respondents go tomaligai kadai for the purpose ofbuying daily needs, 28.5 percent ofrespondents prefer because it islocated close to their homes, 18.5percent of respondents for theavailability of credit, 13 percent ofrespondents for friendly relationshipand 11 percent of respondents preferMaligai Kadai because things areavailable in loose quantities. Fromthis it is clear that the main reasonfor purchasing things at the maligaikadai is to meet daily and urgentneeds.In table 4 the analysis is about thefrequency of visits made by therespondents to various organizedretail stores. Around 36 percent of therespondents have visited Spencer’sand 24 percent of the respondentsmake frequent visits to Spencer’sdaily, 20.5 percent of the respondentshave least visited and 9.5 percent ofthe respondents have never visitedSpencer's daily. Hence it can bepresumed that many people alreadyhave the habit of going to Spencer’s.Table 3: Reasons for purchasing things at the Maligai kadaiFrequencyPercentageAvailable in loose quantities 22 11.0On credit 37 18.5Friendly relationship 26 13.0Located close your house 57 28.5Daily needs 58 29.0Total 200 100.0Table 4: Frequency of visit made to Spencer's daily and MoreSpencer’s dailyMoreFrequency Percent Frequency PercentMost often visited 48 24.0 26 13.0Visited 72 36.0 49 24.5Less frequently visited 41 20.5 68 34.0Never visited 19 9.5 33 16.5Total 200 100.0 200 100.0[ 136 ]Rai Management Journal

Table 4 also shows visiting practices ofpeople to the More super market.Around 16 percent of the people havenot visited More super market and 34percent of the people have visited onlytwice. The percentage of people whohave not visited More super market ismore than the percentage of peoplevisited and this might because of thefact that there are less number of‘More stores’ in Chennai city.From table 5 it can be concluded thataround 39 percent of the people havevery often visited the Heritage Foods.Around 14 percent of people havenever visited and another 14 percenthave just visited on few occasions.Thus number of people who havevisited Heritage Foods is more thanthe number of people who have notvisited. With respect to Reliance fresharound 48.5 percent of therespondents have never visited, 18.5percent of the respondents have leastvisited and only 14 percent of therespondents have visited many timesand another 7.5 percent of therespondents have the practice ofvisiting Reliance fresh. Thereforenumber people used Reliance store isless than the number of people notused.Having studied number of peopleusing organized retail store, nextanalysis will be on the fact that whypeople use organized stores ratherthan the kirana stores. From table 6 itcan be inferred that, ‘no particularreason’ is the major cause for visitingorganized retail store. Around 18.5percent of the respondents useorganized retail store because it islocated at convenient place and thenext important factor is theavailability of all the items. Otherpossible reasons are that it is easy tochoose in an organized store and italso saves time.The Chi-square analysis is used tofind out the relationship between thedemographic variables and reasons forpreferring an organised retail store.The significance value for therelationship between age and reasonfor choosing organised retail storerather maligai store is 0.00, whichmeans that different age categorypeople have different reasons forprefering organized retail store topurchase the regular required things.Likewise the significant value formarital status, family size andmonthly income is less than 0.05. Butthe significant value for occupationTable 5: Frequency of visit - Heritage Fresh and Reliance FreshHeritage FreshReliance FreshFrequency Percent Frequency PercentMost visited 78 39.0 28 14.0Visited 42 21.0 15 7.5Least Visited 28 14.0 37 18.5Never visited 28 14.0 96 48.0Total 200 100.0 200 100.0December 2010 Vol. 7, Issue 2[ 137 ]

Table 6: Reason for purchasing at an organized retail storeFrequencyPercentageConvenient location 37 18.5Prestige 9 4.5Affordable cost 12 6.0High quality 21 10.5Time saving 24 12.0All commodities available 26 13.0Ambience 20 10.0Easy to choose 24 12.0Parking 3 1.5Total 200 100.0and education is above 0.05. Thismeans that people with differentoccupation do not differ on the reasonfor preferring an organized retailstore.The Chi-square analysis is used tofind out the relationship between thedemographic variables and reasonsfor preferring an organised retailstore. The significance value for therelationship between age and reasonfor choosing organised retail storerather maligai store is 0.00, whichmeans that different age categorypeople have different reasons forprefering organized retail store topurchase the regular required things.Likewise the significant value formarital status, family size andmonthly income is less than 0.05. Butthe significant value for occupationand education is above 0.05. Thismeans that people with differentoccupation do not differ on the reasonfor preferring an organized retailstore.Multivariate analysis of variance isused to find the relationship betweenthe demographic variables and habitof visiting particular organised retailstore. The significant value for therelationship between age and habit ofvisiting Spencer’s and More is lessthan 0.05. This means that differentage category have different practicewith respect to frequency of visit madeto More and Spencer’s. The significantvalue for the relationship betweenincome and frequency of visit made toheritage is less than 0.05. This impliesthat monthly income have somerelationship with usage of heritagestore. At the same time differentincome category people do not differ inthe usage of other stores suchSpencer’s, More and Reliance fresh.The occupation is influencing thefrequency of visit made to Spencer’s,More, Heritage and Reliance fresh.Education is having impact on howfrequently people use Spencer’s, Moreand Heritage.[ 138 ] Rai Management Journal

Table 7: Demographic variables and Reason for purchasing at retail storeValue Dof Sig.Gender 16.523 9 0.057Age 125.311 45 0.000Marital status 22.292 9 0.008Family size 113.109 54 0.000Monthly income 88.449 45 0.000Occupation 47.723 45 0.363Education level 47.812 36 0.090Table 8: Demographic variables and frequency of visit to various retail storesSource Dependent Variable df F Sig.AgeMonthlyincomeOccupationEducationlevelSpencer's daily 5 2.474 .036More 5 2.662 .026Heritage Fresh 5 1.697 .141Reliance fresh 5 .574 .720Spencer's daily 5 1.510 .192More 5 1.889 .101Heritage Fresh 5 3.337 .007Reliance fresh 5 2.120 .068Spencer's daily 5 2.535 .032More 5 3.317 .008Heritage Fresh 5 4.215 .001Reliance fresh 5 2.321 .047Spencer's daily 4 3.869 .005More 4 4.406 .002Heritage Fresh 4 3.233 .015Reliance fresh 4 .727 .575The post hoc analysis shown in table 9,separates the people into two groupson the basis of income and their usagepractice of heritage store. The peoplewho have income less than Rs.10000per month visit heritage store morefrequently than the people withincome between Rs.10,000 andRs.20,000.December 2010 Vol. 7, Issue 2[ 139 ]

Table 9: Monthly income and frequency of visit to heritage freshMonthly incomeNSubset for alpha = 0.051 210000 - 20000 39 1.3620000 - 30000 76 1.5340000 - 50000 24 2.08 2.0830000 - 40000 45 2.24 2.24Above 50000 8 2.25 2.25Below 10000 8 2.50Sig. .052 .360Fig. 2: Monthly income and Preference for Heritage freshThe means curve clearly shows thatthe people with income belowRs.10000 use heritage morefrequently. The usage frequency hascome down drastically for people whohave income between Rs.10000 toRs.20000. After that the frequency ofvisiting heritage store increases withrise in income.[ 140 ] Rai Management Journal

It is clear from table 10 that the meanvalue for the usage of Heritage is morethan mean value for the usage of otherstores. This indicates that people visitheritage more frequently than anyother stores. The mean value forReliance is less than 2 but the opinionis collected on 4 point scale. Thisindicates the people of that area havenot used Reliance fresh. This may bedue to less number of stores in thenearby area. As the preference level ofheritage is high which means that thepeople will good support if newheritage store is opened in thetargeted area.V. PURCHASE BEHAVIORTo estimate market potential it isnecessary to know the monthlyexpenditure, time spent in the storeand frequency of visit made to retailstore.From table 11 it is clear that around55.5 percent of people spend Rs.4000to Rs.6000 per month, 16.5 percent ofthe people spend Rs.2000 to Rs.4000per month for purchasing things in theorganized retail store. SpendingRs.4000 is not a small sum. Thisinformation indicates that there is apotential available for the neworganized retail stores.Table 12 shows that 52 percent of therespondents spend around 30 minutesto 1 hour whenever they visit anyorganized retail store. If people spentmore time in an organized store thenthere is every possibility that they willbuy more. Spending one hour in anorganized retail store indicates thatpeople do not mind sparing time inorganized retail stores.Table 10: Preferred retail storeMeanRankHeritage fresh 2.61 ISpencer’s daily 2.47 IIMore 2.10 IIIReliance fresh 1.64 IVTable 11: Monthly expenditure for purchasing things in an organized retailstoreFrequencyPercent2000-4000 33 16.54000-6000 111 55.56000-8000 25 12.58000-10000 7 3.5Total 200 100.0December 2010 Vol. 7, Issue 2[ 141 ]

Once “time spent” by the users isknown then it is necessary to knowhow many times people visit anyorganized store. From table 13 it isinferred that around 43.5 percent ofthe respondents visit organized retailstores at least six times a week. Ifpeople go to a shop very frequentlythen the total value spent for thepurchase of things will be more. Againit is a good sign to open new store.If people have the practice ofpurchasing things while coming backfrom office then they will not beinterested to go to a store located nearto their place. Table 14 shows thataround 26 percent of respondentsnever purchase things in an organizedretail outlet when coming back tohome from office and another 26percent of the people rarely purchasethings while they come back fromoffice. This indicates that peopleprefer to go retail store located near totheir house.From table 15 it is clear that around32.5 percent of the respondentspurchase things from an organizedretail by allocating specific time. Sothey specifically plan and spend timein an organized store. Thus peopleare not buying goods in the storelocated on the way when they comefrom office and they also fix particulartime to make visit to store. This againindicates that the people areinterested to go to an organised storewhich is located near to their area.Table 12: Time spent in the organised storeFrequencyPercentLess than 30 minutes 63 31.530 minutes- 1 hour 104 52.0More than an hour 9 4.5Total 200 100.0Table 13: Frequency of visiting an organized retail store in a monthFrequencyPercent0-3 2 1.03-6 19 9.56-9 87 43.59-12 54 27.012-15 10 5.0> 15 4 2.0Total 200 100.0[ 142 ] Rai Management Journal

Table 14: Purchasing things when returning from officeFrequencyPercentAt all times 4 2.0Most of the times 30 15.0Sometime 52 26.0At rare times 38 19.0Never 52 26.0Total 200 100.0Table 15: Allocation of Specific timeFrequencyPercentAlways 36 18.0Most of the times 65 32.5Often 33 16.5Rarely 28 14.0Never 14 7.0Total 200 100.0Table 16 indicates the amount of timespend by respondents in a particularretail store. Around 34 percent of thepeople are buying goods fromparticular shop for the past 6 monthsto 1 year. Normally there will be ahigh level of switching from one shopto another. From the above table it isclear that people are not very loyal butat the same they are not switchingvery frequently.Table 16: Respondent’s loyaltyFrequencyPercent1-6 months 43 21.56-10 months 69 34.510-12 months 50 25.0More than 1 year 14 7.0Total 200 100.0December 2010 Vol. 7, Issue 2[ 143 ]

Out of 200 respondents 111respondents spent Rs.4000 to Rs.6000per month to buy things in anorganized store. The total amountused in spending by the respondentsis Rs.555000. Likewise the totalamount used in spending by othercategory of people is placed in table17. The maximum market will be fromRs.4000 to Rs.6000 spending categorypeople. From this it is clear that thetotal spending of 200 respondents willbe Rs.892000 for a month. From thisthe total income for retail store can becalculated by converting the figure forthe population.From the above figure it can beinterpreted that customers who areloyal for more than 10 to 12 monthsvisit the retail outlet often, thecustomers who are loyal for 1 to 6months visit the retail outlet alwaysand the customers who are loyal for 6to 10 months rarely visit the retailoutlet. From this it can be concludedthat customers who are much loyal tothe retail store visit the organizedretail store very frequently.Table 18 indicates that therelationship between loyalty ofrespondents and frequency of visitsmade to a particular organized store.Table 17: Market feasibility analysisFrequency Percent Amount Rank4000-6000 111 55.5 555000 I6000-8000 25 12.5 175000 II2000-4000 33 16.5 99000 III8000-10000 7 3.5 63000 IVTotal 200 892000Fig. 3: Allocation of specific time and Loyalty[ 144 ] Rai Management Journal

The significance value is less than 0.05for all retail store. This means thatthere is a relationship betweenfrequency of visit and loyalty of therespondents. This means that peoplewho visit quite often might be loyal tothat particular store. This is true forall the stores.VI. Customer satisfactionAt present customers use some retailstore. To find out what extentcustomers switch to other storedepends upon their level ofsatisfaction with the present store.This will help to rectify or create suchan atmosphere so that customers canbe satisfied. Customer satisfaction isanalyzed on various factors such asparking facility, availability ofproducts, staff co-operation, discountsand offers provided, home deliveryfacility and location of retail store.Around 37.5 percent of the people arenot satisfied with home delivery madeby organized retail store. From table19 it is clear that some stores are notproviding home delivery and somecompanies they do it at their ownspeed. Home delivery is essentialbecause retail stores cannot be locatednear to the house of every person.Other attributes in which people havesizable level of dissatisfaction arediscounts & offers and parking. Thishas given a big lesson to retail store.Now they are trying to stock as manyitems as possible. At present most ofthe people are satisfied withavailability of products. The level ofsatisfaction with respect to discountsand offers is very less. This meanspeople expect something more thanwhat is provided now. Parking isanother problem which most of theTable 18: Customer loyalty and various retail storesSource Dependent Variable dof F Sig.Spencer's daily 5 51.952 .000Corrected ModelMore 5 29.584 .000Heritage Fresh 5 34.974 .000Reliance fresh 5 13.970 .000Spencer's daily 1 193.261 .000InterceptMore 1 166.168 .000Heritage Fresh 1 191.724 .000Reliance fresh 1 63.768 .000Spencer's daily 5 51.952 .000Customer loyaltyMore 5 29.584 .000Heritage Fresh 5 34.974 .000Reliance fresh 5 13.970 .000December 2010 Vol. 7, Issue 2[ 145 ]

etail stores are facing.VII. PREFERRED ITEMSOnce it is decided to establish anorganized retail store, the nextimportant question is what are theitems to be kept in the store? This canbe decided by identifying items whichare frequently purchased by thecustomers.Table 20 indicates that 70 percent ofthe respondents purchase fresh fruitsand vegetables. The vegetables aremore frequently used items. Most ofthe people have the habit of buyingvegetables in the organized store.Therefore the new store should dealwith vegetables because most of thepeople are buying vegetables at thesame time very frequently. The peopleare also having the habit of buyingbakery items, grocery items andcleaning aids very frequently. Around76 percent of the people do not buyprocessed foods very frequently fromorganized retail store.Table 19: Satisfaction level of Respondents on Store attributesHighly Satisfied Neutral Not SatisfiedParking 38 37.5 12.5Availability of Products 53.5 33.5 1.0Staff Co-operation 38.5 41.5 8Discounts and Offers 11 56.0 21Home delivery 14.5 36 37.5Location 32.5 39.5 16Table 20: Items frequently purchased by respondentsItems Purchase (%) Not purchase (%) RankFresh fruits and vegetables 70 30 IBakery items 61.5 38.5 IIGrocery items 52 48 IIICleaning aids 52 48 IVDairy items 47.5 52.5 VGeneral merchandise 44 56 VIBeverages 42 58 VIIFrozen food 31.5 68.5 VIIIProcessed food 24 76 IX[ 146 ] Rai Management Journal

VIII. EXPECTATION LEVELExpectation level deals with level ofimportance given by the respondentsfor selecting an organized retail store.From the table 21 it is inferred thataround 56 percent of respondents feelprice is very important factor inselecting a particular store. More than75 percent of the people feel thatquality of the products is veryimportant. People are not expectingany credit from retail store. Anothernotable feature is that more than 42percent of the people are not givingsignificant importance to discount.Fig. 4: Relationship among Expected variablesTable 21: People expectation from Organised StoreVeryImportantSomewhatimportantNotImportantPrice 56 29.5 2.5Quality of products 78 10Brand name Recognition 45 38 5Customer Service 44 42 2Friendly attitude 42.5 37 8.5Discount 14.5 31 42.5Convenience of store location 40 34.5 13.5Guarantees/ Warranties 31.5 21 35.5Flexible payment terms 11 29.5 47.5December 2010 Vol. 7, Issue 2[ 147 ]

From table 22 it can be inferred thatthe mean value for the importancegiven to the quality is 2.54. Theinformation is collected on a threepoint scale. The two important thingsare quality and price but both cannotgo hand to hand. Therefore it can bestated that people expect reasonablelevel of quality at reasonable price.One thing is clear people are consciousabout the quality as well as the price.The above multidimensional diagramillustrates that people who giveimportance to location, expect friendlytreatment from employees of anorganized store. The diagram alsoindicates that people who expectquality products want to purchasebranded products.ConclusionThe study reveals that the people goto maligai kadai because it is locatednear to their place and therefore itbecomes easy to purchase urgentitems. If organised stores are near totheir place then they can capture theremaining market of maligai kadai.Some of the other findings whichsuggest in opening a heritage store atthe targeted place are1) Heritage is the most preferredstore of this locality and thefrequency of visits made by thepeople to this store is more thanany other store.2) There is a significant associationbetween demographic variables(monthly income, education) andthe place of purchase. This meansthat different income categorypeople and educational categoryare specific about the place ofpurchase. It is found that morethan 50 percent of therespondents spent Rs.4000 toRs.6000 to purchase things froman organised retail store. Thetotal spending of 200 respondentswill be approximately Rs.892000for a month. This clearly revealsthat there is good marketpotential in that area. People areready to spend 30 minutes to 1hour in the organized store forvery visit and they are ready tovisit 6 to 9 times every month andmost of the people fix specific timeto go to the retail stores. Thisproves that people are highlyoriented towards organised retail.Form the analysis it is clear thatheritage foods can open a store atthe targeted place. As peopleexpect good quality products atreasonable price it is the duty ofthe store to offer mainlyvegetables and fruits (which aremost preferred items) atreasonable price with goodquality.REFERENCE• Abdullah Dasci, Gilbert Laporte (2006)“Location and Pricing Decisions of a Multi-Store Monopoly in a Spatial Market.Journal of Regional Science, Vol. 44, No. 3,pp. 489-515, Available at SSRN:http://ssrn. com/abstract=592568• Arindrajit Dube, Lester, T.William andEidlin, Barry (2007), Firm Entry andWages: Impact of Wal-Mart Growth onEarnings Throughout the Retail Sector(August 7, 2007). Institute of IndustrialRelations Working Paper No. iirwps-126-05,Available at SSRN:http://ssrn.com/abstract=841684,[ 148 ] Rai Management Journal

• Bohan, Gregory T., Cahill, Michael (1992)“Determining the feasibility of hotel marketrepositioning“, Real Estate Review, WestGroup.• Cron, William L., Slocum, John W., (1998)“A process for evaluating retail storeefficiency: a restricted DEA approach”International Journal of Research inMarketing, Elsevier B.V.• Debbas, Paul E., Levenson, Maurice (1998)“Retail store industry” The Value LineInvestment Survey, (Part 3 - Ratings &Reports), Line Publishing, Inc• Guo, Liang and Liu, Yunchuan (2000), ToRestrain or to Expand: Optimal Retail StoreOpening Strategies in Coping withManufacturer Direct Entry. Available atSSRN: http://ssrn.com/abstract= 985515• Gerstein, Marc H., Russo, David A (1997)“Retail store industry” The Value LineInvestment Survey (Part 3 - Ratings &Reports), Value Line Publishing, Inc• James Ullmer, (2006 ) “Threshold MarketAnalysis Of Western North Carolina”Journal of Economics and EconomicEducation Research Volume 26, Number 3,pp 401-413• Zhu, Ting and Singh, Vishal (2007)., SpatialCompetition with Endogenous LocationChoices: An Application to DiscountRetailing. Available at SSRN:http://ssrn.com/abstract=1003313December 2010 Vol. 7, Issue 2[ 149 ]

Role of Relationship in PharmaceuticalMarketing- A study in Western U.P.(India)Rajeev Gupta*Abhishek Gupta**This paper focuses on customer relationship and its importance in pharmaceutical marketing. In thepresent era all most all organizations are focusing on building better relations with their customer becausethey know very well without having good relations in the market it is quite tricky to achieve the desiredtask. That is why the organizations have separate customer relationship management department inwhich they are keeping the records related to their customers and utilizing the information when needed.As far as pharmaceutical selling is concern, apart from relationship, lots of other variables are responsibleto affect the sales. It is very important to analyze and find the variables which impact sales.This paper is a comparative study between relation and other variables which have either direct or indirecteffect on sales of the pharmaceutical industry.Keywords: Customer, Pharmaceutical MarketingDistribution channel isthe back bone ofpharmaceutical industryand in this distributionchannel, retailers andwholesalers are the mostimportant members forthe sales point of viewbecause without thecooperation of thesemember, achieving thesales tasks isimpossible.IntroductionIn pharmaceutical marketing, goodrelationship of the bottom lineemployees with the distributionchannel members is must foreffective selling in the market. Thefield staff must know the importanceof each distribution channelmember. Distribution channelincludes company, C&F agents,wholesalers and retailers andcustomers. Distribution channel isthe back bone of pharmaceuticalindustry and in this distributionchannel, retailers and wholesalersare the most important members forthe sales point of view becausewithout the cooperation of thesemember, achieving the sales tasks isimpossible. The reason is if they willnot have the sufficient inventory, themarket will face the situation ofstock out of the product. Goodrelations are required not only withthe distribution channel membersbut also the field staff must havegood relations with the doctorsbecause the doctor prescribes themedicines.Good quality of products, companyimage, knowledge of self productsand competitors products, effectivemarketing strategy, aggressivepromotional tools, best combinationof molecules, everything may be noneffectivein the absence of good*Assistant Professor, Shri Ram Murti Smarak College of Engineering and Technology, Bareilly, U.P., India**Lecturer, Shri Ram Murti Smarak College of Engineering and Technology, Bareilly, U.P., India[ 150 ] Rai Management Journal

elationship in the market. Goodrelationships make the task easier.Field staff can only generate thedemand in the market by effectiveworking but satisfying that demand isthe task of distribution channelmembers. If the distribution channelmembers are not showing interest inmaking the product available in themarket, the competitors will getbenefited because every product haslot of competitors in the market.Relationship management helps ineach and every step of pharmaceuticalselling.Pharmaceutical marketing is based onknowledge management, technologicallyimproved products, proper distributionchannel, effective promotionaltools, strategic daily planning, rightselection of customer etc. but goodrelationships accelerate the routinework and outcome of all above is totallydependent on relationship management.The RetailerRetailer is the key member of thedistribution channel ofpharmaceutical industry because onlythe retailer has the direct contact withthe customers. Retailers play vitalrole in selling the pharmaceuticalproducts. The field staff must have thehealthy relationship with all theretailers available in their territory. Ifthe field representative fails todevelop good relations with theretailers, it is impossible to sell theproduct in the market because theywill not get the support from theretailers. Many retailers will notmake the product available in theirshop and automatically stock outDecember 2010 Vol. 7, Issue 2situation will occur in the market andcompetitors will get benefited and thecompany will lose the sale and imagein the minds of the customers as wellas in the minds of the doctors whoprescribes the products. Formaintaining the relationship, the fieldstaff must take care of retailers byproviding discounts, liquidating theexcess inventory of non-moving items,settling their expiry and breakagerelated issues, should be resolved atthe earliest. There should be regularvisits to the shop and at the same timethe problem must be asked. If anyrepresentative fails to do all thesethings, despite of hard working in themarket, he will not succeed.Good relations with retailers will helpin knowing the product requirementand will also lead to increase in salesof the product. Those representativewho do not have good relations withretailers will face difficulty in sellingthe medicines as with hard workingand good knowledge, they canconvince the doctors to prescribe theirmedicines but if the product is notavailable, from where the customerwill purchase, automatically thecustomer will purchase the substituteand the person who has prescribe themedicine will also switch to otherbrands.Retailers not only help in selling theexisting brands but they play majorrole in establishing the newlylaunched brands in the market. Onthe basis of good relations, retailerstake the risk of having inventorywithout knowing whether the brandwill succeed or not. So retailers are thestrongest member of pharmaceuticaldistribution channel and goodrelationship is highly required.Pharmaceuticalmarketing is basedon knowledgemanagement,technologicallyimproved products,proper distributionchannel, effectivepromotional tools,strategic dailyplanning, rightselection of customeretc.[ 151 ]

Wholesaler, animportantmiddleman forpharmaceuticalsupply chain, isresponsible forsupply of productsto the retailers bykeeping the sufficientstock of productmixof anorganization.The WholesalerWholesaler, an important middlemanfor pharmaceutical supply chain, isresponsible for supply of products tothe retailers by keeping the sufficientstock of product-mix of anorganization.An organization has to appoint thewholesalers according to the marketpotentiality so that they can covertotal area of a particular territorywithout any problem. For anypotential territory, there may be oneor more than one wholesalers. But itis worthwhile for the organizations tohave limited wholesalers who arereliable, financially sound, coveringlarge marketing area, willing to servethe retailers, and having goodrelations in the market. Wholesalersmay directly or indirectly affect thesale of an organization positively ornegatively. Normally a wholesalerdeals with more than one companyand he has variety of products ofdifferent companies and theseproducts may be the direct or indirectcompetitors of each other. That is thereason; a medical representativemust have good relations with thewholesalers as well. As the retailerspurchase the products from thewholesaler that is why wholesalersmust have adequate stock every timeto fulfill the retailer’s requirementsand to prevent stock-out in themarket. Sometimes it happened thatbecause of unhealthy relations with aparticular medical representative, awholesaler does not keep sufficientstock of that company andautomatically company faces thesales loss and competitors getbenefited.For good relations, a medicalrepresentative has to take care of thewholesaler’s interests such as timelyinvoicing of his orders, liquidating thenon-moving items at the earliest,credit note of expiry and breakageitems, immediate delivery of items,providing discounts on purchasinglarge lots, continuous visit to the shopto show sincerity, giving continuousorder bookings, taking initiatives tosolve the disputes with the company ifany.Carry and forward (C&F)AgentCarry and forward agent isaccountable for supplying theproducts to the wholesalers in therespective territories. C&F agents arealso operates for profit making, theyusually give the importance to thosewholesalers who pay them timely forthe deliveries. It is advisable for themedical representatives to deal withonly those wholesalers whoseperception is positive in the mind ofthe C&F agent. Medicalrepresentatives have to generate anddevelop parties in their territories forpeople responsible towards makingsales, who have sense ofresponsibility and belongingness tothe company and who are punctual inpayments. C&F agents have to dealwith lot of wholesalers in theirassigned territory. Sometimes ithappened that a wholesaler is placingthe order to the C&F agent but theC&F agent is not giving importance tothat order because of the wholesaler’snature of not to pay the money at theright time. Normally C&F agentscategorize the total number of[ 152 ] Rai Management Journal

available wholesalers into variouscategories from most potential to leastpotential. A medical representativehas to create pleasant environmentbetween C&F agent and mostpotential wholesaler because themedical representative is the only linkbetween these two parties. Once therelation has developed, a medicalrepresentative can focus in the field toboost the sales because these partiescan make transactions harmoniouslywithout the interference of themedical representative. They cansolve all the issues mutually. If amedical representative is able todevelop this kind of bond betweenC&F agent and wholesaler, it means80% of his problems are solved.CustomerIn pharmaceutical industry, for themedical representative, customer isnot the end user but the customer maybe the retailer, wholesaler, and thedoctor. But as far as medicalrepresentative’s point of view themain customers are doctors whoprescribe medicines as the total salesof the pharmaceutical industrydepend on the prescriptions given bythe doctors to the patients, it is theresponsibility of the field staff togenerate prescriptions by continuousand frequent calls and convincing thedoctors regarding the benefits andimportance of his medicines.It is the routine work of a medicalrepresentative to visit the doctors andask them to prescribe their productsafter explaining the USP of theirproducts as per the pharmaceuticalcompanies. But in real life generatingprescription is really not the output ofcontinuous and frequent visit to thedoctors but much more than this.Normally a company provides variouspromotional tools to its medicalrepresentatives to convince theprescribers such as visual aids, freesamples for distribution, gifts, productmanuals, reminder cards,sponsorships for conferences,discounts to wholesalers and retailersetc. As the market is very muchcompetitive in nature and lot of smalland big competitors are available inthe market and they are providing thesame product at lower cost withadditional benefits that is why almostall companies are giving material tothe medical representatives to capturethe market and are providing trainingto the field staff in terms of how toeffectively use these promotionalmaterial?But in spite of these promotionalmaterial, the sales lies on thecapability of making relations withthe doctors. It is practically seen thata medical representative who ishaving the quality of buildingrelations can be more productive thanthose who are just using thesematerial blindly.A medical representative need tocategorize the total number ofavailable doctors in their territory intovarious categories such as coredoctors, important doctors and normaldoctors according to the potentiality toprescribe their brands. He has to focusmore on those who belong to corecategory and then try to find out whatthey really want like whether they arecall minded, gift minded, or relationIn pharmaceuticalindustry, for themedicalrepresentative,customer is not theend user but thecustomer may be theretailer, wholesaler,and the doctor.December 2010 Vol. 7, Issue 2[ 153 ]

... a medicalrepresentative needsto have bettercommunicationskills, resultoriented, clearobjectives, egocontrolling powerand thoroughknowledge of hisproducts range aswell as wellknowledge ofcompetitor’s productsrange.minded etc. A medical representativehas to perform all the activities butmust focus on developing therelations. Good relations with leastpromotional materials meanmaximum sales rather than badrelations with high promotionalmaterial. A medical representativehas to meet frequently to core doctorsand try to deliver new things byadding values in their products. Fordoing this, they must beknowledgeable. Developing relationsis not an easy task. To be capable ofthis, a medical representative needsto have better communication skills,result oriented, clear objectives, egocontrolling power and thoroughknowledge of his products range aswell as well knowledge of competitor’sproducts range.In the above model, it is clearly shownthat a medical representative issurrounded by various members whoare either directly or indirectlyresponsible for increasing ordecreasing the sales in their territory.Any of these members can affect thesales positively or negatively.A medical representative calls thedoctors to generate the prescriptionsfor his medicines by giving theinformation regarding his products.And the doctor prescribes only whenhe is satisfied with the company andproducts and moreover on the basis ofgood relationship. After getting theprescription the patient contacts theretailer to purchase the prescribedmedicines. Now the duty of the doctoris over and the responsibility of themedical representative start, whereinhe has to make the products availableat each stage of the distributionchannel. Performing this duty ismuch more important for him becauseit happened normally that thedemand is there in the market but theModeling approach[ 154 ] Rai Management Journal

product is not available due to poorrelationship with channel memberswho are responsible to supply theproducts to the consumers.In the model the different arrowsshow the direction of goods flow in thedistribution channel and to whom amedical representative has to contactto build relation by transmitting thevaluable information to maximize thesales in his territory. As per the modela medical representative has tocontact with all the distributionchannel members, doctors, and to hisimmediate boss and he has to providethe needed information wheneverrequired by these members. On behalfof the representative, the immediateboss contacts all these members andthe doctors to increase the sales bydeveloping healthy relationship.Research MethodologyThe study was conducted in westernU.P. (India) with the sample size of280 respondents. All the respondentswere field staff of pharmaceuticalindustry in western U.P. (India). Theywere asked various questions abouttheir opinion related to differentvariables like knowledge of theirproduct, relation with the doctors,chemists, wholesalers, knowledgeabout competitors, communicationskills, company image, product qualityand brand image etc.The study is totally based on primarydata collected through questionnaireand self knowledge because of workingexperience in this sector.Data AnalysisOn the basis of MaritalStatusFor the analyses, total 280respondents were interviewed. Out of280 respondents 105 were marriedand 175 respondents were unmarried.Out of 105 married respondents14(13.33%) respondents have theopinion that company image helps inselling the pharmaceutical products.2(1.90%) thinks that product quality isimportant. 15(14.28%) said thatpromotional material, sponsorshipand frequent calls plays importantTable 1MaritalStatus/Responsetowards variablesCompanyImageProductQualityPromotionalMaterial,Sponsorship,Frequent CallsRelationship TotalMarried 14/13.33% 2/1.90% 15/14.28% 74/70.47% 105Single 21/12% 18/10.28%24/13.71% 112/64% 175Total 35/12.5% 20/7.14% 39/13.92% 186/66.42% 280December 2010 Vol. 7, Issue 2[ 155 ]

ole in selling the products. And74(70.47%) viewed that relationshipis the most important element inpharmaceutical selling. Out of 175unmarried respondents, 21 (12%),18(10.28%), 24(13.71%), and112(64%) thinks that company image,product quality, promotional materialand relationship have their role inselling the pharmaceutical productsrespectively.Figure 1Figure 2[ 156 ] Rai Management Journal

On the Basis of GenderOut of 280 respondents, 208respondents were males in which11(5.2%), 17(8.17%), 43(20.67%), and137(65.86%) thinks that companyimage, product quality, promotionalmaterial and relationship have theimpact on sales respectively. Out of allrespondents, 72 were females. Out of72 females 3(4.16%), 2(2.7%), 5(6.94%)and 62(86.11%) believes that companyimage, product quality, promotionalmaterial and relationship areimportant respectively.Figure 3Figure 4December 2010 Vol. 7, Issue 2[ 157 ]

On the Basis ofQualificationOut of 280 respondents 166 weresimple graduates in which27(16.26%), 13(7.83%), 72(43.37%)and 54(32.53%) respondents thinksabout the importance of companyimage, product quality, promotionalmaterial and relationshiprespectively. 114 were managementgraduates in which 21(18.42%),17(14.91%), 27(23.68%) and49(42.98%) point outs the role ofcompany image, product quality,promotional material andrelationship respectively.Qualification/ResponsetowardsVariablesSimpleGraduatesManagementGraduatesCompanyImageProductQualityPromotionalMaterial,Sponsorship,FrequentCallsRelationshipTotal27/16.26% 13/7.83% 72/43.37% 54/32.53% 16621/18.42% 17/14.91%Total 48/17.14% 30/10.71%27/23.68% 49/42.98% 11499/35.35% 103/36.78% 280Figure 5[ 158 ]Rai Management Journal

Figure 6On the Basis of Age GroupAll the 280 respondents were dividedinto three categories. 138 respondentsbelong to first category i.e. 21-30years. 102 respondents belong tosecond category i.e. 31-40 years and 40respondents belong to third categoryi.e. more than 41 years. The responsesare shown in the following table 4.Table 4AgeGroup/ResponsetowardsVariablesCompanyImageProductQualityPromotionalMaterial,Sponsorship,FrequentCallsRelationshipTotal21-30 Years 24/17.39% 19/13.76% 41/29.71% 54/39.13% 13831-40 Years 18/17.64% 22/21.56% 21/20.58% 41/40.19% 102More than41 Years3/7.5% 2/5% 6/15% 29/72.5% 40Total 45/16.07% 43/15.35% 68/24.28% 124/44.28% 280December 2010 Vol. 7, Issue 2[ 159 ]

Figure 7Figure 8[ 160 ] Rai Management Journal

Figure 9ConclusionAfter analyzing the data, it is foundthat developing the melodiousrelations with all the channelparticipants and doctors is must foreffective selling in the pharmaceuticalindustry. It is also advisable for thepharmaceutical organizations thatthey should develop the strongdatabase of their target customersregarding their likings and disliking,taste and preferences, nature andbehavior, date of birth, date ofmarriage anniversaries, and otherrelated information so that they canfully utilize these information as andwhen needed to improve the relationswith them. The entire variables aresignificant in selling the products butrelations in the market should be theprime focus for effective selling.References• Bansal RK, Das Sanjoy. Unethicalrelationship between doctors and drugscompanies. JIAFM, 2005: 27(1): 40-42.• Szalkai Zsuzsanna. Relationship marketingin the pharmaceutical market- Analysis ofthe Hungarian case. Periodica PolytechnicaSer. Soc. Man. Sci. Vol. 12, No. 2, PP. 177–188 (2004)• Palmer Adrian. Relationship Marketing:Back to Basics? Journal of marketingmanagement, Volume 10, Issue 7, October1994, PP: 571-579.December 2010 Vol. 7, Issue 2[ 161 ]

Empirical Study On PerformanceMeasurement Of Plastic Industry OfMadhya PradeshA. K. Singh *Charu Singh**There is a clear distinction between the traditional and modern small industries. The traditional smallindustries include khadi and handloom, village industries, handicrafts, sericulture, coir, etc. Modernsmall industries manufacture a wide variety of goods from simple items to sophisticated items such astelevision sets, electronics control system, various engineering products, particularly as ancillaries to largeindustries. The common factor emerged from all the location of this industry where the diversions ofworking capital fund for creation of fixed assets. Even the previous studies also indicate this type of seriousproblem, which not only damages the SSI sector but also influences the economy de-growth of the nation.Previous research shows that state-owned banks in very underdeveloped financial systems direct credittowards small- and micro-enterprises which would not have received credit otherwise, but that thenonperforming loan rate at many of these institutions is very high.Keywords: Micro-enterprise, industries, SSI sector.The traditional smallindustries include khadiand handloom, villageindustries, handicrafts,sericulture, coir, etc.Modern smallindustries manufacturea wide variety of goodsfrom simple items tosophisticated items suchas television sets,electronics controlsystem, variousengineering products,particularly asancillaries to largeindustries.IntroductionThe transition period of the processof economic reforms was faced withadverse conditions such as foreignexchange constraints, creditsqueeze, demand recession, highinterest rates, shortage of rawmaterial etc. When the performanceof this sector is viewed against thegrowth in the manufacturing andthe industrial sector as a whole, itinstills confidence in the resilience ofthe small-scale sector. (SSI sectorsurvey conducted by Ministry ofNational Informatics Center withthe base year 1999) There are noclear official definitions of Small*Dean, Sangvi Institute of Management, Indore, India**Student, Sangvi Institute of Management, Indore, Indiascale industries, they are usuallydistinguished from the large-scaleand medium-scale industries on thebasis of size, capital resources andlabor force in the units.However, there is a clear distinctionbetween the traditional and modernsmall industries. The traditionalsmall industries include khadi andhandloom, village industries,handicrafts, sericulture, coir, etc.Modern small industriesmanufacture a wide variety of goodsfrom simple items to sophisticateditems such as television sets,electronics control system, variousengineering products, particularly[ 162 ] Rai Management Journal

as ancillaries to large industries. Thetraditional small industries are highlylabor-intensive, while the modernsmall industries use highlysophisticated machinery andequipment. The term small-scaleindustries are mostly used torepresent modern small industries.The SSIs manufacture many itemswhich include rubber products, plasticproducts, chemical products, glass andceramics, mechanical engineeringitems, hardware, electrical items,transport equipment, electroniccomponents and equipments,automobile parts, bicycle parts,instruments, sports goods, stationeryitems and clocks and watches. Thesmall scale sector has acquired aprominent place in the socio-economicdevelopment of the country during thepast four and a half decades. It hascontributed to the overall growth ofthe gross domestic product as well asin terms of employment generationand export. Performance of the smallscale sector, which forms a part oftotal industrial sector, therefore, hasdirect impact on the growth of thenational economy.According to Reserve Bank of India aweak unit is one which shows (i)accumulated losses equal to orexceeding 50percent of its peak networth for the immediately precedingfive accounting years and (ii) a currentratio of less than 1:1 and suffered acash loss in the immediatelyproceeding accounting year (Pandaand Patra, year 1991).Naik Committee 1991, which was setup to examine adequacy ofInstitutional Credit to small scaleindustry submitted itsrecommendation to RBI. Afterinvestigating the Naik Committeereport, RBI advised banks to ensureadequate and timely credit to thissector. RBI had classified advancesinto four categories i.e. standard, substandard,deferred and loss, Viabilitystudies should be conducted withinthree months and the nursingprogrammed also to be taken care ofwithin six months from the date ofidentification of units as sick.Nimbalkar (2003) commentedforcefully that the important issuethat of promoting technology in theSSI sector. Obsolete technology hadbeen the main cause of stagnation incompetitiveness as well asproductivity of the sector. Theproblem was also compounded withthe advent of WTO norms relating inlow tariff barriers and freeinternational trade. To address these,SIDBI has focused attention towardsindustries having potential for highgrowth and also industries requiringstrategic measures to retaincompetitive edge in the post-WTOregime.Commenting on RBIs revisedguidelines for rehabilitation of sicksmall scale industrial units AIMO(2003) stated that according to theofficial figures almost Rs.1, 00,000cores were blocked in NPA accounts offinancial institutions, which werebound to increase to Rs.2, 00,000 coreswithin the next two years, whichmean productive assets worth Rs.3,00,000 cores, which in turn wouldresult in a production loss of Rs.6,00,000 cores per annum. The GDP ofIndia was Rs.11, 51,000 crores. Thusthe production that was possible fromThe small scalesector has acquired aprominent place inthe socio-economicdevelopment of thecountry during thepast four and a halfdecades. It hascontributed to theoverall growth of thegross domesticproduct as well as interms ofemploymentgeneration andexport.December 2010 Vol. 7, Issue 2[ 163 ]

these non- productive assets wasalmost 52percent of the GDP of India.Even if that figure were discounted by50 percent, it would mean loss ofproduction from these NPAs would be26percent of GDP of India and stategovernments and locking up ofingestible funds of FinancialInstitutions were of serious concern tothe society at large. It was, therefore,generally recognized that in order tofully utilize the productive industrialassets, provide maximum protectionto employment and optimize the useof funds of the Banks and FinancialInstitutions, it would be imperative torevive and rehabilitate the potentialviable sick industrial companies asquickly as possible. As a matter offact, Parliament enacted the SickIndustrial Companies (provisions)Act, 1985 for that purpose. Butunfortunately it did not reduce theindustrial sickness but instead itincreased day by day and became aburning national problem.(Mukherjee, 2003).Nimbalkar (2003) commentedforcefully on promoting technology inthe SSI sector. Obsolete technologyhad been the main cause ofstagnation in competitiveness as wellas productivity of the sector. Theproblem was also compounded withthe advent of WTO norms relating inlow tariff barriers and freeinternational trade. To address these,SIDBI has focused attention towardsindustries having potential for highgrowth and also industries requiringstrategic measures to retaincompetitive edge in the post-WTOregime.Commenting on RBIs revisedguidelines for rehabilitation of sicksmall scale industrial units, AIMO(2003) stated that according to theofficial figures almost Rs.1, 00,000crores were blocked in NPA accountsof financial institutions, which werebound to increase to Rs.2, 00,000crores within the next two years,which means productive assets worthRs.3, 00,000 crores, which in turnwould result in a production loss ofRs.6, 00,000 crores per annum. TheGDP of India was Rs.11, 51,000crores. Thus the production that waspossible from these non- productiveassets was almost 52percent of theGDP of India. Even if that figure werediscounted by 50 percent, it wouldmean loss of production from theseNPAs, would be 26percent of GDP ofIndia and state governments. Lockingup of ingestible funds of FinancialInstitutions was of serious concern tothe society at large. It was, therefore,generally recognized that in order tofully utilize the productive industrialassets, provide maximum protectionto employment and optimizes the useof funds of the Banks and FinancialInstitutions, it would be imperative torevive and rehabilitate the potentialviable sick industrial companies asquickly as possible. As a matter of fat,Parliament enacted the SickIndustrial Companies (provisions)Act, 1985 for that purpose. Did itreduce sickness? Unfortunately not,with the industrial sicknessincreasing day by day, it had becomea burning national problem(Mukherjee 2003). No research hasbeen carried out to study theefficiency measurement of SmallScale Industries of Madhya Pradesh.[ 164 ] Rai Management Journal

RESEARCH METHODOLO-GYThe Study:The present study is an exploratoryinvestigation to examine the overallperformance of plastic industry inM.P. during operational stage ofproject and to examineexternal/internal dimension onproductivity of industry. Formeasuring the efficiency thedimensions that were taken in toconsideration, like project planning,commercial operations, marketing,accidental occurrences, workingcapital management, generalmanagement and ancillary effect. Theselection of units was based on thelocations and the basis of industrialdensity at different sectors and thesize of the firm. 2*4 factorial designwas used to delineate the specificfactors that caused efficiency in eachcategory and also to identify thedifferences between different types ofunits with respect to the factors thatcaused the deviation.The units chosen from Plasticindustries and locations were Indore,Gwalior, Bhopal and Jabalpur. Theselection of sectors was made onjudgmental basis and the unitselection on random basis. Theuniverse in the study included all theexisting units of Plastic firms in thecategory of SMEs in the state of M.P.The sample units were selected on thebasis of stratified random methodkeeping in mind the utility of unit sizeand efficiency. The survey approachwas used to collect primary data.The SampleThe responses had to be collected fromthe executives and owners who wereeither directly involved or selfentrepreneur of the SMEs at differentlocations. The purposive samplemethod was used to selectrespondents from various industries ofthe selected sectors. Since the toolused for collecting data soughttechnical and commercial details, theowners and top level executivesdirectly involved handling of variousindustrial activities were selectedfrom each of the manufacturing unitsof the chosen categories of industries.The number of units selected for thestudy included Six units from each ofthe four location (Indore, Bhopal,Gwalior and Jabalpur)and from theindustries of Plastic. Total number ofrespondents from each industry wassix at every location. Thus the finalsample included 24 representing unitsin total formTools for Data Collection:A detailed taxonomy based scale wasdeveloped after extensively reviewingthe literature besides ascertaining theviews from industry and academicboth, working experts in the area ofproduction and marketing the saidcategories from M.P. The main formatof the scale was adapted fromAllegri(1984) which has sevendimensions namely Planning,Commercial Operation, Marketing,Ancillary Relationship, WorkingCapital, General Management andAccidental Occurrence.December 2010 Vol. 7, Issue 2[ 165 ]

Tools for Analysis:First of all the filled up scales werescreened for completeness and theonce in which responses to all thestatements were complete, it wasselected for analysis. The incompletescales were rejected at this stage.Only after that all the responses werescored and tabulated.Dimension Null hypothesis.Null hypothesis H0 (1) There issignificance difference withinindustrial sector at different locationsPlastic IndustryH001I,B: There is no significantdifference in the efficiency of plasticindustry located at Indore andBhopal.Hoo2I,G: There is no significantdifference in the efficiency of plasticindustry located at Indore andGwalior.Hoo3I,J: There is no significantdifference in the efficiency of plasticindustry located at Indore andJabalpur.Ho04B,G: There is no significantdifference in the efficiency of plasticindustry located at Bhopal andGwalior.Ho05B,J: There is no significantdifference in the efficiency of plasticindustry located at Bhopal andJabelpurHo06J,G: There is no significantdifference in the efficiency of plasticindustry located at Jabelpur andGwalior1) Null hypothese is rejected i.ethere is significant difference inefficiency of plastic industrybetween Indore and Bhopal. Thisconfirms that location influencesthe efficiency of electricalindustry. (t=2.92)2) Null hypothese is rejected i.ethere is significant difference inefficiency of plastic industry atIndore and Gwalior. Thisconfirms that location influencesthe efficiency of electricalindustry (t=3.82)3) Null hypotheses of H009,andH010 is accepted i.e there is nosignificant difference in efficiencyof plastic industry betweenIndore-Jabelpur and Bhopal-Gwalior.4) Null hypotheses of H011 andH012is rejected i.e there issignificant difference in efficiencyof plastic industry betweenBhopal – Jabalpur and Gwalior –Jabelpur. This confirms thatlocation influences the efficiencyof Plastic industry. (t=2.04,2.995)Analyzing the contributingfactors of Plastic IndustryThe study describes the results of t-test applied between the mean scoresobtained for each unit under study.The result were tabulated andpresented separately for eachdimension along with theexplanations. The Summary of[ 166 ] Rai Management Journal

dimension-wise and unit- wise resultswere presented along with theirgraphical presentations to provideexplicit comparison of dimensions ofdifferent sectors and location withdifferent factors. The research studyhas evaluated the performance ofPlastic Industry on different factorscontributing to its health. The firststep was taken to analyze the impactof the region on the sample industry.The result indicates that all the fourregions under study were significantlydifferent in terms of their overallefficiency.The results of t – test for the meanscores of plastic industry located atfour regions are depicted in table.It is evident from the table 1 that thet-ratio for the mean performance ofPlastic industry located at Indore issignificantly different from thoselocated at Bhopal and Gwalior but itdoes not differ significantly from thoselocated at Jabalpur. Thus, the Plasticindustries located at Indore differsignificantly in term of thereperformance from those located atBhopal and Gwalior, while standsimilar in term of their performancewith those located at Jabelpur.Further, the value of meanperformance shown in fig 1 indicatesthat plastic industries located atGwalior stand best in terms ofperformance with the mean score of241.17 followed by Bhopal with themean score of 237.50, Jabelpur withthe mean score of 221.17 where asplastic industry located at Indorestand lowest in terms of performancewith the mean score of 203.83.The common factors in Plasticindustry at four location of M.P.In the present study, variables likedelay in plant and machineryinstallation, late fund release andnon-availability of technicians, timeoverrun, disruption in productionschedule plans, plant suppliertechnology and working capitalmanagement were found to be thecommon elements affecting theTable 1: t –ratio for plastic industry located at four regions:Indore Bhopal Gwalior JabalpurMean 203.83 237.50 241.17 221.17SD 18.74LocationComputed ‘t’ valueIndore - -2.91 -3.82 -1.97Bhopal - - -.522 2.04Gwalior - - 2.995Jabalpur - - -December 2010 Vol. 7, Issue 2[ 167 ]

... the commonstrength of theplastic industry inM.P. enhancing theperformanceirrespective of thelocation were foundto be the regularavailability of rawmaterial in adequatequantity atreasonable pricebefore startingproduction, technicalknowledge ofEntrepreneur,Government supportand working capitalassessment,proximity at sourceof labor and timerequirement to creditliquidation.performance of plastic industry of allthe four locations adversely. Thus thecommon problems faced by the plasticindustry in M.P irrespective of thelocation were delay in plant andmachinery installation, late fundrelease and non-availability oftechnicians, time overrun anddisruption in production scheduleplans, plant supplier technology andworking capital management whichaffected the viability of the project.On the other hand, the regularavailability of raw materials,inadequate quantity at reasonableprice before starting production,technical knowledge of Entrepreneur,Government support and workingcapital assessment, proximity atsource of labor and time requirementto credit liquidation emerged ascommon elements affecting positively.Thus, the common strength of theplastic industry in M.P. enhancingthe performance irrespective of thelocation were found to be the regularavailability of raw material inadequate quantity at reasonable pricebefore starting production, technicalknowledge of Entrepreneur,Government support and workingcapital assessment, proximity atsource of labor and time requirementto credit liquidation. Even theprevious studies also indicated thistype of serious problem, which notonly damages the SSI sector but alsoinfluences the economy de-growth ofthe nation. Previous research showsthat state-owned banks in veryunderdeveloped financial systemsdirect credit towards small- andmicro-enterprises that would not havereceived credit otherwise, but that thenonperforming loan rate at many ofthese institutions is very high.(Hanson 2002). Most of the researchsuggests that large concentrations ofstate bank ownership have someunfavorable economic consequences,such as reduced overall access tofinancing, increased likelihood offinancial crises, or diminishedfinancial system development- Barth,Caprio, and Levine (1999, Clarke andCull (2002, La Porta, Lopez-de-Silanes, and Shleifer .For analyzing the effect of marketingon SMEs, the fifteen sub dimensionwas selected and tested the efficiencyof SMEs of Madhya Pradesh. Theissue like demand stability, decline indemand due to fierce competition,quality not being up to mark,substitute product, mother unitplaces erratic order, less marketingefforts, market share holding,seasonal demand, price mechanism,pricing below cost, rejection due todelayed delivery, adherence ofdelivery schedule due to machinerybreak down, adherence of deliveryschedule due to inadequate workingcapital and adherence of deliveryschedule due to transportationproblems. These sub dimensionsagain divided in six category i.edemand analysis, pricing effect,delayed delivery, machinery breakdown, working capital, transportationproblems. Sachitanand (1999) statedthat delayed payments by customers,usually large industries, have beenthe scourge of SSIs and, in fact, asignificant cause of sickness. On thewhole, SMEs performance doesindicate that the sector faces a toughchallenge for its survival and growthin the period of globalization. Onewould feel all the more so, if onerealizes the ground realities. Mediareports periodically bring out the[ 168 ] Rai Management Journal

declining state of affairs in SSI instates like Karnataka Ramesh, (1999);Kulkarni and Parishwad,(2001);Raghu, (2001); Menon andRaghunandan, (2003). Most of theresearch suggests that largeconcentrations of state bankownership have some unfavorableeconomic consequences, such asreduced overall access to financing,increased likelihood of financial crises,or diminished financial systemdevelopment (e.g.,Barth, Caprio, andLevine 1999, Clarke and Cull 2002, LaPorta, Lopez-de-Silanes, and Shleifer2002). These unfavorableconsequences may occur in partbecause of weak governance, lack ofaggressive collection procedures thatencourages a poor credit culture, orbecause some of the resources may bechanneled for political purposes.The finding of the study indicatesthat, most of the plastic units haveshown similar tendency and due tothis the bankers were also skepticalabout financing of such types ofindustries. A particular effective wayto ensure that small producers get theright type of technical assistance hasbeen an arrangement in which arepresentative of (typically large)clients will agree to engage in buyermentoringfor a while, training smallsuppliers and providing technicalconsultancy, with the assisting agencymeeting part of the costs involvedDawson, (1999); Wong, (1994).Theother major common factor emergedwas, the supply of finished goods onaccount of transport bottlenecks. It iswell versed in M.P that theinfrastructure is also the bottleneck indevelopment of SSI. Apart from allthese major or minor problems, themost interesting factor emerged was,December 2010 Vol. 7, Issue 2sustained profitability on year to yearbasis shown in their balance sheets.So the commercial operation of thestate is not questionable but fewmajor changes were observed.The inherent problems of workingcapital deficiency, interest ambiguityof the promoter, poor endurance of thepromoter and the risk of shorter life ofcommercial operations in Plasticsector were not the deterrent factorsfor its growth and its significance inthe Indian economy. Perhaps thisstructural malady made them moredependants on government forsubsidies, technical know howtransfer and innovation, thus makingthem susceptible to efficiencyproblem. But the greater evil wascaused by the government and thedevelopment agencies as their visioncould not make this sector sustainableby itself. For analyzing the effect ofworking capital on Small ScaleIndustry, the nine sub dimension wasselected which tested the efficiency ofSMEs of Madhya Pradesh. The subdimension chosen were the adequacybank finance and limit sanction,attitude of banks towards loansanction, unreasonable duessettlement against receivable,problem of meeting margin money,liquidity affected due to late payment,disruption in operating cycle andexecuted because of lack of fund.In the present study, managementresponsibilities were largely withsingle person and there was a totallack of professionalism in the way theunit was managed, evident byhaphazard piecemeal planning werefound to be the common elementsaffecting the performance of plasticindustry of all the four locationsThe inherentproblems ofworking capitaldeficiency, interestambiguity of thepromoter, poorendurance of thepromoter and therisk of shorter lifeof commercialoperations in Plasticsector were not thedeterrent factors forits growth and itssignificance in theIndian economy.[ 169 ]

adversely. Thus the common problemsfaced by the plastic industry in M.Pirrespective of the location weremanagement responsibilities werelargely with single person and therewas total lack of professionalism inthe way the unit was managed,evident by haphazard piecemealplanning.The study indicates that concern likeproduction dislocates for the long timedue to the serious accident and thatleads to extensive damage, legallybounded to pay compensation fordamage were found to be the commonelements affecting the performance ofplastic industry of all the fourlocations adversely. Thus thecommon problems faced by the plasticindustry in M.P irrespective of thelocation were production dislocationfor the long time due to the seriousaccident and that leads to extensivedamage, legally bounded to paycompensation for damage.The study indicates that units find itdifficult to comply with stringentcoordination for supply, lay down byparent units irregular/inadequateorder placed by mother units to theirancillary, were found to be thecommon elements affecting theperformance of plastic industry of allthe four locations adversely. Thus thecommon problems faced by the plasticindustry in M.P irrespective of thelocation were difficult to comply withstringent coordination for supply, laiddown by parent units,irregular/inadequate order placed bymother units to their ancillary,production dislocation for the longtime due to the serious accident andthat leads to extensive damage,legally bounded to pay compensationfor damage. On the other hand, theunits were throwing good profits onlydue to regular demand coming fromtheir mother units and emerged ascommon elements affecting positively.Thus, the common strength of theplastic industry in M.P. enhancing theperformance irrespective of thelocation were throwing good profitsonly due to regular demand from theirmother units.Results1) Null hypothese is rejected i.ethere is significant difference inefficiency of plastic industrybetween Indore and Bhopal. Thisconfirms that location influencesthe efficiency of electricalindustry. (t=2.92)2) Null hypothese is rejected i.ethere is significant difference inefficiency of plastic industry atIndore and Gwalior. This confirmsthat location influences theefficiency of electrical industry(t=3.82)3) Null hypotheses of H009,andH010 is accepted i.e there is nosignificant difference in efficiencyof plastic industry betweenIndore-Jabelpur and Bhopal-Gwalior.4) Null hypotheses of H011 andH012is rejected i.e there issignificant difference in efficiencyof plastic industry betweenBhopal – Jabalpur and Gwalior –Jabelpur. This confirms thatlocation influences the efficiencyof Plastic industry. (t=2.04, 2.995)[ 170 ] Rai Management Journal

The results of analysis of performanceof plastic industry located in fourlocation of the study show that units ofplastic industry located at Indorediffer significantly from those locatedat Bhopal, Gwalior, and Jabalpur.Further, the mean performance ofthese units indicated that Gwaliorstood first followed by Bhopal andJabalpur while Indore was lowest interms of performance of plastic units.The study is first of its kind using thetaxonomy based scale to evaluate theefficiency of Small Scale Industries inMadhya Pradesh on the basis ofperformance of selected industriesmeasured on a five point Likert typescale.most efficient. Reliability coefficient ofthe scale was calculated by applyingcorrelation method. Norms forefficiency measurement of industrialhealth in SSI were also developed tofacilitate in Indian context.The third objective was to determinewhether internal or / external factorsare more important in efficiencymeasurement. The results indicatethat units differ significantly on all thedimensions either on internal orexternal factor when compared on onebasis with each other. It was foundthat both dimensions play their role indeciding the overall efficiency of eitherof any sector within the state.ConclusionThe first objective relates the factorscontributing to industrial healthduring operational stages of theproject. The study has resulted into avalidated, reliable, simple and easyway to use to measure the efficiency ofSSI during the implementation andoperational stage of the project.Internal validity of the scale isconfirmed through high contributionof each item towards the dimensiontotal and in turn each dimensiontowards total score of the scale. Forconfirming the effect on efficiency infour major location during planningand commercial dimension,(operational stage) various validitytests have been applied and it is foundthat plastic industries are mostefficient in Indore and Gwalior inPlanning of their activities whereas incommercial operation, auto industriesof Indore, Bhopl and Jabalpur areBibliography• Ratnam, C.V.S. (1991), `Institutions forPromoting Technological Modernization ofIndian Small Enterprises', in Bhalla, A.S.Small and Medium Enterprises: TechnologyPolicies and Options, Greenwood. 4• Mathew, P.M. (1997), ``Union Budget andSmall Enterprises'', Economic and PoliticalWeekly, 5 April 1997, pp. 691-92. 5• Dutt, Raddar and Sundharam, K.P.M.(1994), ``Small-Scale Enterprises'', IndianEconomy, S. Chand & Company Ltd.: NewDelhi.• George, P.V. ``Fundamental gaps in the newpolicy initiatives for the small scale sector'',Indian Economic Journal, pp. 125-29.• Brochures of NISIET, Hyderabad, India.• Panda, Small-scale industries: Preparing forthe WTO challengeswww.blonnet.com/2002/07/012/stories.• Sachitanand. CII prescription w.Sachitanand. CII prescriptionwww.Hinduonnet.com/thehindu/biz/2002/01/24/storiesDecember 2010 Vol. 7, Issue 2[ 171 ]

• Nimbalkar .B. Chairman & ManagingDirector, SIDBI- www. Sidbi.com /english/corporate/chaivmessage/archives/speechc. "Small and Medium Enterprises :The March Forward"• Survey for phasing out SSI reservation –www Ficci.com/ficci/business/smallscaleSurvey for phasing out SSI reservation -February 27, 2003• "Revised draft guidelines for rehabilitationof sickness of sick small scale industrialunits .www.rediff.com/money/2003/febAIMO COMMENTS ON RBI'S• Mukherjee By Industrial sickness and workculture.www.ganashakti.com/old/1998/981207/featureeco.htm/www.ganashakti.com/old/19 98/981207/featureeco.htm• Industrial unrest, sickness on a downtrend:survey -http://www.rediff.com/money/2002/feb/26eco4.htm• www.bankersindia.bravepages.com/committees/omkargoswami_committee.htmChairman Prof. Omkar Goswami, Prof. ofEconomics, Delhi School of Economics, andnow consultant to CII.• Singh Dr.Radhey Shyam “Financing ofSmall Scale Industries in India “ – – 1986-PP 208-209• Singh Dr. Renu “Industrial Sickness andSmall Scale Sector in India” – A case study– PP 213-14- 1992• Economical survay 1987 –88 1988 – 89 1988–90 91-91 ministry of fiancé govt. of India• Ahmad, Q.K. (1996). "Problems andProspects of Small and Micro Enterprises inthe Process of Economic Liberalisation inSouth Asia" in R. Islam (ed) (1996). Smalland Micro Enterprises in a Period ofEconomic Liberalisation: Opportunities andChallenges. New Delhi: ILO - SAAT, pp. 16-51• Ayyar, S.R.S. (1994). "New EmergingChallenges and Opportunities for Smalland Medium Enterprises throughTechnological Upgradation and BetterFinancial Management" in Small IndustryBulletin for Asia and Pacific, No. 29, UnitedNations, New York, pp. 38-40• Bhalla, A.S. (1996). Facing theTechnological Challenge. London:Macmillan Press Ltd.• Bhavani, T.A. (2001). Small-scale Units inthe Era of Globalisation: Problems andProspects. Discussion Paper Series No.41/2001.• Chandra, P., and Sastry, T. (1998)“Competitiveness of Indian Manufacturing:Findings of the 1997 ManufacturingFutures Survey” in in Vikalpa the Journalfor Decision Makers, Vol. 23, no.3, July-September, pp. 25-36.• Antlny R.N. & reece T.s; A package ofmeasures for reducing incidence ofindustrial sicknes- principles aprorece &soms Bombay 1977• Bidani, s.n. & mitra, p.k: Bank fiancé forInd; working capital & term laons, vision/books New Delhi 1984)• Kumari Rita “Problems and Prospective ofIndia’s Foreign Trade – Since 1971”– Page158 – year 1991.• Williams Dr. Ranjana Neema –StructureReforms in India Foreign Trade since 1980-99• Singh By Dr. Surendra”The role of GATTin the Trade Promotion of DevelopingEconomy” –– PP 144 to 145 – 1994:[ 172 ] Rai Management Journal

A Study on Analysis of Various FactorsAffecting Customer Satisfaction inService Industry with reference toIndian Hotel Industry'Hotels in India' have supply of 110,000 rooms. According to the tourism ministry, 4.4 million tourists visitedIndia last year and at current trend, demand will soar to 10 million in 2010 - to accommodate 350 milliondomestic travelers. 'Hotels in India' has a shortage of 150,000 rooms fueling hotel room rates across India.With tremendous pull of opportunity, India is a destination for hotel chains looking for growth. The WorldTravel and Tourism Council, India, data says, India ranks 18th in business travel and will be among the top5 in this decade. Sources estimate, demand is going to exceed supply by at least 100% over the next 2 years.Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity, 'Hotel India' room ratesare most likely to rise 25% annually and occupancy to rise by 80%, over the next two years. 'Hotel Industry inIndia' is eroding its competitiveness as a cost effective destination. However, the rating on the 'Indian Hotels'is bullish. 'India Hotel Industry' is adding about 60,000 quality rooms, currently in different stages ofplanning and development and should be ready by 2012. MNC Hotel Industry giants are flocking India andforging Joint Ventures to earn their share of pie in the race. Government has approved 300 hotel projects,nearly half of which are in the luxury range. Sources said, the manpower requirements of the hotel industrywill increase from 7 million in 2002 to 15 million by 2010.With the USD 23 billion software services sector pushing the Indian economy skywards, more and moreIT professionals are flocking to Indian metro cities. 'Hotel Industry in India' is set to grow at 15% a year.This figure skyrocketted in 2010, when Delhi hosted the Commonwealth Games. Already, more than 50international budget hotel chains are moving into India to stake their turf. Therefore, with opportunitiesgalore the future 'Scenario of Indian Hotel Industry' looks rosy. The thriving economy and increasedbusiness opportunities in India have acted as an advantage for Indian hotel industry. India’s tourismindustry has witnessed a strong period of growth mainly driven by the promising Indian middle class, riseof high spending overseas tourists, and timely Government initiatives with a focus on campaign called as‘Incredible India. The tourism industry of India has reached to a figure of US$100 Billion in the year 2008with expectation to touch figure of US$275.5 Billion by the year 2018 showing an annual growth rate of9.4 Per cent. To sustain the momentum it is high time that it accepts and practices in true sense aconsumer oriented marketing approach which implies that players of the tourism industry should viewand organize its business activities from the consumers’ point of view that would be immensely helpful increating, communicating, and delivering superior customer value to its target market on a continuingbasis. An attempt in this paper has been therefore shall be made to suggest how tourism service qualityapproach shall have implications on delivering of desired customer satisfaction coupled with CustomerRelationship Management practices. It has also identified the opportunities and challenges that the hotelindustry likely to face in near future.Keywords: Tourism, Hotel Industry.*Assoc. Prof. &Dean R&D, Institute of Management & Technology,Faridabad**Research Scholar, Singhania University, Pacheri Bari, RajasthanParul Khanna*Alka Kaul**December 2010 Vol. 7, Issue 2[ 173 ]

Customersatisfaction and theservice industry aredirectly relateddependent variablesand in certain caseshave the causal effectand the dependencyof variablemultivariate.1.1. Introduction:From a hotel's perspective it isimportant to ensure that customersare satisfied with the product theypurchase as well as with the way theproduct is delivered. This is true forcompanies producing pure goods orpure services, or for companies sellinggoods and services. Customers havespecific needs, expectations, andperceptions, but if a company is notable to exceed or at least meet theseexpectations, the customer becomesdissatisfied and probably does notconsider a repurchase. Oneprerequisite for customer satisfactionis therefore that the company knowstheir customer's needs andexpectations.Customer satisfaction and the serviceindustry are directly relateddependent variables and in certaincases have the causal effect and thedependency of variable multivariate.To study the factors affecting theindustry specific variables forcustomer satisfaction in hospitalityand education sector, I amundertaking a detailed research andhotel industry being the integral partof the industry, this article focusesspecifically on the study of factorsaffecting customer satisfaction inhotel industry.1.2. Prologue:Tourism Defined: Tourism is theactivities of persons traveling to andstaying in places outside their usualenvironment for not more than oneconsecutive year for leisure, businessor other purposes. It is a dynamic andcompetitive industry that requires theability to constantly adapt tocustomers' changing needs anddesires, as the customer’s satisfaction,safety and enjoyment are particularlythe focus of tourism businesses. Thetourism industry has been dividedinto five different sectors such asaccommodation, food and beverageservices, recreation andentertainment, transportation andtravel services (www.go2hr.ca).Hotel Industry in India: India is avery famous holiday destination in theworld, and provides ample facilities asfar as lodging is concerned. It hasstate of the art hotels to cater to itsever booming travel and tourismindustry. Many hotels and resortshave popped up in India over the lastfew years to cater the accommodationneeds of everybody. India is dottedwith hotels that fit in every budget.There are hotels ranging from luxuryhotels to economy hotels. A travelagent can help in finding a suitableaccommodation.A number of hotels in India arecounted among some of the best hotelsin the world.Categorization of Hotels inIndiaThe hotels in India can be divided intovarious classes on the basis of roomtypes, amenities and location. Some ofthe prominent categories of hotels inIndia include:• Heritage HotelsReflecting the old glory andgrandeur of India, most of thehavelis and mansions of ancient[ 174 ] Rai Management Journal

times have been turned intoheritage hotels, that provide thetourists with an opportunity toexperience royal pleasure intraditional ambiance. Most of theheritage hotels in India areconcentrated in the princely statesof Rajasthan, Delhi, and MadhyaPradesh.• Luxury HotelsEquipped with world classinfrastructural amenities, theluxury hotels in India offer thetourists with a fine lodging anddinning experience. Cateringprimarily to the upper classexecutives, the luxury hotelsextend a warm welcome to all thecustomers.• Budget HotelsA home away from home, thebudget hotels accommodatecustomers from upper middle andmiddle class. Also referred to aseconomy class hotel, businesshotels and discount hotels, thebudget hotels support all themodern infrastructural facilitiesfor a comfortable and pleasantstay.• ResortsResorts are mostly found in hillstations and sea side touristdestinations of India. Locatedamidst natural scenic beauty, theresorts are the ideal place to enjoysome valuable time with familyand friends or in solitude.Important Hotel Groups inIndiaHotel industry is a booming businesssector of India that has given a boastto tourism in the country. Taj group ofhotels, park group of hotels, Radissonhotels India and itc hotels are some ofthe luminaries in the field of hotelindustry that are famous for uniqueamenities and superb accommodationarrangements.The professionally trained hotel staffsbelieve in maintaining a strong bondof trust and reliability with theircustomers through customer friendlyservices. Hotels in India have come along way since independence and theyhave been offering world class servicesto tourists visiting the country.The Indian hotels company ltd (IHCL)is the largest player in the industry,while east India hotels (EIH), itc,bharat hotels, Asian hotels and hotelleela venture are among the other keyplayers. Several international players,including intercontinental, Marriott,star wood and accor have also enteredthe Indian hospitality space(www.ibef.org).A hotel can be defined as a highlyorganized commercial unit eithersmall, owned and managed by anindividual or one of the largest chainof hotels, departmentalized in itsorganization where basic aim is toprovide a friendly welcome andattention to needs of those who requireaccommodation, food drink and rest.In other words it is "home away fromhome”. Hotel has been defined byBritish law is a place where a bonafidetraveler can receive food and shelter,A hotel can bedefined as a highlyorganizedcommercial uniteither small, ownedand managed by anindividual or one ofthe largest chain ofhotels,departmentalized inits organizationwhere basic aim is toprovide a friendlywelcome andattention to needs ofthose who requireaccommodation, fooddrink and rest.December 2010 Vol. 7, Issue 2[ 175 ]

The tourismindustry of Indiahas experienced atremendous boomthat has fuelled thegrowth of Indianhotel industry.providing he is in a position to pay forit and is in a fit condition to bereceived(www.businessdictionary.com).a hotelis an establishment that provideslodging and usually meals and otherservices to travelers and other payingguests (www.answers.com). Thetourism industry of India hasexperienced a tremendous boom thathas fuelled the growth of Indianhotel industry. The entry of low costairlines and the associated price warshave given domestic tourists a host ofoptions. The 'incredible India' and the'atithi devo bhavah' (ADB) campaigntoo have favourably influenced thegrowth of domestic and internationaltourism as well as the hotel industryof India (www.iloveindia.com).Consumer oriented marketingstrategy: to sustain the momentum itis highly essential that hotel industryto organize its business activities in aconsumer-centric manner to create,communicate, and deliver superiorcustomer value to its target market. Itimplies that company should view andorganize its business [marketing]activities from the consumers’ point ofview (kotler& Armstrong 1998). Aconsumer orientation usually meansthat a firm concentrates on providingproducts and services that fulfillcustomer needs (Dean & Bowen,1994).According to Schneider and Bowen(1995) consumer orientation meantorganizational commitment forcustomers in such a way thatcustomers and firms shareinterdependencies, values, andstrategies over the long term. For this,companies need to foster directcustomer contact, collect informationfrom customers about their needs, anduse customer-supplied information todesign and deliver products andservices (Schneider & Bowen, 1995).One of the methods for creating aconsumer-focused work environmentis through adoption of consumerorientation(Jaworski and Kohli,1993; Kohli and Jaworski 1990).Consumer orientation has beendefined as the set of beliefs that putsthe customers’ interest first, while notexcluding those of all otherstakeholders such as owners,managers, and employees, in order todevelop a long-term profitableenterprise." (Deshpande, Farley, andWebster, 1993).Kelley (1992) arguedthat consumer-orientation plays acrucial role in service firms because ofintangibility, heterogeneity, andinseparability of services(Parasuraman, Zeithaml, and Berry1985). These characteristics make thecustomer service an importantdeterminant of customers' qualityperceptions (Kelley 1992). Consumerorientedfirms also tend to enjoybetter performance measured interms of profitability and or servicequality than do firms employing otherorientations.1.3: Some Reflections ofconsumer oriented marketingstrategy on TourismIndustry of India:The government of India’s initiativesof upgrading and expanding itsinfrastructure such as airports,national highways have given anopportunity to tourism and hospitalityindustry to get a bounce in its growth.India’s tourism industry hasexperienced a rapid growth, driven by[ 176 ] Rai Management Journal

the promising Indian middle class,growth by higher spending of overseastourists, and coordinated campaignsby the government of India to promote‘incredibleIndia’(www.economywatch.com). Tourismindustry is one of the largest serviceindustries of India contributing 6.23per cent to the national gdp and 8.78per cent of the total employment inIndia with a receiving of more than 5million foreign tourists arrivals and562 million domestic tourism visitsannually in India with a figure ofus$100 billion in the year 2008 that isexpectation to reach figure of us$275.5billion by the year 2018 showing anannual growth rate of 9.4 per cent.According to world travel and tourismcouncil, India will be a tourism hotspotduring the years from 2009 to 2018. Asper the, travel & tourismcompetitiveness report, 2007 rankedIndia at the 6th in terms of pricecompetitiveness and 39th in terms ofsafety and security. Despite short- andmedium-term setbacks, such asshortage of hotel rooms, tourismrevenue is expected to move up by 42per cent during year 2007 to2017(www.wikipedia.org).According to The Department ofIndustrial Policy and Promotion(DIPP), the hotel sector is undoubtedlyis one of the key sector for tourismindustry of India that has contributedin terms of Foreign DirectInvestments (FDI), and inflows thatwere pegged at US$ 2.1 billion fromApril 2000 to march 2010,(www.ibef.org). As per the travel &tourism competitiveness report, 2009the contribution of travel and tourismto Gross Domestic Product (GDP) isexpected to be at US$ 187.3 billion bythe year 2019. Export earnings frominternational visitors and tourismgoods are expected to generate US$51.4 billion (nominal terms) by theyear 2019. It accounted for 6.4 per centof total employment in the year 2009,and is estimated to rise to 7.2 per centof total employment by the year 2019(www.ibef.org). India’s hotel pipelineis the second largest in the Asia-pacificregion and is projected to grow at arate of 8.8 per cent during 2007-2016reflecting India as the second-fastestgrowing tourism market in the entireworld. The government of India’sinitiatives for massive investment inhotel infrastructure too has beenaimed at propelling further futuregrowth of this sector of Indianeconomy (www.ibef.org).The Indian tourism industry isexpected to offer numerousopportunities in the first-class andmid-market hotel segments with mostof the room supply are likely and alsobeing added in this segment. In thequarter one of the year 2009, Indiahad a total number of 421 hotelprojects in progress of 72,682 rooms.Its direct impact on the gdp is inr1,165 billion or about 2.2 per cent ofthe gdp in offering of directemployment to 12.9 millionindividuals showing figure of 2.7 percent of the total employment.Although, the business travel segmenthas suffered a slowdown in the year2009, it is expected to bounce back bythe year 2019. The growth in businesstravel is less than that in personaltravel not only in India but worldwide(www.ficci.com). Its growth becomesself-evident from the following table.India’s hotel pipelineis the second largestin the Asia-pacificregion and isprojected to grow ata rate of 8.8 percent during 2007-2016 reflectingIndia as the secondfastestgrowingtourism market inthe entire world.December 2010 Vol. 7, Issue 2[ 177 ]

The hotel industryof India is one ofthe lаrgеѕt foreignexchange earner forIndian economy. Ithas been sub-dividedinto eight segmentsby the ministry oftourism as viz., 5-star deluxe; 5-star;4-star; 3-star; 2-star, and 1-starrespectively, heritageand unclassified.Table 1 “Comparative Growth of India’s Tourism”Criteria Year India South Asia World1.4: Some Manifestations onHotel Industry of India:The hotel industry of India is one ofthe lаrgеѕt foreign exchange earnerfor Indian economy. It has been subdividedinto eight segments by theministry of tourism as viz., 5-stardeluxe; 5-star; 4-star; 3-star; 2-star,and 1-star respectively, heritage andunclassified. But, the 3-star, 2-star,1star and unclassified hotels in Indiaare extended асrοѕѕ India in a highlyfragmented way whereas, theupscale, mid-market and heritagecategories are highly organized thatare primarily present in the metrosand the tier 1,m and now tier 2 citiesfor expansion. It іѕ characterizedsignificantly by small unorganizedplayers, labor-intensive operations,seasonality, cyclicality, highly capitalintensive nature and highly sensitiveto the external factors like economy,terrorism and political status. One ofthe key reasons for rising demand forhotel rooms in India is positive growthof number of sectors such asinformation technology, telecom,retail and real estate(www.financialexpress.com). Therewas a decline in income in top line andbottom line, the cost of hotel industrywent up by 20 per cent during quarter[In Percentages]Growth In Personal Travel & Tourism 2009 6.0 5.1 -2.92019 7.6 7.3 3.8Growth In Business Travel 2009 -4.2 -3.6 -7.22019 7.6 6.8 3.6four, financial year 2009 as comparedto the quarter three, financial year2009. The hotel companies such astajgvk hotels & resorts limited haveregistered decline in net profit by41.49 per cent in quarter fourfinancial year 2009 as compared to thequarter three financial year 2009followed the jaypee hotels limitedwhich registered decline in net profitby 44.86 per cent during the sameperiod. The other hotels which haveregistered sizable decline in net profitwere oriental hotels limited (28.34 percent), jindal hotel limited (58.12 percent) and Howard hotels limited(57.28 per cent) respectively. Themaximum rise was incurred by Asianhotels limited (11.57 per cent)followed by jay pee hotels limited(10.85 per cent) and tajgvk hotels &resorts limited (8.30 per cent). Theemployee cost of hotels also registereda rise in the total expenditure duringthe period. The employee cost of hotelsrose by average 7.47 per cent inquarter four, financial year 2009 ascompared to the quarter three,financial year 2009. The hotels thatwitness maximum rise in employeecost include Asian hotels limited(24.91 per cent), tajgvk hotels &resorts limited (24 per cent), Howardhotels limited (21.65 per cent), ishwar[ 178 ] Rai Management Journal

huvan hotels limited (15.45 per cent)and oriental hotels limited (13.27 percent) among others in quarter four,financial year 2009 as against quarterthree, financial year2009(www.assocham.org).1.5: A Need for Consumer-Oriented Approach inMarketing of Hotel Industryof India: A Critique:Many firms have public missions thatincorporate customer satisfaction asits primary goal. A consumer-orientedmarketing approach needs to beadopted especially in the hotelindustry to recognize and accord duerecognition through its employeeswho need to directly interact with itstarget customers (Lawler, Mohrman,& Ledford, 1992) that is correlatedwith an emphasis on quality andcustomer service. Customers are to beacknowledged as crucial stakeholders(Grant, Shani, & Krishnan, 1994;Schuler & Harris, 1992) as customersophistication and knowledge hasbeen increasing (Bounds, 1994). Asexpectations rise, customers' attentionto detail and ability to articulate gapsbetween expectations and experiencesincreases (Zeithaml, Parasuraman &Berry, 1990). Companies thereforemust adapt to meet these everchanging conditions particularly in theservice arena where customers are andneed to be viewed as importantpotential co-producers (Bowen &Schneider, 1988; Cardozo, 1965; chase& Garvin, 1989; Mills, Chase, &Margulies, 1983). As customers'expertise increases, their ability tomake effective contributions toproduction activities also increases.The companies are expected toconsider its customers as partners asit is useful for achieving success(Schuler and Harris, 1992). Customerscannot only receive what anorganization produces and delivers,but they also can directly andindirectly influence the operations andoutcomes of an enterprise. Thus, thehotel is one part of hospitalityindustry which has evolved from thevery modest beginning of families andlandowners who has opened theirhomes to travelers to the high riseof properties. It consists of thousandsof guests’ rooms also having lodgingfacilities that can be classified on basisof its location, rate, and on basis of thetotal number of rooms. Laurel scanlanand Janelle mcphail (2000) in theirstudy had embraced upon the idea ofimproving customer retention throughpro-actively promoting the importantrole of the interpersonal serviceencounter to build long-term servicerelationships between customers andservice organizations, and determinedthe critical relational attributes in theface-to-face service encounter thatwere most influential in the formationof a service relationship from thebusiness travelers’ perspective.Reichheld and sasser (1990) foundthat in any organization, loyalcustomers are the most profitabletypes of customers as they tend tospend more over along time period.Berry ( 1995) had studied that theloyal customers represent a source ofpositiveword-of-mouthcommunication, often resulting inreferral business and loyalty to oneorganization reduces the risk ofservice variability, and allows thedevelopment of a social rapport withthe service provide, and thecustomization of services. According toMacintosh and lockshin (1998), serviceDecember 2010 Vol. 7, Issue 2[ 179 ]

Reichheld and sche(2000) embracedthat loyalty is notwon with technologybut through thedelivery ofconsistently superiorcustomerrelationship inhotels.loyalty is more dependent on thedevelopment of interpersonalrelationships as opposed to loyaltywith tangible products. Reichheld andsche (2000) embraced that loyalty isnot won with technology but throughthe delivery of consistently superiorcustomer relationship in hotels.Dyche 2001) studied that five-percentincrease in customer retentionresults in a 25 to 95 percentincrease in profits, and found thatcustomer relationship management(crm) is a strategic necessity forattracting and increasing guests‘patronage so in this way to enhanceprofitability and guest loyalty.Gronroos (1994) took a broaderperspective on the successfultranslation of the relationshipmarketing paradigm fromorganizational to consumer servicemarkets depends partly on managingof information in the service sector.Zineldin (1999) studied that servicefirms by their inherent characteristicsof inseparable production andconsumption possess the elementsnecessary to forge relationships withcustomers. Kelley (1992) argued thatconsumer orientation plays a moreimportant role in service firms than inother firms because of theintangibility, heterogeneity, andinseparability of services(parasuraman, zeithaml, and berry1985). Cynthia a. Lengnick-hall(1996) emphasized that the specifictools and methods a firm adopts orwhat quality experts an organizationfollows, managing for quality andcompetitive advantage means a firmmust become customer-oriented, if itwants to succeed. Robert Saxe andBarton a. Weitz (1982) measured thedegree to which salespeople engage incustomer-oriented selling, andindicated that the use of customerorientedselling is related to theability of the sales- people to helptheir customers and the quality of thecustomer-salesperson relationship. Inpresent scenario competitive marketposition and a good reputation of acompany can quickly translate intomarket share and profit, but thatdistinction is often earned onlythrough a philosophical commitmentto service backed by diligent attentionto what customers want and need(Zineldin and Bredenlo¨w, 2001). Inan era when intense competition isbeing greatly facilitated bytechnology, the need of providingadequate product/service quality willnecessitate the hotels’ to focusattention on issues of improving,measuring and controlling theirproduct/service quality (Sylvestro,1990). The service quality isdependent on consumers’ needs andexpectations, and whether the level ofservice meets these needs andexpectations. Service quality has thusbeen distinguished as a “gap” betweencustomers’ expectations and theperformance they actually receive(Parasuraman et al., 1985). Asher(1996) has suggested that servicetransactions are subjectively judged,and that service quality depends onthe degree to which a customer’sperceived expectations have been met.According to this paradigm,customers decide when they aresatisfied.Customers’ satisfaction is dependenton many factors such as viz., thequality of tangible facilities; theresponsiveness, and empathy of staffto customer needs and requests; the[ 180 ] Rai Management Journal

consistency of service quality; theaccuracy of information provided, andthe location of the service providerwhere service is provided. It has beenrealized that services marketing is theresponsibility of each and everyonewithin the organization, and thatorganizational marketing needs to beembraced as a corporate philosophy,whereas one way to measure quality isthrough customer complaints andcustomer survey (Chapman, 1997).Quality measurement is of particularimportance to be considered by allmanagers and marketers of highcontact services in service industry.The inputs or delivery system in asupplier is a combination of humanresources, locations and equipment.Customer loyalty and themaintenance of the customerrelationship are in fact dependent onhow well a product and servicemeasures up to the customer’s originalexpectations of quality.Customer Relationship Management[CRM] is a management process ofSource: Zineldin (2006)acquiring customers by understandingand fulfilling their requirements toretain them in a way that would meettheir expectations and also attractingnew customers through customerspecific strategic marketingapproaches. The process invites totalcommitment on the part of the entireorganization in evolving andimplementing relationship strategiesthat would be rewarding to allconcerned (h. Peeru mohamed and a.Sagadevan, 2003).Zineldin (2006) extended technicalfunctionalquality models intoframework of five quality dimensions(5qs) i.e. Total quality which wouldhave an impact on the satisfaction andloyalty of a customer and its outcomewould be positive crm strategy. Thefive qualities have been defined asquality of object, quality of processes,quality of infrastructure, quality ofinteraction, quality of atmosphere asshown in figure given as below.CustomerRelationshipManagement[CRM] is amanagement processof acquiringcustomers byunderstanding andfulfilling theirrequirements toretain them in away that would meettheir expectationsand also attractingnew customersthrough customerspecific strategicmarketingapproaches.December 2010 Vol. 7, Issue 2[ 181 ]

Customersatisfaction is verycrucial for marketingplanning sincesatisfaction doesinfluence customers’intention torepatronage therestaurant in future.1.6: Conclusion:In the modern times, the way peoplespend their holidays has undergone agreat change. People like to spendgood times with family and friendwhile at the same time exploringvarious tourist places across the globe.As a result the tourism industryacross the globe has seen anunprecedented growth which in turnhas also resulted in tremendousgrowth in the hotel andaccommodation facilities. Comfortablehotels and accommodation facilitiesplay a very important role inpopularizing any tourist destination.A consumer oriented marketingapproach would help hotel industry toretain customer by providing qualityservice and delivering superiorcustomer value to its target market ona continuing basis by building,enhancing and maintaining therelationship through customerrelationship management strategy.In today’s fast-paced and increasinglycompetitive market, the bottom line ofa firm’s marketing strategies andtactics is to make profits andcontribute to the growth of thecompany. Customer satisfaction,quality and retention are global issuesthat affect all organizations, be itlarge or small, profit or non-profit,global or local. Many companies areinterested in studying, evaluating andimplementing marketing strategiesthat aim at improving customerretention and maximizing share ofcustomers in view of the beneficialeffects on the financial performancefor the firm. There has been a strongadvocacy for the adoption of customerretention as one of the keyperformance indicators (e.g. Kaplanand Norton, 2001). For instance, astudy by Reichheld and Sasser (1990)reported a high correlation betweencustomer retention and profitabilityin a range of industries. However, thefragmentation of media choices andthe dynamic nature of the market,coupled with an increased number ofmore demanding and affluentconsumers, brought greaterchallenges to marketing practitionersin retaining their customers. Qualityand customer satisfaction have longbeen recognized as playing a crucialrole for success and survival in today’scompetitive market. Not surprisingly,considerable research has beenconducted on these two concepts.Notably, the quality and satisfactionconcepts have been linked to customerbehavioural intentions like purchaseand loyalty intention, willingness tospread positive word of mouth,referral, and complaint intention bymany researchers (Olsen, 2002; Kang,Nobuyuki and Herbert, 2004;Söderlund and Öhman, 2005).Customer satisfaction is very crucialfor marketing planning sincesatisfaction does influence customers’intention to repatronage therestaurant in future. Hence,marketers should look into the factorsthat would affect customersatisfaction level. In addition, ascustomer expectations are changingover time, practitioners are advised tomeasure their customer expectationand satisfaction regularly and handlecomplaints timely and effectively.Secondly, in order to enhance thegrowth of hotel industry thegovernment should assist in building[ 182 ] Rai Management Journal

and developing educationalinstitutions to fulfill the emergingdemand for skilled manpower in thetourism sector across all states,provide adequate infrastructure tomatch the expectation, restrictiveairline policy of the government ofIndia should be made more flexible,government should also play asignificant role in rationalizing thecost of land auctioned for hoteldevelopment. This would assist theindustry in creating value by addingsubstantial inventory of hotel roomsrequired to diminish the demandsupplygap. The challenges andopportunities which are identifiedwould have great socio-economicimplication for the Indian economy interms of employment generation,inflow of foreign funds, forinfrastructure etc.The hotel industry faces multiple taxstructures at the central and statelevel. It has been adversely affected bythe global economic meltdown.Foreign tourist arrivals have beenbadly hit and occupancy levels acrossthe country have fallen. The recentterrorist attacks in Mumbai haveshaken the confidence of mncs andbusiness travelers. Many have beenforced to re-consider their travel plansand subsequently, the winter seasonwhich implies brisk business for thehospitality industry has seen far loweroccupancies. When compared to othermarkets across the globe, in India, thecost of the land constitutes a verylarge chunk, especially in case of largeinfrastructure projects. This delaysthe breakeven of these projects anddiscourages further investments. Theindustry is facing a manpowershortage which pushes up the cost ofacquiring quality talent(www.technopak.com). The use ofinternet, homogenization of the hotelproduct and increased corporateoversight has reduced the amount ofcontrol that operators have over thecustomer. The customers arechanging due to demographics such asthe aging of the baby boomergeneration, and due to lowertransportation costs that promotetravel. Customers’ expectations arealso changing as they have becomebetter educated and moresophisticated.The hotel industry need to do a betterjob of managing and using informationtechnology for better addressing thechallenges being posed by everchangingtechnology. It must aligntechnology investment with itsbusiness objectives, address aging andinadequate infrastructure, and is alsoexpected to learn how to better utilizeinformation technology in marketingto its guests, for imparting trainingemployees, yield management, andabove all, meeting target customers’needs and wants (www.hotelonline.com).One finds a robust growth in terms ofboth domestic and overseas tourists inIndia which need to be serviced by asubstantial increase in infrastructure,including air-road, rail connectivity aswell as hotels and restaurants. Anemployment in hotels is estimated toincrease to 3.5 million by the year2020. The places of pilgrimage such astirupati and haridwar haveconsiderably lower availability ofrooms. Whereas actual requirementshall be a total number of 2.5 millionand 5.8 million hotel rooms by the yearThe hotel industryneed to do a betterjob of managingand usinginformationtechnology for betteraddressing thechallenges beingposed by everchangingtechnology.December 2010 Vol. 7, Issue 2[ 183 ]

2010 and 2020 respectively whichcalls for substantial improvement inthe growth of infrastructure to keeppace with growing rise of domesticand overseas tourists in India in nearfuture. Better road connectivity,evolving lifestyles, and positiveperception of brand Indiacommunicate positive signs for thetourism and hotel industry of India.By the year 2020, we shall needaround 6.6 million hotel rooms to tapthe likely future growth potential andit is expected that the budget and midmarkethotel segment will witnesshuge growth and expansion while theluxury segment will continue toperform extremely well(www.iloveindia.com).the number ofForeign Tourist Arrivals (FTAS) inIndia during the month of October2010 were 4.87 lakh as compared to4.46 lakh during the month of October2009 and 4.50 lakh in October 2008(timesofindia.indiatimes.com) whichis expected to double the number ofbranded hotel rooms from 100,000 bythe year 2013. Leading the pack ofglobal hotel chains, which would addover 300 hotel properties at anestimated 55,000 rooms in India bythe year 2013(www.ibef.org). Besides,favorable demographics and rapideconomic growth point out favourablytowards a long-term secular uptrendin the domestic demand for hotels forbusiness and leisure in India in a nearfuture. It shall bring aboutopportunities in all price and valuechain segments due to the shortage ofhotel rooms which truly justifies plansfor increasing to total number of hotelrooms to a figure of 200,000 by theyear 2011 (www.tourismindia.com).Rising business and leisure travel tosmaller cities such as Udaipur,Thiruvananthapuram, Bhubaneswar,Pune, Kochi and Chandigarh, haveincreased demand for quality hotelrooms in these cities. The hospitalitychains are expected to increase theirpresence in smaller cities to leveragethis opportunity. Further, they arelikely to plan a suitable project mix inform of more budget/business hotelscompared to luxury hotels for thesecities.It calls for preparing an effectivecustomer database that shall allow acompany to understand bettercustomers’ needs particularly theirrelationship needs better than thecompetitors. It shall also include dataabout the current and past attitude,state/trend of business from customer,market shares, profitability, etc. Thedata about customers’ needs,attitudes and behaviour shall enablehotels to identify today’s keycustomers to maintain relationship ,develop relationship with tomorrow’scustomers, and calculate the revenuethat is generated from the customer ,and estimate own future investmentopportunities.Selected References:• Berry, l. L. (1983), ‘relationship marketingof services : growing interest, emergingperspectives’, journal of the academy ofmarketing science, vol. 23, no. 4, pp. 236-245.• Bounds, g., Yorks, l., Adams, m., & Ranney,g. 1994. Beyond total quality management:toward the emerging paradigm. New York:McGraw-hill.• Bowen, D. E., & Schneider, b. (1988)services marketing and management:implications for organizational behavior.Research in organizational behavior, vol.10: 43-80. Greenwich, ct: jai press.[ 184 ] Rai Management Journal

• Chapman, r., Murray, p. and Mellor, r.(1997), “strategic quality management andfinancial performance indicators”,international journal of quality & reliabilitymanagement, vol. 14 no. 4, pp. 432-48.• Chase, r. b., & Garvin, d. a. 1989. The servicefactory. Harvard business review, 57(4): 61-69.• Cynthia a. Lengnick-hall (1996), “customercontributions to quality: a different view ofthe customer-oriented firm” academy ofmanagement review 1996, vol. 21, no. 3, 791-824• Dean j. w., jr., & Bowen, D. E. 1994.Management theory and total quality:improving research and practice throughtheory development. Academy ofmanagement review, 19: 392-418.• Deshpand6, rohit, john u. Farley, andFrederick e. Webster jr. (1993), "corporateculture, customer orientation, andinnovativeness in Japanese firms: a quadradanalysis," journal of marketing, 57(January), 23-27.• Dyche j, 2001, the crm handbook: a businessguide to customer relationship management,addison-wesley professional• Grant, r. M., shani, r., & Krishnan, r. 1994.Tqm's challenge to management theory andpractice. Sloan management review, 35(2):25-35.• Gronroos, c. (1994), "from marketing mix torelationship marketing: towards a paradigmshift in marketing", management decision,vol. 32 no. 2, pp. 4-20.• H peeru Mohamed a sagadevan (2003);“customer relationship management,” vikaspublishing house ltd., pp. 34-58.• Jaworski and ajay k. Kohli (1993), "marketorientation: antecedents and consequences,"journal of marketing, 57 (July), 53-70.• Kelley, Scott w. (1992), "developing customerorientation among service employees,"journal of the academy of marketing science,20 (winter), 27-36.• Kotler, p. And Armstrong, g. (1998),principles of marketing, 5th ed., prenticehall,Englewood cliffs, NJ.• Laurel scanlan and Janelle mcphail (2000)forming service relationships with hotelbusiness travelers: the critical attributes toimprove customer retention journal ofhospitality & tourism research, vol. 24, no. 4pp.491-513• Lawler, e. E., iii, mohrman, s. A., & Ledford,g. E. 1992. Employee involvement and totalquality management. San Francisco: josseybass.• Macintosh, g. & lockshin, l.s.(1998), ``retailrelationships and store loyalty: a multilevelperspective'', international journal ofresearch in marketing, vol.14, pp.487-98• Mills, p. K., chase, r. B., & Margulies, n.(1983). Motivating the client/employeesystem as a service production strategy.Academy of management review, 8: 301-310.• Parasuraman, a., Zeithaml, v.a. and Berry,l.l. (1985), “a conceptual model of servicequality and its implications for furtherresearch”, journal of marketing, vol. 49, pp.41-50.• Reichheld, f. and Schefter, p. (2000), ``eloyalty'',Harvard business review,July/august, pp.105-13.• Reichheld, f. F. and sasser, w. E. (1990),'zero defections: quality comes to services',Harvard business review, September –October, pp. 105-111.Schneider, b., & Bowen, d. e. 1995. Winning theservice game. Boston, ma: Harvard businessschool press.• Schuler, r. S., & Harris, d. L. 1992.Managing quality: the primer for middlemanagers. Reading, ma: addison-wesley.• Sylvestro, r. Et al. (1990), “patterns ofmeasurement of service performance:empirical results”, in teare, r., moutinho, l.and Morgan, n. (EDS), managing andmarketing services in the 1990s, casselleducational, London.• Zeithaml, v. A. Parasuraman, a., & berry, l.L. 1990. Delivering quality service:balancing customer perceptions andexpectations. New York: free press.December 2010 Vol. 7, Issue 2[ 185 ]

• Zineldin, m. (1999), ``exploring the commonground of Total Relationship Management(TRM) and Total Quality Management(TQM)'', management decision, vol.37 no.9.• Zineldin, m. (2006), "the royalty of loyalty:crm, quality and retention", the journal ofconsumer marketing,vol. 23 no. 7, pp. 430-437• Zineldin, m. And bredenlo¨w, t. (2001),“performance measurement andmanagement control: quality, productivityand strategic positioning – a case study of aSwedish bank”, managerial auditingjournal, vol. 9 no. 16.Websites• service quality and customer satisfactionantecedents of customer’s re-patronageintentions.mht• www.mapsofindia.com/hotels-india/• www.answers.com• www.assocham.org• www.businessdictionary.com• www.economywatch.com• www.ficci.com• www.financialexpress.com• www.go2hr.ca• www.hotel-online.com• www.ibef.org• www.iloveindia.com• www.technopak.com• www.tourismindia.com• www.timesofindia.indiatimes.com• www.wikipedia.org[ 186 ] Rai Management Journal

CALL FOR PAPERSRai Management JournalIssue: Vol. 8, Issue 1Important DatesDeadlines for Paper Submission: 30th May 2011Completion of First Review: 10th June 2011Completion of Final Review: 10th July 2011Publication: 31st July 2011Guidelines for AuthorsRai Management Journal - an initiative of Rai Business School invites educationists, corporateexecutives and researchers to contribute articles/ research papers/ case studies that would enhancethe creative acumen of its readers. Wide in scope and readership, Rai Management Journal is amultidisciplinary journal, publishing research articles in varied areas like Marketing, Finance,Human Resource, Information Technology and International Business.The Articles/ Research Papers/ Case Studies should reach us before 30th September 2010 taking intoaccount the following guidelines: (1) Authors are requested to submit a soft-copy using MS-Word. (2)The paper must be typed in 12-point font in Times New Roman on A-4 size paper in double spacewith margins of 1.5 inches on all sides. (3) The article should not exceed 4000 words. (4) The abstractshould be between 150-200 words outlining the purpose, scope and conclusion of the paper. Theauthors should follow “The Harvard reference System” (also known as author-date system) for citingthe references used in their manuscript.Submission of a manuscript signifies that it has been neither copyrighted, published, nor submittedor accepted for publication elsewhere. All submissions should include a title page containing the titleof the paper, full names and affiliations, complete postal and electronic address, phone and faxnumbers, an abstract and a list of keywords.Authors are strongly encouraged to upload the electronic file of their manuscript atraijournal@rbs.edu.inDecember 2010 Vol. 7, Issue 2[ 187 ]

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