journal of management and science · april-june, 2012 vol. - ii, no. : 2 i.s.s.n.-2249-1260...

April-June, 2012 Vol. - II, No. : 2

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JOURNAL OF

MANAGEMENT AND SCIENCE

A International Level Quarterly Journal

on Journal of Management and Science

Published by

Non Olympic Times


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June Issue

JOURNAL OF MANAGMENT AND SCEINCE

EDITORIAL BOARD

CONTENTS

Page No.

Dr.A.Chandran

Managing Editor,

Dean, RVS Faculty of Engineering, Tamilnadu, India.

ASSOCIATE EDITORS

Dr.Frank Fuller

Professor, Department of Political

Science, Clark Atlanta University,

USA.

Dr. Arup Barman

Reader, Dept. Of Business

Administration, Assam University, Assam, India.

Prof.P.Malyadri

Principal, Government Degree College

Osmania University, A.P., India.

Dr.V.Vijay Durga Prasad

Professor and Head, Department of

Management Studies

Potti Sriramulu College of Engineering

and Technology, A.P., India.

Dr. Arul Suresh

Professor , Department of Commerce

Loyola College (Autonomous), India.

Prof.M.Venkatachalam

Department of Mathematics

RVS Faculty of Engineering, India.

Prof.K.Prabhakaran

Department of Management Studies

RVS Faculty of Management, India.

IDEAS ON POLANYI‘S MARKETS

Frank Fuller

A EFFECTIVENESS OF TECHNICAL INDICATORS - A STUDY ON CNX IT INDICES

K.Prabhakaran and S.Nagarajan

A STUDY ON HR ISSUES IN RETAIL OUTLETS IN COIMBATORE

M.G.Saravanaraj, S.Arulsenthilkumar and N.Punitha ANALYSING THE VOLATILITY OF NSE INDICES – EMPRICAL STUDY

V.Prabakaran and D.Lakshmi Prabha

THE EFFECT OF DEMOGRAPHICS ON INVESTMENT CHOICE: AN EMPIRICAL STUDY OF INVESTORS IN RAJASTHAN

Dhiraj Jain and Khushboo Ranawat AN EMPIRICAL STUDY ON BARRIERS OF INNOVATION IN INDIAN SMES

S.Poornima and K. Nithya Kala

IMPLICATIONS OF INTERMEDIARIES IN GLOBAL LOGISTICS OF FOREIGN TRADE

C. Muthuvelayutham and R.Karuppasamy A STUDY ON CONSUMERS BRAND PREFERENCE TOWARDS PURCHASING CAR IN TIRUNELVELI DISTRICT

T. Samson Joe Dhinakaran

WORD OF MOUTH: THE KEY TO UNLOCK HINTERLAND

P.Prialatha and K.Malar Mathi EVALUATION OF CONSUMER PROTECTION COUNCIL WITH SPECIAL REFERENCE TO ERODE DIRSTRICT

N.A.Krishnamurthi and K.M. Suresh

3-10

11-20

21-32

33-41

42-61

62-68

69-74

75-80

81-95

96-105

It is assumed that the submitted manuscript has not been published and will not be simultaneously submitted or published elsewhere. By submitting A manuscript, the author agrees that the copyright for his articles is transferred to the publisher, if and when, the paper is accepted for publication. The publisher cannot take responsibility of any lose of manuscript. Therefore, authors are requested to maintain a copy at their end.

Readers may send popular articles of topical interest in English to the editor email address ([email protected])


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IDEAS ON POLANYI’S MARKETS

Frank Fuller

Department of Political Science, Clark Atlanta University, USA.

ABSTRACT: What makes a market society one that is more beneficial than a society that is state-

regulated? Is the world market truly leading towards these types of changes? Prosperity comes from greater

interaction between states and markets. Firms drive needs for global trade, but society within states

promotes market changes. Some regulation of markets is desirable, while free markets must have some

enforcement mechanism of rules to address inequalities and alleviate some of the side-effects of market

transition.

Key words: Polanyi, Political Economy, Subsistence Farming, Globalization

1. Introduction. One can ask the question, does democracy reduce income inequality, or does it in fact

have the opposite effect, especially with respect to Latin America and Eastern Europe? Is a democratic-

oriented society more beneficial than a society that is state-regulated? Polanyi asserts that societies that

endorse much of the laissez-faire ideology today, especially endorsed by democracies, are sorely lacking in

providing needs for the poor and in assessing the problems of the underprivileged. Who are the ones that

actually benefit, such as when more industrialized countries go in and invest in a Third World nation (such

as Mexico) to build a manufacturing plant, with most of the profits being funnelled back into the host

country? Lenin, for one, emphasized this point about capitalism:

Lenin asserted that finance capital was responsible for imperialism, notably for the struggle for

spheres of influence, concessions, extraterritorial rights, and the innumerable forms in which the

Western Powers got a stranglehold on backward regions, in order to invest in railways, public

utilities, ports, and other permanent establishments on which their heavy industries made profits,

as cited by Polanyi (2001, 16).

2. Problems with Income Inequality. Such are certain gaping disparities that exist even in today's global

economy. The call for state regulation of markets is not unwarranted, as Polanyi would advise even the

most stable of markets to have some sort of regulation. However, the Washington consensus favours the

opposite view and perceives the inequalities as mere side effects that are necessary in any society that is

moving towards a freer, more interconnected world system, for they believe that "the key to transformation

is 'getting prices right' and getting the government out of the economy through privatization and

liberalization," cited by Polanyi (2001, XIV). The challenge is to find which system is the most effective

and perhaps view some alternative means of resolving the debate. The most difficult part of a society

moving from one of, for example, subsistence farming into one of diversified industries is the fact that there

are many people who will not benefit from these drastic changes. The poorest of the poor and those whose


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products will become obsolete with emerging technology will be most affected. What is to be done about

these people, economically speaking? Democracy is supposed to bring excitement, opportunity. However,

we see that this is not always the case, as the reality sometimes paints a different picture in Budapest,

Hungary:

Intense, undisguised begging is certainly a new phenomenon in Budapest. Poverty is not new, but

the wide-spread perception of misery is, and inequalities are more striking than earlier. Begging,

usually considered an offense by the police, was not possible during the state socialist period: the

fiction of full employment and security held so strong in the days of ―high‖ socialism that the

motivators for giving—bad conscience or genuine empathy for displayed poverty—did not exist.

While taking note of the striking and colourful crowd of beggars during his visit to Moscow in

1926-27, Walter Benjamin observed that ―one very seldom sees anyone to give. Begging has lots

its strongest foundation, the bad social conscience, which opens purses so much wider than does

pity.‖ But social conscience is back and it does open purses, but due to the homogenization of

neighbourhoods and to increasing motorization, not the purses of those whose conscience is

supposed to be the worst: the wealthiest hardly ever encounter beggars. (Field evidence suggests

that this is one reason that this is one reason for choosing to drive instead of using public transport

on the part of those who have a choice.), according to Bodnar (1998, 499-500).

The only possible alternative to such a situation, Polanyi would say, is to regulate markets so that the

disparity of income is minimized somewhat. Public housing can be provided for the poor, as well as public

assistance of various kinds. The system of governance cannot always be accounted for in contributing to

many of the problems. Even in a stable system with sound political solutions, there is always going to be

one group left out, for in self-regulating markets, "such an institution could not exist for any length of time

without annihilating the human and natural substance of society; it would have physically destroyed man

and transformed his surroundings into a wilderness," as Polanyi (2001, 3) states. Those in abject poverty,

with the help of the state, can be taught to be aware of these types of changes that formulate. The

involvement of the state is critical to helping these underprivileged groups to survive, for if no one claims

them, they can wither and die. In times of crisis, such as a famine, a Third World nation, such as Mexico,

on the brink of industrialization suffers most if it does rely heavily on subsistence farming, as stated earlier.

There is little room for compromise when considering the effects of how the total markets will be affected,

since profits will virtually be eliminated for the small farmer and the means to survive will decline even

further. The state's efforts can offset the losses, provide for a workshop or two on better farming

techniques, and even aid the workers in investing in more sophisticated farming equipment. Unregulated

markets, particularly those that operate under capitalism, can lead to unintended consequences, not the least

of which is providing for the few and taking away from the many. Tony Waters, in an article on Tanzania,

for example, explains that activities such as subsistence farming are outside of the typical market activities

and can often lead to exploitation if some effort is not made by the state to address this sector of the


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economy, according to Waters (2000, 617). Industrialization also cannot avoid certain realities, which

"Pauperism fixed attention on the incomprehensible fact that poverty seemed to go with plenty. Yet this

was only the first of the baffling paradoxes with which industrial society was to confront modern man,"

says Polanyi (2001, 88).

3. Unregulated Markets vs. State Intervention. Is the world market truly leading towards these types of

changes? Is the Washington consensus striving entirely to industrialize with regard for little else? This

seems so, since many Western European democracies are pushing ahead with entrepreneurial spirit and

with sparse room for many alternatives. What would happen if the unregulated markets were to continue

unchecked? Disaster would not only occur in crises, but the income gap would be widened between the

haves and the have-nots. This would not be the only problem, but exploitation would occur by host

countries to Third World institutions. Exploitation itself "has been perpetrated so often, so persistently, and

with such ruthlessness on the backward peoples of the world by the white man" that it remains such a

critical issue even to this day, according to Polanyi (2001, 166). One can actually observe this exploitation

if one looks carefully at the way that United States' businesses operate in Mexico. For example, many of

the factory workers in Mexico (in the plants set up by US and other multinational corporations a

corporations are often ―non-unionized, poorly paid, and deprived of the social benefits of economic

development…‖ according to Sklair (1992, 99). Mexican organizations can pick and choose how they

decide to initiate democratic principles, which makes managing at the micro level harder. The labour

unions are few, the pay for workers, especially at minimum wage, is much less, and the environmental

regulations set forth by many governments have declined to the point of being major hazards throughout

this smaller, more vulnerable nation. The most dangerous aspects here are the fact that the environmental

regulations would have fewer boundaries or limits as to how much pollution there is. There must be some

kind of authority to check on private corporations in maintaining an ecologically friendly approach. Vicki

Birch field contends that Polanyi ―demonstrated that capitalist production…had to be insulated from the

devastating effects of a self-regulating market‖; despite being a ‖critic of capitalism, Polanyi was…a

pragmatist who believed socialist ideals could be accommodated once the myth of the free market was

finally disposed of and the economy re-submerged in social life rather than its obverse under economic

liberalism,‖ cites Birch field (2005, 587). All of the nightmares of the antitrust and the extreme pollution

that everyone hears about will certainly come true if free markets continue unchecked in other nations in

the foreseeable future. However, there is hope, as Birch field and Polanyi stated. Prosperity comes from

greater interaction between states and markets. Critics should not be so quick to dismiss the old state-run

regimes, as they have valuable lessons to learn, since democracy does not come overnight, and a transition

to another form of government brings difficult conditions: But if communism is dead as an ideology and a

system of rule, its encumbering legacy continues to haunt the political and social landscape. Since the

transition was gentle, the bulk of the old nomenklatura remains, attempting at every turn, as Elemer

Hankiss puts it, to convert its old politically based privileges into new economic rights. This spectacle has


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fostered a diffuse but profound sense of injustice and tempted many to follow the radicals in demanding a

settling of accounts with officials and the ―collaborators‖ who ran the repressive machinery of the old

regime. After a soft transition have come economic and social hardship and a search for those responsible

for the crimes of the past and the difficulties of the present, as cited by Rupnik (1996, 367).

4. Privatization vs. Strong State Models. Markets are only effective when there is a fine line between

businesses being profitable while reminding them of their limitations in profit-maximizing schemes. Some

aid must be given to workers while they adjust to market changes, and interest rates also must be adjusted

from time to time in order to be fair, especially in the capitalist system, which is notorious for its

exploitations, as Polanyi would say. Many experts of the Washington consensus argued that there is no

need for government intervention; they rest on the idea that the "invisible hand" will right things when they

seem to be inevitably going bad. Development itself, in their view, is "little more than the accumulation of

capital and improvements in the efficiency with which resources are allocated," cites Polanyi (2001, XIV).

However, the invisible hand only works when a system is in place to evenly balance everything and

everyone. Not only are such necessary measures as inflation adjustments needed, but subsidizing the poor

and the oppressed and new re-training methods in jobs can prove to help workers in the long run. The state

should first be allowed to take the initiative, creating sufficient infrastructure that attracts investment.

Having both the state and the market work together on achieving a singular vision allows for ―the

transformation of societies in which each household has the ability to produce what it needs for basic daily

survival and social reproduction into ones where market mechanisms must operate for households to meet

basic daily survival needs,‖ cites Waters (2000, 615). The market, then. is obligated to follow through once

the state takes the lead early on.

5. Alternatives to Capitalistic Models. This is perhaps the beginning of some alternative solutions that are

available. Today, we realize more and more what the social ills of capitalism can do to those who struggle

the most. Privatization of all industries can make things more difficult for legitimizing businesses, and mere

privatization of everything leaves less responsibility for any one organization in addressing these ―social

ills‖ of society. Capitalism may benefit many, but who is going to help those who are left out if there is no

public assistance? The early forms of capitalism show that especially without a labor market it "failed

disastrously. The laws governing such an order (the landlord and the allowance system) had asserted

themselves and manifested their radical antagonism to the principle of paternalism," cites Polanyi (2001,

84). Also, in this increasingly technological world that we live in with fast-moving markets and jobs that

seemingly change overnight, there have to be some safety mechanisms in order to prepare people for these

changes. In the rush to impose democratic incentives, the lesson of gradual transition remains steadfast,

especially post-Communism to formulating a democratic structure, here exemplified in Eastern Europe:

There are other, more pragmatic considerations that one might add to these. After a negotiated

revolution, it would have been awkward to suddenly turn against the very same roundtable partners who

allowed the nonviolent transition to occur. While the moral imperative to oust collaborators or the


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nomenklatura is understandable, it could also undermine economic efficiency. Getting rid of the old

economic officials, high-level administrators, and judges may be desirable, but who is to replace them?

Dissidents? There were not many of them, and while they were surely virtuous, they are not necessarily

qualified to manage the economy or modernize the state apparatus. For liberals, however, the most

objectionable idea is that decommunization can provide society with a kind of collective catharsis.

Communism‘s legacy in the structures and mentality of the society was decades in the making. The debate

about the weight of this legacy thus leads to a pessimistic vision that extends beyond the reach of moral

injunctions: the totalitarian experience soils the victim as much as it does the torturer, cites Rupnik (1996,

367-68).

England was able to withstand change during the Tudor and Stuart dynasties because of certain adjustments

that were made by the state: England withstood without grave damage the calamity of the enclosures only

because the Tudors and the early Stuarts used the power of the Crown to slow down the process of

economic improvement until it became socially bearable employing the power of the central government to

relieve the victims of the transformation, and attempting to canalize the process of change so as to make its

course less devastating, says Polanyi (2001, 40).

Job retraining programs are an excellent form of public assistance to help those in need and those people

who are left "in the dust," with seemingly no one to anchor their problems. When people are eliminated

from their jobs because of downsizing, for example, one of the biggest tragedies that comes out of this is

the fact that workers can sometimes only temporarily obtain severance pay, but overall many of them lose

their retirement benefits. This is one of the most difficult realities that we face today, and so in capitalism's

right to maximize profits, it often loses its ability to help others when it resorts to these actions in getting

rid of existing jobs that are deemed unnecessary to continue or obsolete because of emerging technology in

replacing workers. One can consider another special example in one of many of capitalism's faults. In

California some time ago, machines were invented to pick tomatoes to cut the time of having to

painstakingly go through the fields and hire people to hand-pick them. However, the efficiency of this

technology allowed many workers to be displaced because of the time saved and the smaller number of

laborers that were required to operate the machinery. The time may have been well spent in utility of costs,

but the many union workers in California saw the machines as a threat to their employment. The workers

lobbied successfully to get the machines banned so that many people that relied on picking these tomatoes

were allowed to continue without being forced out of the markets. Also, if one takes a closer look, one

realizes that if there were no unionization of workers in the state, these laborers would never be allowed to

have their jobs. Many of them are poor, uneducated, and little equipped to transfer quickly to other sectors,

and many of them come from Mexico and must provide for their families back in their home countries.

The problem is that mechanized picking had ―been a response to the growing strength of labor and the

organization of the United Farm Workers…Mechanized picking had been available…for some time, but

they only introduced machines into the…fields when…faced with unionization and new labor legislation,‖


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says Burawoy (1979, 240). A more constructive approach would have been to follow the advice of Trist

and his peers on combining the best of both worlds, such as he suggested in mining operations: Trist et

al…claim that mechanization of mining, which involves the fragmentation of work and the break-up of the

self-regulating, self-selecting work group, leads to higher…stress,…absenteeism, and lower…productivity

than a system which involves the mutual adaptation of men and machines in the retention of the relatively

autonomous work group of the single-place tradition…Whereas management naturally chose…

mechanization to appropriate control…Trist and company suggest that the transition to a ―composite work

organization‖ in which miners collectively decide how and when to use machines would be more effective

…As in the Western Electric studies, little attention is directed to changes in the environment

during the period of observation. Their claim is… general…that machines should not be designed or used

to fragment work or appropriate control but rather…to consolidate the responsible autonomy of the primary

work group, according to Burawoy (1979, 241).

In an era of globalization, what is the ultimate solution to prosperity throughout the world?

Capitalism certainly has gaping holes, but Polanyi believes that there can be a healthy combination of the

two opposite trends of this Washington consensus and of state-regulated markets. There are certain

parameters within which states can be enforced, and of how markets function; it is through individual

actors or societal forces, not through institutions. Corporate institutions especially are how business is

conducted daily throughout the world but societal forces shape these decisions. Firms drive needs for

global trade, but society within states promotes market changes. A state will keep functioning even if it has

no money because a state itself creates policies and can borrow if they have problems; the government is

not a corporate entity but runs a country. States promote more open trade amongst nations because firms

wish to establish business relationships in other countries, but only because societal forces encourage or

discourage these. Firms technically run the markets, but ultimately people, through the governments, are

there to set the guidelines and enforce the rules on how business is conducted. People are the ones, Polanyi

asserts, who determine, through such reforms as Social Security and the National Labor Relations Act, that

"society would decide through democratic means to protect individuals and nature from certain economic

dangers," cites Polanyi (2001, XXXVI).

One of the prevailing trends today is deregulation of international trade through

lowering of tariffs, fewer export taxes, and other forms of reducing protectionism. Polanyi strongly asserts

that institutionalizing capitalism is the worst alternative but expanding society's role in it is the key to

finding the balance between extremes of capitalism and state-dominated markets. Favoring a complete

change would not help in the search for equality, especially in Eastern Europe after Communism‘s demise:

The euphoria that accompanied the fall of communism has given way to disappointment, social

anomie, and the emergence of new dangers. The unity of the great mass rallies for democracy has

shattered, and wide-ranging economic hardship has overshadowed political gain for most citizens. Instead

of civil societies, one sees a splintered landscape teeming with corporatism‘s and resurgent communal


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loyalties, cites Rupnik (1996, 365).

For stability and balance in a society, one must set forth a system of finding markets that balance each other

and enforce a standard set of international laws based on an international societal consensus. There can be

required mechanisms, in that by lowering trade, these countries agree to do these things to make sure that

certain social ills do not come about. Exploitation is less of a problem if there is a political system willing

to enforce certain rules, like establishing environmental regulations or that there must be a standard for

minimum wage based on various economic indicators, for example. This would at least alleviate some of

the disparities if one calls for international cooperation and standards on markets. Of course, one cannot

resolve all of these societal social ills, but at least having standards and an enforcement mechanism is a

good start. Roosevelt's New Deal reforms helped to address a set of mechanisms in that they "meant that

the U.S. economy continued to be organized around markets and market activity," but also that "a new set

of regulatory mechanisms now made it possible to buffer both human beings and nature from the pressures

of market forces," according to Polanyi (2001, XXXV-XXXVI).

6. Conclusions. A free-market society, then, is not necessarily better than one that is heavily state-

influenced. Economies with many restrictions do not always provide for efficient ones either. Laissez-faire

economics tends to leave some of the underprivileged with less to work with, and industrialization is not

always the answer. In fact, one realizes that democracy and modernization do not make everything equal in

all societies:

Whatever their theoretical and political differences, both Samuel P. Huntington and Guillermo

O‘Donnell claim that there is a level beyond which further development actually decreases the

probability that democracy will survive. Huntington argues that both democracies and

dictatorships become unstable when a country undergoes modernization, which occurs at some

intermediate level of development. O‘Donnell, in turn, claims that democracies tend to die when a

country exhausts ―the easy stage of import substitution,‖ again at some intermediate level. Our

finding, however, is that there is no income level at which democracies become more fragile than

they were when they were poorer. Only in the Southern Cone countries of Latin America have

authoritarian regimes arisen at the intermediate levels of development. Four out of the nine

transitions to authoritarianism above $3,000 ($6,000 is considered stable in a nation) transpired in

Argentina. Adding Chile and Uruguay, we see that the instances in which democracy fell at

medium levels of development are to a large extent peculiar to the Southern Cone, according to

Przeworski et al. (2001, 169).

Exploitation of industry in the Third World can indeed result from a host country investing heavily with

less need to worry about restrictions, creating more problems and more disparities. Some regulation of

markets is desirable, while free markets must have some enforcement mechanism of rules to address

inequalities and alleviate some of the side effects of market transition. Polanyi was certain that


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collaboration between "governments would produce a set of agreements to facilitate high levels of

international trade, but societies would have multiple means to buffer themselves from the pressure of the

global economy," cites Polanyi (2001, XXXVI). Globalization continues to reduce barriers, but

deregulation with respect to following set policies uniformly throughout the world can help to benefit

people of all incomes more equally. Dispersing institutionalization of capitalism and promoting societal

factors can come with market reforms in addressing a healthy balance, and so striking the even scale is

perhaps most effective.

Acknowledgements. I would like to thank my old professor at Georgia Tech, Dr. Vicki Birchfield, for

inspiring me to write this article. Without her input, I would not have written this or considered presenting

it at a conference for possible future publication.

REFERENCES

[1] V. Birchfield (2005), ―José Bové and the Globalisation Countermovement in France and Beyond:

A Polanyian Interpretation,‖ Review of International Studie, vol. 31, no. 3, pp. 581-598.

[2] J. Bodnar (1998), ―Assembling the Square: Social Transformation in Public Space and the Broken

Mirage of the Second Economy in Postsocialist Budapest,‖ Slavic Review, vol. 57, no. 3, pp. 489-

515.

[3] M. Burawoy (1979), ―The Anthropology of Industrial Work,‖ Annual Review of Anthropology,

vol. 8, pp. 231-266.

[4] K. Polanyi (2001), The Great Transformation, Beacon Press, Boston, MA, USA.

[5] A. Przeworski, M. Alavarez, J. A. Cheibub, and F. Limongi (1996), ―What Makes Democracies

Endure?‖ Journal of Democracy, vol. 7.1, pp. 39-55.

[6] J. Rupnik (1996), ―The Post-Totalitarian Blues,‖ in The Global Resurgence of Democracy, eds. L.

Diamond and M. F. Plattner, Johns Hopkins University Press, Baltimore, MD, USA, pp. 364-378.

[7] L. Sklair (1992), ―The Maquilas in Mexico: A Global Perspective,‖ Bulletin of Latin American

Research, vol. 11, no. 1, pp. 91-107.

[8] T. Waters (2000), ―The Persistence of Subsistence and the Limits to Development Studies: The

Challenge of Tanzania,‖ Africa: Journal of the International African Institute, vol. 70, no. 4, pp.

614-652.


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A EFFECTIVENESS OF TECHNICAL INDICATORS - A STUDY ON CNX IT INDICES

K.Prabhakaran1 and S.Nagarajan2

1Assistant Professor, RVS Faculty of Management, Coimbatore, Tamilnadu, India.

2Assistant Professor, Maharaja Prithvi Engineering College, Coimbatore, Tamilnadu, India.

ABSTRACT: There are numerous technical tools available to predict future trend of index prices. All tools

may not be effective for all the companies and at all times. The purpose of this study is to find out the

effectiveness of technical tools in predicting the index price movement. The research is based on secondary

data collected from various websites. The data is collected for two different time periods representing the

bullish and bearish seasons. The technical indicators taken for the study are Relative Strength Index (RSI),

Money Flow Index (MFI) and On Balance Volume (OBV). From the study it is found that Relative

Strength Index, Money Flow Index and On Bonus Volume are effective in predicting the index movement

CNX IT during the Bullish period and during the Bearish period, Stochastic Oscillator is deemed effective.

Key words: Technical Analysis, MFI, RSI, OBV

INTRODUCTION

Technical analysis is a method of evaluating securities by analyzing statistics generated by market

activity, past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value;

instead they look at stock charts for patterns and indicators that will determine a stock's future performance.

Technical analysis has become increasingly popular over the past several years, as more and more people

believe that the historical performance of a stock is a strong indication of future performance. The use of

past performance should come as no surprise.

People using fundamental analysis have always looked at the past performance of companies by

comparing fiscal data from previous quarters and years to determine future growth. The difference lies in

the technical analyst's belief that securities move according to very predictable trends and patterns. These

trends continue until something happens to change the trend, and until this change occurs, price levels are

predictable.

There are many instances of investors successfully trading a security using only their knowledge

of the security's chart, without even understanding what the company does. However, although technical

analysis is a terrific tool, most agree it is much more effective when used in combination with fundamental

analysis. The methods used to analyze and predict the performance of a company's stock fall into two broad

categories: fundamental and technical analysis. Those who use technical analysis look for peaks, bottoms,

trends, patterns and other factors affecting a stock's price movement and then make buy/sell decisions

based on those factors. It is a technique many people attempt, but few are truly successful at it.

http://www.investopedia.com/terms/t/technicalanalysis.asp

http://www.investopedia.com/terms/i/intrinsicvalue.asp

http://www.investopedia.com/terms/f/fundamentalanalysis.asp


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The world of technical analysis is huge today. There are literally hundreds of different patterns

and indicators that investors claim to have success with. We have tried to keep this tutorial as short as

possible. Our goal is to introduce you to the different types of stock charts and the various technical

analysis tools available to investors.

Indian Stock Exchanges are a structured marketplace for the proper conduct of trading in company

stocks and other securities. There are 24 Recognized Stock Exchanges in India, including the Over the

Counter Exchange of India for providing trading access to small and new companies. The main services of

the India Stock Exchanges all over the country are to provide nation-wide services to investors and to

facilitate the issue and redemption of securities and other financial instruments.

HISTORY OF THE STOCK EXCHANGE

The working of Stock Exchanges in India started in 1875. BSE is the oldest stock market in India.

The history of Indian stock trading starts with 318 persons taking membership in Native Share and Stock

Brokers Association, which we now know by the name Bombay Stock Exchange or BSE in short. In 1965,

BSE got permanent recognition from the Government of India.

INDEX PARAMETERS

The 30 stock Sensitive Index or SENSEX was first compiled in 1986. The SENSEX is compiled

based on the performance of the stocks of 30 financially sound benchmark companies. The NIFTY is

compiled based on the performance of the stock of 50 financially sound benchmark companies.

INTRODUCTION OF SEBI

To prevent frauds, the Government formed The Securities and Exchange Board of India, through

an Act in 1992. SEBI is the statutory body that controls and regulates the functioning of stock exchanges,

brokers, sub-brokers, portfolio manager‘s investment advisors etc. SEBI oblige several rigid measures to

protect the interest of investors. Now with the inception of online trading and daily settlements the chances

for a fraud is nil, says top officials of SEBI.

CNX IT INDEX

Information Technology (IT) industry has played a major role in the Indian Economy during the

last few years. A number of large, profitable Indian companies today belong to the IT sector and a great

deal of investment interest is now focused on the IT sector. In order to have a good benchmark of the

Indian IT sector, IISL has developed the CNX IT sector index. CNX IT provides investors and market

intermediaries with an appropriate benchmark that captures the performance of the IT segment of the

market.

http://www.investopedia.com/terms/p/pattern.asp

http://www.investopedia.com/terms/i/indicator.asp


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CHART NO - 1

PERFORMANCE OF CNX IT INDEX

STATEMENT OF THE PROBLEM

Several investors have gained as well as lost in the stock market. One way to determine the stock

price is fundamental analysis, which in turn is composed of economy, industry and company. The other

way is technical analysis, which says that the past trends will repeat in the future.

The question that arises here is how market index moving whether towards efficient or inefficient.

So that losses and gains can be estimated with the movement of the market index.

REVIEW OF LITERATURE

Vinothini, (2007) this study is made to find out ―Risk Perception and Portfolio Management of

Equity Investors‖. The study reveals that the investors in Erode are not aware of portfolio which would

minimize risk and maximize the return. And also it is clear that the investors in erode have low level of

understanding about risk and the importance of portfolio management as they are not aware of the portfolio

management proper steps to be taken in order to improve the awareness level in the minds of the investors.

Venkataraman (2008) suggests that Price movements do not only depend wholly in Technical

Analysis. Fundamental factors also affect the commodity market price. So, each and every investor should

think about their selling and buying the product before the investment. Day to day prices changes in

Government policies also affect the market prices. Political stability, war, depression / boom of the

economic condition will affect the market. In India, commodity market growth have been increasing day by

day awareness spread out throughout the country now ignorance of the commodity market slightly removed

by the government policies.

CNX IT

0

5000

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YEAR

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Technical Indicators

Practitioners‘ reliance on technical analysis is well documented. Frankel and Froot (1990a) noted

that market professionals tend to include technical analysis in forecasting the market. There is also a shift

away from the fundamentals to technical analysis in the 1980s, according to a survey done by Euro money

(see Frankel and Froot, 1990a). On a market level, the prevalence of technical analysis is demonstrated by

the fact that most real time financial information services, like Reuters and Telerate, provide detailed,

comprehensive and up-to-date technical analysis information. It is obvious that the frequent upgrading of

technical analysis services is a response to the demand for technical analysis services and competition

among the financial information service providers.

OBJECTIVES OF THE STUDY

To gain knowledge of the equity market and the instruments being traded in Indian stock market.

To analysis the index price movement of CNX IT.

To find out this is a suitable level to entry and exit the trade in CNX IT indices.

SOURCES OF DATA

The data employed in the study consists of Monthly indices CNX IT for the period January 2007 to

December 2011. The prices used are Monthly Open, High and Close prices. These data will be collected

from National Stock Exchange website.

PERIOD OF THE STUDY

The period of data is from January 2007 To October 2011 - (For the past 05 Years).

TOOLS USED FOR THE ANALYSIS

The following tools were used to analyze the data

1) Relative Strength Index (RSI)

2) Money Flow Index (MFI)

3) On Balance Volume (OBV)

1) RELATIVE STRENGTH INDEX (RSI)

The RSI (Relative Strength Index) is one of the most popular momentum oscillators in

Technical Analysis use today. It was introduced in a 1978 book by J. Welles Wilder. RSI helps to signal

overbought and oversold conditions in a security. The indicator is plotted in a range between zero and 100.

A reading above 70 is used to suggest that a security is overbought, while a reading below 30 is used to

suggest that it is oversold. This indicator helps traders to identify whether a security‘s price has been

unreasonably pushed to current levels and whether a reversal may be on the way.

The standard calculation for RSI uses 14 trading days as the basis, which can be adjusted to

meet the needs of the user. If the trading period is adjusted to use fewer days, the RSI will be more volatile

and will be used for shorter term trades.


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FORMULA

100

RSI = 100 ----------

1 + RS

Average Gain = Total Gains / n

Average Loss = Total Loss / n

Average Gain

First RS = ----------------------

Average Loss

(n=number of periods taken)

When the average gain is greater than the average loss, the RSI rises because RS will be greater

than 1. Conversely, when the average loss is greater than average gain, the RSI declaims because RS will

be less than 1. Note: if the average loss ever becomes zero, RSI become 100 by definition.

OVER BOUGHT / OVER SOLD ZONES

Wilder recommended using 70 and 30 and overbought and over sold levels respectively. If the RSI

rises above 30 it is considered bullish for the underlying stock. If the RSI falls below 70 it is a bearish

signal. Basically, the RSI is a measure of the strength of a recent trend:

RSI is considered strongly bullish if the 14-day RSI exceeds 70 this means the security has

trended up strongly over the past 14 days. Some would consider the security to be overbought at

these levels, and a potential selling point might thus be reached when the RSI exceeds 70;

If the 14-day RSI is between 50 and 70, the security has moved up over the past 14 days; however,

the uptrend has not been very pronounced;

If the 14-day RSI is between 30 and 50, the security has moved down over the past 14 days;

however, the downtrend has not been very strong;

If the 14-day RSI is below 30, the security has trended strongly lower over the past 14 days and

the RSI is considered strongly bearish. Some would consider the security to be oversold at these

levels, and an RSI reading below 30 might thus mark a potential buying point.

2) MONEY FLOW INDEX (MFI)

Money flow index was discovered by Created by Gene Quong and Avrum Soudack. Money flow

is positive when the typical price rises. This is due to buying pressure. A ratio of positive and negative

money flow is then plugged into an RSI formula to create an oscillator that moves between zero and one

hundred. As a momentum oscillator tied to volume the money flow index (MFI) is best suited to identify

reversals and price extremes with a variety of signals.

FORMULA

Money Flow Index = 100 - (100/ (1 + Money Ratio))


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3) ON BALANCE VOLUME (OBV)

On Balance Volume (OBV) measures buying and selling pressure as a cumulative indicator that

adds volume on up days and subtracts volume on down days. OBV was developed by Joe Granville and

introduced in his 1963 book, Granville's New Key to Stock Market Profits. It was one of the first indicators

to measure positive and negative volume flow. Chartists can look for divergences between OBV and price

to predict price movements or use OBV to confirm price trends.

FORMULA

If the closing price is above the prior close price then:

Current OBV = Previous OBV + Current Volume

If the closing price is below the prior close price then:

Current OBV = Previous OBV - Current Volume

If the closing prices equals the prior close price then:

Current OBV = Previous OBV (no change)

DATA ANALYSIS AND INTERPRETATION

TABLE NO-1

RELATIVE STRENGTH INDEX OF CNX IT INDEX

Date Open High Low Close MFI RSI OBV

31-Jan-07 5597.5 5626.95 5517.95 5535

14 D

ays

MF

I

14 D

ays

RS

I

12055

28-Feb-07 5301.75 5347.75 5066.65 5129.6 33835

30-Mar-07 5195.3 5218.45 5155.7 5180.7 24665

30-Apr-07 5276.05 5429.55 5275.15 5418.4 37675

31-May-07 5193.85 5257 5193.85 5218.35 54534

29-Jun-07 5169.5 5203.1 5165.85 5192.3 40906

31-Jul-07 5083.85 5094.25 5015.45 5086.7 32063

31-Aug-07 4775.55 4820.1 4768.2 4813.2 23747

28-Sep-07 4790.65 4882.85 4769.45 4804.2 37254

31-Oct-07 4828.35 4833.25 4759.45 4793.65 58105

30-Nov-07 4303.3 4452.4 4303.3 4431.15 46013

31-Dec-07 4833.1 4860.95 4778.95 4812.6 37263

31-Jan-08 3850.45 3914.9 3776.75 3838.15 57679

29-Feb-08 4055.25 4060.4 3932.65 3984.5 50163

31-Mar-08 3808.65 3855.3 3650.8 3704.95 47.76814 97.84366 63073

30-Apr-08 4330.35 4414.45 4284.5 4357.65 48.49776 95.52681 86057

30-May-08 4592.4 4704.35 4543.15 4688.35 54.32169 94.72053 68735

30-Jun-08 4016.75 4067.15 3977.75 3999.4 47.26411 96.44708 56640

31-Jul-08 3819.25 3819.25 3732.45 3752.85 48.20649 96.50064 76224

29-Aug-08 3827 3931.6 3827 3926.8 46.8955 96.08052 64590

30-Sep-08 2974.5 3192.25 2902.1 3107.05 52.68257 96.82001 86260

31-Oct-08 2585.7 2802.25 2585.7 2686.95 52.25253 96.93858 64613


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28-Nov-08 2322.2 2466.9 2322.2 2449.95 47.59206 97.10638 45507

31-Dec-08 2215.6 2222.65 2170 2187 54.31414 97.27191 108890

30-Jan-09 2187.35 2233.8 2167.8 2225.75 49.99398 96.96144 84857

27-Feb-09 2104.8 2105.6 2042.25 2094.1 49.47044 97.69322 67125

31-Mar-09 2296 2335.6 2280.25 2318.7 47.02449 96.50041 88878

29-Apr-09 2650.2 2781.6 2650.2 2770.85 58.10048 95.84585 128481

29-May-09 3138.6 3217.55 3121.5 3206.2 57.32987 94.45218 91459

30-Jun-09 3515.05 3552.05 3480.5 3497.65 48.73239 95.27946 66224

31-Jul-09 4334.7 4374.55 4284.25 4330.05 63.645 94.1344 121581

31-Aug-09 4644.05 4649.95 4602.75 4618.35 59.40369 91.54974 85655

30-Sep-09 5043.9 5141.55 5043.9 5122.1 58.66704 88.99256 50338

30-Oct-09 5112.25 5192.3 4978.15 5048.8 63.97176 89.87646 93710

30-Nov-09 5315.8 5397.5 5309.6 5364.2 51.68352 82.32216 76696

31-Dec-09 5797.15 5843.2 5797.15 5818.4 53.90732 72.00756 96786

29-Jan-10 5554.85 5619.45 5423.45 5594.15 56.41774 71.63816 122825

26-Feb-10 5787.3 5832 5724.8 5766.7 48.49711 59.98183 102392

31-Mar-10 5947.6 5967.55 5842.3 5855.95 53.31748 59.68098 86208

30-Apr-10 5947.85 6021.75 5914.7 5985.8 55.03691 49.85907 102913

31-May-10 5852.35 5852.35 5704.2 5761.95 54.48987 64.80325 121220

30-Jun-10 5877.8 5949.6 5837 5928.3 47.31266 66.49026 108234

30-Jul-10 6139.25 6144.25 6045.6 6086.85 45.69129 68.21004 97216

31-Aug-10 5936.5 5987.8 5908.7 5974.9 47.62237 74.02964 86851

30-Sep-10 6583.75 6645.55 6532.15 6613.4 39.53223 75.2478 107673

29-Oct-10 6666.45 6666.45 6554.4 6613.25 39.41648 77.13918 98630

30-Nov-10 6645 6745.65 6602.95 6703.6 48.00793 80.01624 122187

31-Dec-10 7484.8 7511.05 7436.15 7491.1 39.93218 72.3152 108568

31-Jan-11 6990.75 6995.1 6884.9 6971.25 50.53283 84.91054 122392

28-Feb-11 6688.55 6918.7 6628.05 6666.3 49.56581 89.67345 139159

31-Mar-11 7021.45 7192.35 7021.45 7148.1 49.99468 85.68589 159432

29-Apr-11 6722.8 6752.1 6680.65 6718.35 47.01354 89.75318 146204

31-May-11 6533.45 6604.4 6525.1 6538.5 48.71936 90.9945 133507

30-Jun-11 6579.05 6640.5 6558.95 6624.7 59.04396 91.14056 164744

29-Jul-11 6293.65 6356.5 6264.75 6335.1 53.73563 91.43062 140491

30-Aug-11 5407.65 5474.85 5325.45 5451.25 51.76985 94.43756 122017

30-Sep-11 5709 5771.3 5658.75 5678.9 51.99527 94.276 105643

31-Oct-11 6271.2 6333.85 6261.25 6278.7 51.94205 92.61411 91761

30-Nov-11 5814.9 5924.15 5803.45 5893.25 51.13757 94.85465 117658

30-Dec-11 6126.55 6171.55 6115.85 6139 50.13163 94.32969 107221

Note:Bolded items in the table indicate Over Bought Zones of RSI and MFI.


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CHART NO -2

RELATIVE STRENGTH INDEX OF CNX IT INDEX

CHART NO - 3

MONEY FLOW INDEX OF CNX IT INDEX

RELATIVE STRENGTH INDEX

0

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Mar-

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MONEY FLOW INDEX

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CHART NO – 4

ON BALANCE VOLUME OF CNX IT INDEX

INTERPRETATION

RSI is considered strongly bullish in this study because it exceeds 70 mark levels in maximum

cases. This means the security has trended up strongly over the past 14 days. RSI is between 50 and 70

indicates that the security has not been hold uptrend. MFI is considered that the security moves with normal

ups and downs in 14 days MFI because the researcher could not able to find overbought zones and oversold

zones too. A rising OBV reflects positive volume pressure that can lead to higher prices. That can be

explain through high 1, high 2 (higher high), high 3 (higher high) and More buying pressure will increase

the volume that will automatically leads to increase the OBV. This is also applicable for lower lows.

FINDINGS

RSI shown maximum bullish in this research due to buying pressure.

RSI is below 30, the security has trended strongly lower over the past 14 days and the RSI is

considered strongly bearish. But in this research the researcher could not able to find oversold

zones.

MFI is clearly shown that there is normal buying pressures because the research could not able to

find overbought zones.

The higher highs depicted bullish signals. OBI is also holding more highs and higher highs.

ON BALANCE VOLUME

020000400006000080000

100000120000140000160000180000

Jan-

07

May

-07

Sep

-07

Jan-

08

May

-08

Sep

-08

Jan-

09

May

-09

Sep

-09

Jan-

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May

-10

Sep

-10

Jan-

11

May

-11

Sep

-11

YEAR

OB

V

OBV

High 1 High 2

High 3


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This bearish difference warned stock traders that the recent price increases were lacking strong

commitment by buyers.

CONCLUSION

This study concentrated on tools such as RSI, MFI, and OBV used to find the bullish and bearish

signals. This study is to focus the forecasting of future price movements based on an examination of past

price movements. Based on the finding from this study, the researcher would say that CNX IT indices

having more bullish signals compare with bearish signals. The Investors having an option to do trading in

CNX IT and It would provide opportunities to test bullish growth. But Technical Analysis does not give

absolute predictions about the future. Instead it can be used as an anticipatory tool.

REFERENCES

[1] BallaV.K -Investment Management (Security Analysis and Portfolio Management), (11th Edition,

Tata McGraw-Hill Publication, New Delhi).

[2] Punithavathy Pandian -Security Analysis and Portfolio Management, (Vikas Publishing House Pvt

Ltd.,).

[3] Prasanna Chandra- Investment Analysis and Portfolio Management, (2nd Edition, Tata McGraw-

Hill Publication, New Delhi).

[4] Preethi Singh,-Investment Management (Security Analysis and Portfolio Management), (14th

Edition, Himalaya Publishing House, Mumbai).

[5] Raman. V.N.S – Investment principles and techniques (2nd Edition, Vikas Publishing House,

New Delhi )

[6] Robert D. Edwards, John Magee Technical analysis of stock trends, 8th

Edition.

WEBSITES

[1] http://www.nseindia.com/

[2] http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators

[3] http://en.wikipedia.org/wiki/Money_flow_index

[4] http://www.investopedia.com/terms/o/onbalancevolume.asp

http://www.nseindia.com/

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators

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

http://www.investopedia.com/terms/o/onbalancevolume.asp


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A STUDY ON HR ISSUES IN RETAIL OUTLETS IN COIMBATORE

M.G.Saravanaraj1, S.Arulsenthilkumar2 and N.Punitha3

1Professor & Head /MBA, Muthayammal Engineering College- Rasipuram.

2Research scholar, Manonmaniam Sundaranar University, Tirunelveli.

3Executive Development, FEDUNI, Coimbatore.

ABSTRACT: Although retailing is a one of the very emerging fast growing sector in our country, Now

massive retail stores has been functioning in the nook and corner of the all across the areas for fulfilling the

customer needs under one roof Now, various well reputed organizations are very clear to setting up shop in

India; they have a passion to be closer to the customer. At this time when the country‘s retail business is

going through a transformation, there is a Compelling need for those involved in retailing and those who

wish to be involved to understand this phenomenon systematically so that they can practice it perfectly.

However one of the most problematic parts in the retail industry is that of acquiring, developing and

retaining the personnel involved in the business of retail. This article has been undertaken to identify the

pertinent HR issues faced in the retail sector, with a focus on retail outlets in Coimbatore. In this Study, a

foundation to the aspect of retailing has been given, which includes Retailing in the global and Indian

scenario, retail formats, etc. Then primary data has been collected with the help of a questionnaire, with the

help of which the HR issues involved in retail have been identified. In the end suggestions and

recommendations have been provided.

Key words: Retail Transformation, Global Retail scenario, Employee Retention

Introduction to Retailing

The word ‗retail‘ is derived from the French word ‗retaillier‘, meaning ‗to cut a piece Off‘ or ‗to break

bulk‘. In simple words, it implies a first hand transaction with the Customer. Retailing involves a direct

contact with the customer and the co-ordination of business activities from end to end right from the

concept and design stage of a product to its delivery or after delivery service to the customer. The industry

has contributed to the financial growth of more countries and is clearly one of the very fastest growing,

dynamic and wide scope industries in the world today.

Retail stores serve as communication hubs for customers and sellers commonly known as the Point of Sale

(POS) or the Point of Purchase (POP), retail stores transmit information to the Customers through

advertisements and displays. Hence the role of retailing in the Marketing mix can play a significant role to

promote the retail strategy much better to the market. Retailing that has made a significant contribution to


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the economic prosperity that we so much enjoy. Retailing is also responsible for matching individual

demands of the consumer with supplies of all manufacturers. The nations that have enjoyed the greatest

economic and social progress have been those with a strong retail sector.

.

Retailing Scenario Global

Retailing in more developed countries is big business and better organized than what it is in India.

According to a report published by McKinsey & Co. along with the Confederation of the Indian Industry

the global retail business is worth a staggering US$ 6.6 trillion.In the developed world, most of it is

accounted for by the organized retail sector. For Instance, the organized retail sector has gone upto 80%

share of retail sales in the United States. The corresponding figure for Western Europe is 70% whilst it is

50% in Malaysia and Thailand, 40% in Brazil and Argentina, 35% in Philippines, 25% in Indonesia and

15% in South Korea. In China it remains a paltry 10%.

On the Global Retail Stage, little has remained the same over the last decade. The global Economy has

changed, consumer demand has shifted, and retailers‘ operating systems today are infused with far more

technology than was the case six years ago. Saturated home markets, fierce competition and restrictive

legislation have relentlessly pushed major food retailers into the globalization mode. Since the mid-1990s,

numerous governments have opened up their economies as well, to the free markets and foreign investment

that has been a plus for many a retailer. However, a more near-term concern has been the global economic

slowdown that has resulted from dramatic cutback in Corporate IT and other types of capital spending.

Consumers themselves have become much more price sensitive and conservative in their buying,

particularly in the more advanced economies.

The growth of multiple chain retailers has been ruthless for many years in the west and this has been

accompanied by the development of retail names as brands in their own right. Discount retailer Walmart

has catapulted to the top of the Fortune 500 rankings in the U.S. ahead even of oil major Exxon Mobil and

the mammoth manufacturing giant General Electric. A relentless policy, of, ‗Always Low prices. Always.‘

has brought Walmart to the top.

Walmart and Nordstrom in the U.S. and Sainsbury‘s and Marks & Spencer in the U.K. Have grown by

rapid geographic expansion in their own countries. Specialists like Benetton of Italy and IKEA of Sweden

and The Body Shop of the UK are international and the fast food chains like McDonald‘s and Pizza Hut are

everywhere. The same Products are increasingly available from the same names on every continent.

Retailers Worldwide have immensely benefited from the sustained growth of the disposable income of their

global consumers.


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The service sector accounts for a large share of GDP in most developed economies. The retail sector forms

a very strong component of the service sector. Hence, the Employment opportunity offered by the industry

is immense. According to the US Department of Labor, about 22 million Americans are employed in the

retailing industry in more than 2 million retail stores. As long as people need to buy, retail will generate

employment. Globally, retailing is customer centric with an emphasis on innovation in products, processes

and services. In short, the customer is King!

Retailing Scenario India:

The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized

sectors, India retail industry is one of the fastest growing industries in India, especially over the last few

years. Though initially, the retail industry in India was mostly unstructured, however with the change of

expectations and preferences of the consumers, the industry is getting more utilizing these days and getting

organized very well. With emerging market demand, the industry is expected to grow at a pace of 25-30%

annually.

In the Indian retailing industry, food is the most important sector and is growing at a rate of 9% annually.

The well reputed food industry is trying to enter the India retail market and transform Indian consumers to

well equipped branded food. Since at present 60% of the Indian grocery basket consists of non- branded

items. India has the largest population in the world. Most of them are independent and contribute as much

as 96% in total retail sales. Because of the decreasing number of nuclear families, working women, greater

work pressure, Migrating to cities, increased commuting time and convenience has become a priority for

Indian consumers. They want everything under one roof for easy accessibility and induce to know better of

every things their choice. This offers an excellent opportunity for organized retailers in the country who

amount for just 2% of the estimated US $180 billion worth of goods that are retailed in India every year.

This figure is equivalent to the turnover of one single US based retail chain, Wal-Mart.

Growth of Indian Retail

It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion. India retail

industry is one of the fastest growing industries with revenue expected in 2007 to amount US$ 320 billion

and is increasing at a rate of 5% yearly. A further increase of 7-8% is expected in the industry of retail in

India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption. It has

further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the

current size of US$ 7.5 billion.

The growth and development of organized retailing in India is driven by two main factors Lower prices and

benefits the consumers can‘t resist. At the US – India Business Summit in collaboration with Price water

house Coopers the following details were Released India is rapidly evolving into a competitive market with


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potential target consumers in the niche and middle class segments. The market trends indicate fabulous

growth opportunities. Global majors too are showing keen interest in the Indian retail market.

Over the years, international brands like Marks & Spencer, Samsonite, Lacoste, McDonald‘s, Swarovski,

and Domino‘s among a host of others have come into India through the franchise route following the

relaxation of FDI. Large Indian companies like the Tata, Goenka, Aditya birla, reliance, pantaloon, RPG

Group and Piramal groups – are investing heavily in this industry.

Today retailing provides jobs to roughly 15% of employable Indian adults, and is the largest contributor to

India‘s GDP after agriculture. The growth potential of the industry is such that in the next ten years nearly

one million new jobs will be created in the organized retail sector alone. (Source: Business Executive (Dec-

Jan 2001)).

Considering such opportunities, one needs to take a look at the organizations and Institutes offering retail

education and training in India. At present there are but a few like Institutions offering Retailing courses for

their students this trend has to change, while the first few steps towards sophisticated retailing are being

taken, the biggest task for organized retail organizations is to locate and recruit Qualified, knowledgeable,

skilled and Trained staff to handle their operations.

According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, India retail

industry is the most promising emerging market for investment. In 2007, the retail trade in India had a

share of 8-10% in the GDP (Gross Domestic Product) of the country. In 2009, it rose to 12%. It is also

expected to reach 22% by 2010.According to a report by North bride Capita; the India retail industry is

expected to grow to US$ 700 billion by 2010. By the same time, the organized sector will be 20% of the

total market share. It can be mentioned here that, the share of organized sector in 2007 was 7.5% of the

total retail market.

The Future of Retail Industry in India

The retail industry in India is currently mounting at a great pace and is expected to go up to US$ 833 billion

by the year 2013. It is further predictable to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As

the country has got a high growth rates, the consumer expenditure has also gone up and is also expected to

go up further in the future. In the last four year, the consumer spending in India climbed up to 75%. As a

result, the India retail industry is expected to grow further in the future days. By the year 2013, the

organized sector is also expected to grow at a CAGR of 40%.

India retail industry is progressing well and for this to continue retailers as well as the Indian government

will have to make a combined effort.


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Review of literature

A review of various literatures available would help in providing me with a better Understanding of the

various information involved in the retail function and their relation to the people oriented nature of the

business.

Source: Vedamani Gibson (2006). Retail Management – Functional Principles and Practices. Jaico

Publishing House, Mumbai.

Title: Manpower planning in a department store

Following rapid growth in business volumes, a department store recruited 150 permanent Employees to

cover its working hours from 10:00 a.m. to 8:30 p.m. The store which had an area of 50,000 sq. ft. works

seven days a week. Manpower planning in a free access department store is done according to factors like

sales volumes and value planned per salesperson, floor area covered by a salesperson, number of customers

attended per day, or a combination of these. The idea is to optimize business operating results. The store

has a rush of customers on weekends from Friday to Sunday. Further the store experiences heave sales

during the weekend. In retail, manpower planning takes into account the number of staff needed at different

times of the day. It looks at the possibility of range of shift lengths not exceeding the statutory 8 hours

rather than rigid fixed shifts which would mean employing more people. The store however feels that with

its growing business there are less staff to serve customers, especially during weekends and busy hours.

Efficient manpower planning takes into account the impact of part timers and overtime to meet short term

peaks in demand. It uses weekenders in times of dire necessity. This store has not been following this

practice. The organization also fears that the commitment of such weekenders and part timers would be

very low.

Source: www.rediff.com

Title: HR factor in retail, largely ignored by Rajendra K Aneja, CEO, Switz Group and former MD,

Unilever, Tanzania

The mood in India these days is "Goodbye, Socialism. Welcome, Sonyism". But the Sudden explosion of

retailing emphasis the principal challenge confronting Indian retailers in the coming decade: staffing

operations and motivating teams. The lacks of formal retailing education further embitter the problem of

recruiting. How should retailers build human relations in retail management? The first ingredient is

infusing a passion for success in employees. If the staff are the

Employees of the company, rather than outsourced from agencies, there will be greater Commitment.

Further, retailers should make every employee a partner through a stock options scheme. A watchman who

knows that he has a stake in the final profits, in the form of a bonus or

a stock option, will ensure zero levels of shrinkage. Remember, businessmen must share their wealth with

those who generate it.


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Get the basics right

Retailing is a hard business. It is rigorous. The floor staff stands on its feet for up to nine Hours every day.

The job of the salesperson on the floor is physically exacting and emotionally draining. This is why

changing existing mindsets and motivating personnel will also require Ensuring basic hygiene factors. It is

crucial to provide toilets, restrooms, canteens and Dining areas, as well as recreation rooms to the staff.

Also, in a competent retail organization, each employee should spend at least 10 working days a year in the

classroom. Training of the staff is the best investment in the retail business. Training has to be constant, in

the classroom and on the floors, on a daily basis. Business schools should come together to pioneer a new

curriculum for master's degree in retail management. Next to training is the vital policy of building careers

and promoting people from within the company. Internal progression systems augment loyalty and boosts

morale.

Respect the floors

In a customer service-oriented retail outlet, the supervisory staff, managers, directors or the chairman of the

company will walk the floors. They will also seek advice and customer responses from the staff. As Sam

Walton, the best retailer of our times, once said, "Our best ideas come from the shop floors.

Looks do matter

Retailing is about the staff wearing clean, ironed uniforms. It is about shaving daily, using the right type

and the right amount of deodorant; it is about bright eyes and warm Smiles, about polished shoes, no straps

showing through the uniform and no hairy Armpits. These are fundamental hygiene factors, but they can

make or break a sale. It is a smart Move to recruit the grooming and communications staff from top five-

star hotels to train Retail staff.

Family ties

Working in any company should be fun and rejuvenating. The staff should look forward to coming to work

daily. This is possible when the team spends informal times together. Winning is great fun, becoming rich

is glorious, and it is vital to celebrate success together. If the employees of a retail company dance, sing,

eat, rejoice together, the company stays together.

Opinion – the article lays emphasis on the importance of imparting retail education in a bid to groom

individuals and making them more receptive to the idea of pursuing a career in retail. Further it outlines the

need to motivate employees constantly and providing them with adequate facilities. It also states the need

to honor viewpoints and suggestions of the frontline sales staff.


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Objectives of the study

To understand the role and importance of HR in the retail business.

The focus would be to identify the recent HR issues faced by retail organizations.

The objective would also be to develop suitable HR strategies for the prevalent HR

Issues in retail business.

To analyze the employees opinions about the policies of Retail Industry

Research Methodology

Type of research – A combination of both exploratory and descriptive research would be Used.

Exploratory research often relies on secondary research such as reviewing available literature and/or data,

or qualitative approaches such as informal discussions with consumers, employees, management or

competitors, and more formal approaches through in-depth interviews, focus groups, etc.

Descriptive research, describes data and characteristics about the population or Phenomenon being studied.

Descriptive research answers the questions who, what, Where, when and how.

Research Method – The qualitative and survey method would be used in this study.

Types of data – Primary as well as secondary data would be used in the project.

Data gathering procedure – The various techniques adopted for gathering data would be:

Questionnaires

Interviews

With store employees

With the managerial level personnel in organizations

Research techniques – The various techniques used in the research process would be:

• Questionnaires

• Direct interview

• Observational study

Sampling details

Sample size – A sample size of 120 would be taken for the survey.

Sample description – The sample chosen for the purpose of the research would be the

Frontline sales personnel, managerial personnel and persons associated with apex Industrial bodies.

Sampling techniques - The sampling technique used in the study would be Simple

Random Sampling.


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Scope of the study:

The study covers all aspects of identifying the HR issues faced in the retail sector with special

reference to select outlets.

The study covers to know about the retail industry in the aspect Manpower planning.

Limitations of the study:

• Time constraint is a limitation in the project as only limited organizations can be contacted.

• The credibility of the information shared by the respondents.

Data analysis and Interpretation:

Table 1: Showing opinions about Gender and Job satisfaction

Null Hypothesis (H0) : There is no significant relationship between gender and level of job

satisfaction.

Alternative Hypothesis (H1) : There is close significant relationship between gender and job satisfaction

CHI - SQUARE TEST

Calculated 2 value = 0.102

Degree of Freedom = 2

Table value = 5.991

Result = Significant at 5% level

INFERENCE

It is found from the above table that calculated value is less than the table value at 2 degree of freedom. So,

Null hypothesis (H0) accepted hence it is concluded that there is no significant relationship between gender

and level of job satisfaction.

Table 2: Showing opinions about Age and working Environment

Gender Level of Job Satisfaction

Total percentage Low Medium High

Male 25 35 15 75 63

Female 15 22 8 45 37

Total 40 57 23 120 100

Sl. No. Particulars 18 -25 25-35 >35 Total Percentage

1 Highly satisfied 11 10 6 27 23

2 Satisfied 17 15 4 36 30

3 Average 11 8 5 24 20

4 Dissatisfied 9 7 3 19 16

5 Highly Dissatisfied 7 5 2 14 11

6 Total 55 45 20 120 100


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Null Hypothesis (H0) : There is no significant relationship between Age and Working Environment.

Alternative Hypothesis (H1): There is close significant relationship between Age and Working

Environment.

Calculated Chi- Square (χ2) Value = 1.997

Level Of Significance = 0.05

Degrees Of Freedom = 8

Table Value = 15.507

Inference:It is found from the above table that calculated value is less than the table value So, Null

hypothesis (H0) accepted hence it is concluded that there is no significant relationship between age and

Working Environment.

Table 3: Showing opinions about Age and welfare Facilities

Null Hypothesis (H0) : There is no significant relationship between Age and Welfare Facilities

Alternative Hypothesis (H1): There is close significant relationship between Age and Welfare Facilities





Inference:It is found from the above table that calculated value is less than the table value at 2 degree of

freedom. So, Null hypothesis (H0) accepted hence it is concluded that there is no significant relationship

between age and Welfare Facilities.

Sl. No. Particulars 18-25 25-35 >35 Total Percentage

1 Highly satisfied 8 7 3 18 15

2 Satisfied 13 11 7 31 23

3 Average 19 17 5 41 38

4 Dissatisfied 5 3 2 10 8

5 Highly Dissatisfied 10 7 3 20 16

6 Total 55 45 20 120 100


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Table 4: Showing opinions about Age and Remuneration Facilities

AGE WISE


1 Highly satisfied 18 13 5 38 30%

2 Satisfied 17 15 8 40 33

3 Average 13 12 5 30 24%

4 Dissatisfied 5 4 2 11 10%

5 Highly Dissatisfied 2 1 0 3 3%

6 Total 55 45 20 120 100

Null Hypothesis (H0) : There is no significant relationship between Age and Remuneration Facilities

Alternative Hypothesis (H1): There is close significant relationship between Age and Remuneration

Facilities





Inference: It is found from the above table that calculated value is less than the table value So, Null


Remuneration Facilities.

Table 5: Showing opinions about Age and Work time

AGE WISE


1 Highly satisfied 12 9 4 25 21%

2 Satisfied 29 26 11 66 55%

3 Average 11 7 3 21 18%

4 Dissatisfied 2 2 1 5 4%

5 Highly Dissatisfied 1 1 1 3 2%

6 Total 55 45 20 120 100

Null Hypothesis (H0) : There is no significant relationship between Age and Work Time

Alternative Hypothesis (H1): There is close significant relationship between Age and Work Time


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Table Value = 15.507s

Inference: It is found from the above table that calculated value is less than the table value So, Null


Work time

Findings

Male workers are working more in Retail Sector

18 to 25 Age group peoples working more in Retail Sector

Level of Job satisfaction is Average.

23% peoples highly satisfied their working Environment.

15% peoples are highly satisfied their Welfare facilities

38% peoples are averagely satisfied their Welfare facilities

30% peoples are highly satisfied their salary.

Level of salaries at par with other industry.

57 % peoples satisfied their Work time.

Suggestions

Working in a retail sector more so at the frontline level. The job must be given the Due

prominence it deserves and people must be made to understand that they are not merely selling but

servicing customers.

With regards to Working Environment and Welfare facilities, which are probably the first of

the HR functions, it must be borne in mind that business forecast and performance standards are

foremost. They are the key areas because without the business forecast you will not be able to

recognize the need for manpower in future and if Performance standards are set then it would be

easy for the employees to work efficiently.

Compensation must be reviewed regularly and employees must be paid at Competitive rates.

Further a certain component of their remuneration must be Merit based so as to motivate them to

perform better.


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Attrition is a concern in the retail industry. However, by ensuring competitive Pay, well motivated

staff, facilities and benefits, career paths and growth charts, Etc the same could be controlled to a

large extent.

With the advent of several players in the retail sector – both Indian and International, the HR

personnel must ensure that employees are motivated, trained to handle their jobs better, paid at

competitive rates, given adequate rest hours to Prevent exhaustion, etc.

Conclusion

Given the nature of business, the frontline sales staff in a retail enterprise are truly the brand ambassadors

of the company i.e. their employer. It is this frontline staffs who is in direct contact with the customer and it

is they who can make or lose a customer. However the role of the middle and top management people are

equally important as it is they who make the frontline staff prepared to handle their job. Recruiting the right

person with the right attitude will determine the success of retailing. Integrity is of paramount importance.

It is also important to reward employees for Achieving better results. Managing personnel in a retail

environment demands unique, specialized skills. Soft skills are required in addition to academic

qualifications. Retail is a dynamic industry and makes a lot of demands on the personnel involved in the

business. Therefore they need intensive training and motivation. The focus should move to being more

meticulous – ‘Retail is Detail’. Each customer haste be delivered a Moment of Magic and the HR

department has to ensure that retail employees are trained to deliver those ‘Moments of Magic’.

Bibliography

[1] Edwin. B. Flippo – Principles of Personnel Management, McGraw Hill Kogusha Company

Limited, Tokyo, sixth edition – 1998.

[2] Kothari. C.R. – Research Methodology Methods and Techniques, Wishwa Prakashan, second

edition – 1990.

[3] Mamoria C. B. – Personnal Management, Himalaya Publishing House, Bombay,4 – 1992.

[4] Pradhan Swapna (2nd edition). Retailing Management Text and Cases.

[5] Stephen. P. Robbins – Organizational Behavior, ninth edition by prentice hall.

[6] Tripathi - Personnal Management and Industrial Relations, Sultan Chand and Sons, New Delhi,

Twelfth Edition – 1996

[7] Vedamani Gibson (2006). Retail Management – Functional Principles and Practices. Jaico

Publishing House, Mumbai.

[8] http://www.jstor.org

[9] http://www.workthing.com


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ANALYSING THE VOLATILITY OF NSE INDICES – EMPRICAL STUDY

V.Prabakaran1 and D.Lakshmi Prabha2

1Assistant Professor/ 2Lecturer, Department of Management, KPR School of Business, Arasur, Coimbatore,

Abstract: Stock market volatility forecasting is an emerging trends financial market, since better

forecasting influence the FII inflows which intern give impact to Indian economy. In this direction, this

paper attempts to analyze the volatility of NSE indices, forecast the index value for the next year and to

suggest the strategies for trading. Statistical tools like correlation test, volatility test and method of least

squares are used to analyze the data, to study the trends in Index flow. The study forecast the Index value

for the next year and found the consistent index among the selected indices.

Keywords: Volatility, NSE Indices, Stock Market Volatility, Forecasting

Introduction

For the past two decades lot of analysis has been done to study the stock market volatility by

academicians as well as practitioners with the use of empirical and theoretical investigations. Experts has

given different methods of analyzing the stock market volatility out of which the simplest method is use

statistical tools like standard deviation or variance of asset returns or indices. There is a model which is

used to analyze the stock market volatility is ARCH/GRACH class of models, which are most extensively

used in finance. In our study we are using the first method; in addition to that we are also using the method

of least squares to forecast the index value for the next year.

Need of the study

A stock index is a bunch of stock grouped together which indicates the performance of different companies

listed in it. Stock portfolio is normally compared with the performance of the respective index value where

the index value is used to tract the general performance of the industry.

Objectives

1. To study the volatility of NSE indices

2. To forecast the 2012 indices value

3. To frame the trading strategy in NSE indices

Review of Literature

Abhijit Dutta, has done a study on A Study of the NSE's Volatility for Very Small Period using

Asymmetric GARCH Models. This paper analyzed the Indian Stock Market experiences volatility

clustering and hence GARCH-type models predict the market volatility better than simple volatility


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models, like historical average, moving average etc. It is also observed that the asymmetric GARCH

models provide better fit than the symmetric GARCH model, confirming the presence of leverage effect.

Takahashi, Katsuyuki, Shoji, Isao conducted a study on An empirical analysis of the volatility of the

Japanese stock price index: a non-parametric approach. The objective of the study analyse the stochastic

features of volatility in the Japanese stock price index, or TOPIX, using high-frequency data sampled every

5 min. The process of TOPIX is modeled by a stochastic differential equation with the time-homogeneous

drift and diffusion coefficients. The result of the estimation suggests that the volatility function shows

similar patterns for one period, but drastically changes for another.

Wessel Marquering and Mamo Verbeek conducted a study on The Economic Value of Predicting Stock

Index Returns and Volatility. The study analyzed the economic value of predicting stock index returns as

well as volatility. Using monthly data, they examined the economic value of a number of alternative trading

strategies over the period 1970-2001. The study found that, the economic value of trading strategies that

employ market timing in returns and volatility exceeds that of strategies that only employ timing in returns.

Most of the profitability of the dynamic strategies, however, is located in the first half of our sample period.

P Srinivasan conducted a study on Modeling and Forecasting the Stock Market Volatility of S&P 500

Index Using GARCH Models. The study attempted at modeling and forecasting the volatility (conditional

variance) of the S&P 500 Index returns of United States stock market, using daily data covering a period

from January 1, 1996 to January 29, 2010. Based on out-of-sample forecasts and a majority of evaluation

measures, the results showed that the symmetric GARCH model does perform better in forecasting

conditional variance of the S&P 500 Index return rather than the asymmetric GARCH models, despite the

presence of leverage effect.

Methodology

Descriptive research is used in this study to figure out the volatility of NSE indices in Indian Stock

Market. The secondary data are collected from National Stock Exchange – Indices like CNX BANK, CNX

Infrastructure, CNX IT, CNX FMCG, CNX Auto and CNX Pharma. Statistical tools like correlation test,

volatility test and method of least squares are used to analyze the data, to study the trends in Index flow to

forecast the 2011-12 Indices.


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Analysis & Interpretation

Table No: 01 Statistical study of Banking Sector (CNX Bank)

S.No Particular 2006-07 2007-08 2008-09 2009-10 2010-11

1 Opening Value 4724.1 4959.7 6608.1 4211.5 9507.8

2 Closing Value 5308.5

6655.0

4133.2

9459.6

11705.5

3 Average Annualized return -0.3 -0.3 -0.5 -0.1 -0.3

4 Mean value of CNX Bank 5002.4 7639.8 5430.9 7906.4 10828.5

5 Beta 2.1 2.0 1.2 2.4 2.9

6 Standard Deviation 830.7 1485.3 1118.5 1293.4 1108.2

7 Correlation between banking index and

NSE index 1.0 1.0 0.9 1.0 0.9

Interpretation: From the above table it is clearly inferred that, the annualized average return for analyzed

period is shown a negative value and there is a lowest value exist during the year 2008-09. For the year

2008-09 the index moved 1.2 times of the market movement which shown in the value of beta. The

correlation value shows that, the banking index is almost having perfect positive correlation with the

market movement since the value is almost nearer to 1.

Table No: 02 Statistical study of Infrastructure Sector (CNX Infrastructure)

S.No Particular 2006-07 2007-08 2008-09 2009-10 2010-11

1 Opening Value 2600.2 2969.4 4204.5 2374.4 3428.9

2 Closing Value 3099.5 4261.2 2369.3 3422.6 3076.7

3 Average Annualized Return -0.3 -0.2 -0.6 -0.2 -0.4

4 Mean value of CNX Infrastructure 2692.0 4480.5 3111.0 3453.9 3356.2

5 Beta 1.0 1.2 0.9 0.4 0.4



NSE index 1.0 1.0 1.0 0.7 0.5

Interpretation: From the above table it is clearly inferred that, the closing value has increased for all the

year except 2008-09 and 2010-11. The Beta value is decreased from 2008-09 to 2010-11 which shows the

movement of CNX index along with the market index and the evidence from standard deviation reflects

less volatility in the Infrastructure Sector during the year 2010-11 compared to all the selected period.

Though the sector shown a negative return throughout the analyzed period, it generated a high mean value

during the year 2007-08 and the return as well.


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Table No: 03 Statistical study of IT Sector (CNX IT)

S.No Particular 2006-07 2007-08 2008-09 2009-10 2010-11

1 Opening Value 4460.5 4940.5 3674.9 2379.8 5984.0

2 Closing Value 5180.7 3705.0 2318.7 5856.0 7148.1

3 Average Annualized Return -0.3 -0.5 -0.6 -0.020 0.1

4 Mean value of CNX IT 4689.4 4691.4 3191.9 4635.8 6472.2

5 Beta 1.6 -0.3 1.0 1.9 1.0


7 Correlation between banking index and NSE

index 1.0 -0.5 1.0 0.9 0.7

Interpretation: From the above table it is clearly inferred that, the value of average annualized return for

all the year shown negative value expect the year 2010-11. During the year 2010-11 the mean value

reached the highest among the selected period and the value of standard deviation also reached the lowest

among the selected period which shows the less volatility. The negative value of beta exists during the year

2007-08 which shows the index movement is opposite to market movement.

Table No: 04 Statistical study of Pharmaceutical Sector (CNX Pharma)

S.No Particular 2006-07 2007-08 2008-09 2009-10 2010-11

1 Opening Value 2835.1 2646.3 2906.3 2176.2 4020.4

2 Closing Value 2720.3 2928.5 2200.4 4016.9 4535.9

3 Average Annualized Return -0.4 -0.3 -0.5 -0.1 -0.3

4 Mean value of CNX Pharma 2613.9 2799.9 2753.6 3158.9 4450.6

5 Beta 0.4 0.1 0.6 0.8 0.9



NSE index 0.8 0.6 0.9 0.9 0.8

Interpretation:From the above table it is clearly inferred that, the mean value did not shown any big

difference during the year 2006-07 to 2008-09 and the average annualized return reached the highest for the

year 2008-09. During the year 2007-08 the value of beta, standard deviation and correlation between the

index and the market showed the lowest value among the selected period. As a whole the beta value

showed that, the index is a defensive index where the value of beta is less than 1 for all the selected period.


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Table No: 05 Statistical study of FMCG Sector (CNX FMCG)

S.No Particular 2006-07 2007-08 2008-09 2009-10 2010-11

1 Opening Value 6036.8 4572.9 5933.7 5117.6 7264.3

2 Closing Value 4724.8 5817.7 5134.7 7273.3 9188.5


4 Mean value of CNX FMCG 5249.8 5446.1 5335.2 6580.5 8608.0

5 Beta 0.2 0.6 0.5 1.2 1.7


7 Correlation between banking index and NSE

index 0.2 0.9 0.9 0.9 0.9

Interpretation: From the above table it is clearly inferred that, there is an existence of positive annualized

return only during the year 2010-11. The correlation value is almost perfect correlation for all the year

except the year 2006-07. During the year 2006-07 the value of mean, beta, correlation and standard

deviation showed the lowest value among the selected period which reflects the low volatility of the index

during that period. In the year 2006-07 the value of mean, beta, correlation and standard deviation showed

the highest among the selected period which reflects the high volatility of the index and aggressive

movement of index with respect to market movement during that period.

Table No: 06 Statistical study of Automobile Sector (CNX Auto)

S.

No Particular 2006-07 2007-08 2008-09 2009-10 2010-11

1 Opening Value 2231.8 1849.2 1860.6 1346.0 3207.0

2 Closing Value 1970.9 1878.4 1341.9 3206.8 3862.4


4 Mean value of CNX Auto 2094.7 2055.2 1436.7 2529.2 3683.7

5 Beta 0.4 0.2 0.4 1.0 0.9



NSE index 0.8 0.8 1.0 1.0 1.0

Interpretation: From the above table it is clearly inferred that, the performance of automobile sector

shown a drastic change during the year 2009-10 & 2010-11 where the values of good positive response

from the average return and the mean value. The volatility of the index is high during the period 2009-10 to

2010-11 which reflects in the high value of standard deviation. In the evident from Beta & Correlation, it is

inferred that the index movement is almost in phase with market movement during 2009 to 2011.


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Table No: 07 Trading Strategy for CNX Bank indices

The below table shows the strategies that can be used for trading in index. Passive strategy can be

used by investors who purchase the stock with the intention of long-term capital appreciation and limited

maintenance in which the investors buy a security and typically don't actively attempt to profit from short-

term price fluctuations, where as in active strategy investors will typically look at the price movements of

their stocks many times a day.

S.No Year

Active Strategy Passive

Strategy Difference

Buy

Period

Buy

Price

Sell

period

Sell

price Return Return

1 2006 19.07.06 3428.15 01.12.06 6330.75 84.67 12.40 72.27

2 2007 02.04.07 4959.65 14.01.08 10698.35 115.71 34.20 81.51

3 2008 16.07.08 4726.45 11.08.08 6723.20 42.25 -37.50 79.75

4 2009 01.04.09 4211.45 16.10.09 9526.70 126.21 124.60 1.61

5 2010 25.05.10 8851.75 05.11.10 13268.7 49.90 23.10 26.80

Interpretation: From the above table it is clearly inferred that, in all the year returns from the active

strategy is dominating the returns from the passive strategy in which buy and sell periods are different

between active strategy and passive strategy. The passive strategy is not suitable for investor where as the

speculator always choose to follow active strategy in which they may look for short term profit only not a

capital appreciation.

Table No: 08 Correlation Matrix

The below table shows the correlation matrix in which the correlation between the selected index are

measured.

CNX Bank CNX Infra CNX IT CNX Pharma CNX FMCG CNX Auto

CNX

Bank 1.0 - - - - -

CNX

Infra -0.5 1.0 - - - -

CNX IT -1.0 -0.7 1.0 - - -

CNX

Pharma -0.7 -1.0 1.0 1.0 - -

CNX

FMCG -0.5 -0.8 0.1 1.0 1.0 -

CNX

Auto -0.4 -0.2 -0.9 -1.0 -0.7 1.0


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Interpretation:From the above table it is cleared that, there is an existence of positive perfect correlation

between CNX Pharma & CNX IT sectors and CNX FMCG & CNX Pharma sectors where as positive poor

correlation is present between CNX FMCG & CNX IT. In the other way there is a poor negative correlation

existence between CNX IT & CNX Bank and CNX Auto & CNX IT where as poor negative correlation

exist between CNX Auto & CNX Infra.

Table No: 9 Statistical Study of Expected Value for the year 2011-12

The below table shows the expected value of the selected indices for the period 2011-12. By using

Method of least Squares the expected value is calculated in which period is taken as X and Indices value is

taken as Y. The difference between the actual value and the expected value is calculated and it is listed in

the below table.

S.No Indices

Expected Index Value

Actual Index value Deviation of actual from expected value

Value Percentage

1 CNX Bank 12129.12 10828.50 -1300.62 -12.0

2 CNX Infra 3539.44 3356.20 -183.24 -5.5

3 CNX IT 6140.14 6472.20 332.06 5.1

4 CNX Pharma 4768.34 4450.60 -317.74 -7.1

5 CNX FMCG 9384.24 8608.00 -776.24 -9.0

6 CNX Auto 3820.70 3683.70 -137 -3.7

Interpretation: From the above table it is cleared that, the actual value of all the selected indexes is greater

than the expected value except CNX IT, which shows that the market did not move as it predicted. Actual

Index value for CNX IT is greater than expected value which is called as abnormal increment where the

index movement is aggressive than it was predicted.


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Table No: 10 Calculations for the Volatility Test

The below table shows the consistency performance of the index with the use of Co-efficient of variance

tool and volatility test.

S.No Period Co-efficient of variation

CNX Bank CNX Infra CNX IT CNX Pharma CNX FMCG CNX Auto

1 2006-07 0.17 0.14 0.13 0.08 0.08 0.08

2 2007-08 0.19 0.20 0.11 0.05 0.09 0.07

3 2008-09 0.21 0.25 0.28 0.19 0.09 0.22

4 2009-10 0.16 0.09 0.24 0.16 0.11 0.21

5 2010-11 0.10 0.08 0.08 0.08 0.08 0.09

Average of CV 0.17 0.15 0.17 0.11 0.09 0.14

Standard Deviation 0.04 0.07 0.9 0.06 0.01 0.08

Volatility 0.24 0.49 0.52 0.53 0.14 0.56

Interpretation: From the above table it is cleared that, the volatility of the CNX FMCG is very low

compared to other selected indexes. Since the consistency is measured in terms of volatility, it is inferred

that the consistent of CNX FMCG is very high and CNX Auto having high level of volatility and low

consistent.

Findings

CNX FMCG is considered as a consistent performing index among the selected indexes.

By using Method of Least Square this study forecasted the index value for 2011-2012 and it was

found that the abnormal increase exist in CNX IT index in which the actual index value exceeds

expected index value.

The study analyzed the difference between active and passive strategy for trading and suggest the

active strategy for speculators and passive strategy for investors.

Conclusion

It is very important to understand the risk involved in stock market investment for all countries

especially developing country like India. The degree of volatility involved in the stock market may

influence the investors to demand high premium which leads to create portfolio. The degree of volatility

also impedes the flow of FII & DII and disturbs the economic development of a country. This study shows

the level of volatility and consistency level of the indexes in Indian stock market. This study concludes that,

in the bull phase the investor may earn decent return and the bear phases incurred loss. In the bull phases

volatilities were lower than bear phases.


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Reference

[1] Akgiray, V, "•Conditional Heleroskcdaslicily in Time Series of Stock Returns: EvidenL-e and

Horecasls" Journal of Bisness. 62 (198^1, 55-80

[2] Alberg D, Shalit H and Yosef R (2008), ―Estimating Stock Market Volatility Using Asymmetric

GARCH Models‖, Applied Financial Economics, Vol. 18, No. 15, pp. 1201-1208

[3] Breen, W,; L. R. Glusten; and R. Jagannathan. ""Pxononiii.- Significiuice of Predictable

Variations In Stock Index Rciumsr Journal of FiiHmce.AA{ [9^^)). 1177-1189.

[4] Brooks, C. and Persand, G. (2003), Volatitlity Forecasting for Risk Management, Journal of

Forecasting, 22, pp. 1-22

[5] Brooks C and Burke S P (1998), ―Forecasting Exchange Rate Volatility Using Conditional

Variance Models Selected by Information Criteria‖, Economics Letters, Vol. 61, No. 3, pp. 273-

278.

[6] Flemitig. J.; C. Kirby: and B. Ostdiek. "The Economic Value of Volatility Timing." Journal of

Finance. 56 (2001). .329-352.

[7] French, K. R.; G. W. Schwert: and R. F. Stambaugh. "Expected Stock Returns and Volalility."

Journal ofEinanciat Economics. 19 (1987), ,3-29.

[8] Glosten, L.R. Jagannathan, R. Runkle, D.E. (1993) ― On the Relation between the Expected Value

and the Volatility of the Nominal Excess Return on Stocks‖, Journal of Finance , 48, 17, pp. 79 –

1801

[9] Glosten L R, Jagannathan R and Runkle D E (1993), ―On the Relation Between the Expected

Value and the Volatility of the Nominal Excess Return on Stocks‖, Journal of Finance, Vol. 48,

No. 5, pp. 1779-1801.

[10] Gokcan S (2000), ―Forecasting Volatility of Emerging Stock Markets: Linear Various Non-Linear

GARCH Models‖, Journal of Forecasting, Vol. 19, No. 6, pp. 499-504.

[11] Karmakar, M. (2005), Modeling Conditional Volatility of the Indian Stock Markets‖ Vikalpa, Vol

30, No3, July- September, pp. 21-37.

[12] Liu W and Morley B (2009), ―Volatility Forecasting in the Hang Seng Index Using the GARCH

Approach‖, Asia-Pacific Financial Markets, Vol. 16, No. 1, pp. 51-63.


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THE EFFECT OF DEMOGRAPHICS ON INVESTMENT CHOICE: AN EMPIRICAL STUDY OF

INVESTORS IN RAJASTHAN

Dhiraj Jain1 and Khushboo Ranawat2

1Asst. Professor , Pacific Institute of Management, Udaipur (Rajasthan) , India .

2MBA ( II) , Major ( Finance ) , Pacific Institute of Management , Udaipur, (Rajasthan) , India .

ABSTRACT: Different investors have different choices at different stages This paper examines the

association of demographic factors on investment choices. The differences among the different genders

were found to be significant for post office schemes, real estate, gold/commodities and shares/equity. The

chi-square test shows that investors with higher income group prefer to invest in real estate and females

prefer to invest in gold/commodities. The study also reveals that females were conservative while investing

and males were aggressive. Most of the investors consult their family members for taking investing

decision and invest for the period of 3-5 years. Most of the investors invested their money for the safety

and growth of money. There is no association of income, age, gender, occupation on the percentage of

income and investors wants to save for the future requirements, but there is significant relationship between

qualification and percentage of income save for future requirements. But demographic factors does not

effect the investment period. This study shows that there is association of demographic profiles and

personality type of the investors with investment choice.

Key words: Determinants, Investment avenues, investment, savings, portfolio management.

I. Introduction

Investments form an important part of the economy of any nation. With the savings invested in various

options available to the people, the money acts as the driver for growth of the country. Indian financial

scene too presents a plethora of avenues to the investors. Though certainly not the best or deepest of

markets in the world, it has reasonable options for an ordinary man to invest his savings.

One needs to invest and earn return on their idle resources and generate a specified sum of money for a

specific goal in life and make a provision for an uncertain future. One of the important reasons why one

needs to invest wisely is to meet the cost of inflation. Inflation is the rate at which the cost of living

increases.

The cost of living is simply what it cost to buy goods and services you need to live. Inflation causes money

to lose value because it will not buy the same amount of a good or services in the future as it does now or

did in the past. The sooner one starts investing the better. By investing early you allow your investments

more time to grow whereby the concept of compounding increases your income, by accumulating the

principal and the interest or dividend earned on it, year after year.


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Researchers have emphasized that when investors become aware of their own unique psychology and

demographic features; they can adapt it to market conditions and can make investment decisions. Some

evidence also suggests that factors such as age, income, education and marital status affect an individual‘s

investment decision. So, it is important to study the relationship between various demographic factors, and

the investment personality exhibited by the investors.

II. Literature Review

Grable and Lytton (1999) highlighted the role of financial education in determining risk taking, with the

more financially educated participants more likely to take risk. Bajtelsmit and Bernasek (1996)

summarized that women make more conservative decisions with respect to investments. Barber & Odean

( 1999) found that the potential for overconfidence in the valuation of securities may push men to choose

riskier strategies or make them more likely to rebalance away from default investments. Agnew (2003)

studied that men are more likely to own a higher percentage of company stock, generally considered a

riskier strategy because of the lack of diversification with wage variability. Hinz, McCarthy and Turner

(1997) found that the female effect persists after demographic controls showing that men are more likely to

invest in risky assets. Agnew (2003) noted that human capital can and should play a role in investment

decisions, especially when considering company stock as an option. Croson & Gneezy ( 2009) studied the

gender differences in investments and argued that it is women‘s level of risk aversion that pushes them to

choose the less risky portfolios. Mitchell, Mottola, Utkus, & Yamaguchi( 2006) studied the lack of

attention that investors pay to their investments. They examined, by demographic characteristics, what

groups are more or less likely to rebalance their portfolios. They found that most participants are inattentive

in the oversight of their accounts and that men are more likely to trade. Papke (1998) examined investment

choices using the 1992 NLS of Mature Women showing that there is not a significant gender effect on the

choice of stock allocation. Lusardi & Mitchell (2007) studied using the 2004 HRS about the responses of

men and women to gauge the relationship between financial literacy and preparedness. Their study shows

that women are less likely than men to be able to answer financial knowledge questions correctly and that

the ability to answer those questions was correlated with a propensity to plan for retirement.

III. Objective

The main objective of the study is to find out the needs of the current and future investors. For this analysis,

customer perception and awareness level will be measured in important areas such as:

To find out how investors get information about the various financial instruments.

The type of financial instruments, they would prefer to invest.

The duration for which they would prefer to keep their money invested.

To study the dependence/ independence of the demographic factors of the investors and his/her risk

tolerance level.


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IV. Data and Methodology

The study is based on the primary data collected from various respondents through a questionnaire. Care

was taken that only those respondents were interacted who were interested in investments. The

questionnaire contained all closed-ended questions. The sampling technique used for selecting the sample

was convenient sampling. A sample of 100 respondents was taken. Chi-square test had been used as the test

for association or non-association of variables. The data has been analyzed using the statistical softwares

and Microsoft Excel.

V. Hypothesis framed for the study :

H01: There is no association between the demographic determinants and the investment choices made by

the investors.

H02: There is no association between the demographic determinants and the percentage ( % ) of income

saved for the future requirements.

H03: There is no association between the demographic determinants and the appropriate investment

period.

VI. Data Analysis and interpretation

Table I

Demographic Determinants of Respondent In Rajasthan

S.No. Status No. of Respondent Percentage

Gender

1 Male 66 66.0

2 Female 33 33.0

Total 100 100.0

Age

1 < 30 years 35 35.0

2 30-40 years 20 20.0

3 40-50 years 31 31.0

4 50-60 years 13 13.0

5 > 60 years 1 1.0

Total 100 100.0

Qualification

1 Post graduate 60 60.0

2 Graduate 32 32.0

3 Non-graduate 8 8.0

Total 100 100.0


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Occupation

1 Professional 19 19.0

2 Service 31 31.0

3 Business 29 29.0

4 Student 20 20.0

5 Others 1 1.0

Total 100 100.0

The demographic profile of the respondents influences the investment choices of the people. Therefore the

researcher analyses the demographic profile of the respondents.

Table 1 exhibits the demographic profile of the respondents. It is clear from Table 1 that out of 100

respondents, 66% respondents were male, 33% respondents were female and 1% respondent has not

mention its gender. 35% of respondents belonged to the age of below 30 years, 1 percent of the respondent

were above 60 years, 13% of the respondents were in the age group of 50-60 years, 31% of the respondents

were in the age group of 40-50 years and 20% of the respondents were in the age group of 30-40 years.

60% of the respondents were post graduate. Those who were graduate and non graduate were 32% and 8%

respectively. It can also be inferred that 19% of the respondents were professional, 31% were of service

sector, 29% of the respondents were businessman, 20% were students and 1% of respondent were in the

category of others.

Association between demographics and the investment in various investment avenues

Ho: The is no significant association between demographics ( Income , Occupation , Qualification ,

Gender & age ) and the various Investment Avenues .

Table II(a)

Association of Income with Different Investment Avenues

Average income

Total

Less

Than

Rs

150000

Rs

150000-

300000

Rs

300000-

450000

Rs450000-

600000

More

Than

Rs600000

Fixed Deposits Yes 10 19 11 7 2 49

No 13 12 18 5 3 51

Total 23 31 29 12 5 100

Post Office Yes 5 10 5 2 0 22


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No 18 21 24 10 5 78

Total 23 31 29 12 5 100

Real Estate Yes 1 4 14 7 2 28

No 22 27 15 5 3 72

Total 23 31 29 12 5 100

Gold/Commodities

Yes 7 5 13 4 3 32

No 16 26 16 8 2 68

Total 23 31 29 12 5 100

Shares/Equity Yes 4 7 18 6 3 38

No 19 24 11 6 2 62

Total 23 31 29 12 5 100

Others Yes 2 1 2 2 2 9

No 21 30 27 10 3 91

Total 23 31 29 12 5 100

Chi - square test for income

Fixed

Deposits

Post

Office

Real

Estate Gold/Commodity Shares/Equity Others

Chi Square

Value(

calculated)

4.157 3.890 21.64 7.619 16.17 8.149

Df 4 4 4 4 4 4

Tabulated

value 9.488 9.488 9.488 9.488 9.488 9.488

Accepted/

Rejected Accepted Accepted Rejected Accepted Rejected Accepted

From the above Table II(a), the results reveal that the differences are not significant for fixed deposits, post

office schemes, gold/commodities and others but were significant for real estate and shares/equity. 4.34%

of the investors in the income group of less than Rs 1.5 lakh and 40% of the investors falling in the high


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income bracket preferred real estate as the investment option. Also, 17.3% of the investors with less income

do not prefer to invest in shares/equity, but 60% of the investors belonging to the high income brackets

invest in the shares/equity.

The result from the Table II(b) shows that the differences is significant for the fixed deposits, post office

schemes, gold/commodities and others, whereas, they are insignificant for real estate and shares/equity. We

can infer that 58.1% of the investors belonging to the service class preferred fixed deposits as the

investment option, whereas only 37.9% and 47.4% of investors belonging to the business and professional

class respectively were preferring fixed deposits as the investment option. We can also infer that 31.5% of

professional, 22.5% of service sector, 17.2% of business sector investors preferred post office schemes as

investment option. Lastly, 36.8% of professional, 41.9% of service sector, 20.6% of business sector

investors preferred gold/commodities as an investment option.

Table II( c ) clearly shows that the difference is significant for the real estate, whereas, they are

insignificant for fixed deposits, post office, gold/commodities, shares/equity and others. 20% of the people

belonging to post graduate class, 46.9% of the people who came under the graduate category and 12.5% of

the people belonging to non graduate category preferred real estate as investment option.

The Table II( d ) reveals that the differences are not significant for fixed deposits and others category.

However, differences were found to be significant for post office, real estate, gold/commodities and

shares/equity. 15% of the males and 33% of the females preferred post office schemes. 41% of the male

and none of the female preferred real estate. In case of gold/commodities, 22.7% of the male and 51.5% of

the females preferred gold/commodities. Also,53% of males and only 9% of the females preferred

shares/equity as investment options. This shows that males mostly like to invest in real estate and

shares/equity, whereas females like to invest in post office schemes and gold/commodities because this are

more conservative than other investment avenues.

Table II(b): Association of Occupation with Different Investment Avenues

Occupation

Professional Service Business Student Others

Fixed Deposit Yes 9 18 11 10 1 49

No 10 13 18 10 0 51

Total 19 31 29 20 1 100


No 13 24 24 16 1 78

Total 19 31 29 20 1 100


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No 18 23 10 20 1 72

Total 19 31 29 20 1 100

Gold/Commodities Yes 7 13 6 5 1 32

No 12 18 23 15 0 68

Total 19 31 29 20 1 100


No 11 22 12 16 1 62

Total 19 31 29 20 1 100


No 17 28 27 18 1 91

Total 19 31 29 20 1 100

Chi-square test for occupation

Fixed

Deposits

Post

Office

Real

Estate

Gold/

Commodities Shares/Equity Others

Calculated value 3.51 1.733 33.360 5.891 9.791 0.351

Df 4 4 4 4 4 4

Tabulated Value 9.488 9.488 9.488 9.488 9.488 9.488

Accepted / Rejected Accepted Accepted Rejected Accepted Rejected Accepted

Level of significance : 5 %

Table II ( c ) Association of Qualification with Different Investment Avenues

Qualification

Total

Post graduate Graduate

Non-

graduate

Fixed Deposit Yes 30 15 4 49

No 30 17 4 51

Total 60 32 8 100

Post Office Yes 11 8 3 22


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No 49 24 5 78

Total 60 32 8 100

Real Estate Yes 12 15 1 28

No 48 17 7 72

Total 60 32 8 100

Gold/Commodities Yes 23 9 0 32

No 37 23 8 68

Total 60 32 8 100

Shares/Equity Yes 26 12 0 38

No 34 20 8 62

Total 60 32 8 100

Others Yes 6 3 0 9

No 54 29 8 91

Total 60 32 8 100

Chi-Square test

Fixed

Deposits

Post

Office

Real

estate

Gold/

Commodities

Shares/

Equity Others


Df 2 2 2 2 2 2

Tabulated value 5.991 5.991 5.991 5.991 5.991 5.991

Accepted/ Rejected Accepted Accepted Rejected Accepted Accepted Accepted


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Table II ( d ) : Association of Gender with Different Investment Avenues

Gender

Total

Male Female

Fixed Deposit Yes 31 18 49

No 35 15 51

Total 66 33 100

Post Office Yes 10 11 22

No 56 22 78

Total 66 33 100

Real Estate Yes 27 0 28

No 39 33 72

Total 66 33 100

Gold/Commodities Yes 15 17 32

No 51 16 68

Total 66 33 100

Shares/Equity Yes 35 3 38

No 31 30 62

Total 66 33 100

Others Yes 6 3 9

No 60 30 91

Total 66 33 100


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Chi-square for gender

Fixed

Deposits

Post

Office

Real

Estate

Gold/

Commodities Shares/Equity Others


Df 2 2 2 2 2 2

Tabulated value 5.991 5.991 5.991 5.991 5.991 5.991

Accepted/ rejected Accepted Rejected Rejected Rejected Rejected Accepted

Table II( e )

Association of Age with Different Investment Avenues

Age

Total < 30 years

30-40

years

40-50

years

50-60

years

> 60

years

Fixed Deposit Yes 16 6 19 7 1 49

No 19 14 12 6 0 51

Total 35 20 31 13 1 100


No 27 16 24 10 1 78

Total 35 20 31 13 1 100


No 34 13 19 5 1 72

Total 35 20 31 13 1 100

Gold/Commodities Yes 12 4 11 5 0 32

No 23 16 20 8 1 68

Total 35 20 31 13 1 100


No 25 8 21 8 0 62

Total 35 20 31 13 1 100


No 33 18 27 12 1 91

Total 35 20 31 13 1 100


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Chi-square for Age

Fixed

Deposits

Post

Office

Real

Estate Gold/Commodities Shares/Equity Others

Calculated Value 6.077 0.359 20.867 2.300 7.496 1.188

Df 4 4 4 4 4 4

Tabulated value 9.488 9.488 9.488 9.488 9.488 9.488

Accepted/

Rejected Rejected Accepted Rejected Accepted Accepted Accepted

The Table II (e) brings out the result that the differences are not significant for fixed deposits, post office,

gold/commodities, shares/equity and others. However, differences were found to be significant only for real

estate. With the increase in age, the inclination towards real estate as an investment option increases. As it

can be seen from the table, that only 3% of the investors in the age of below 30 years invested in real estate

and as the age increased from 40-50 years to 50 years and above, the percentage increased from 38.7% to

61.5%.

Table III

While Taking the Investment Decision, Who Does the Investor Consult the Most?

Consultant No. of preferences Percent

Agent/Broker 18 10.1%

Family Members 60 33.5%

Friends 14 7.8%

Financial Magazines/Newspapers 33 18.4%

Chartered Accountant 15 8.4%

Electronic Media 37 20.7%

Other 2 1.1%

Total 179 100.0%

The Table 3 infers that 33.5% of the investors preferred to consult their family members and only 7.8% of

the investors consulted their friends. The investors who preferred the agent/brokers, chartered accountant

and electronic media were 10.1%, 8.4% and 20.7% respectively. This type of information can be useful to

the wealth manager. By this, the wealth manager comes to know about the contact person, who can be used

to introduce their investment products to the investors. They also come to know about the effects of the

advertisements of their products on the investors.


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Table IV

Preference of the Investors with Regard To Time Horizon

Time Horizon Of Investment No. of Preferences Percent

Less than 1year 4 4.0

1-3 years 35 35.0

3-5 years 51 51.0

5-10 years 9 9.0

More than 10 years 1 1.0

Total 100 100.0

The Table 4 clearly shows the importance the investors attach to the time horizon of the investment. About

51% of the people agreed to invest for 3 to 5 years and only 35% and 4% of the investors wanted to invest

for 1 to 3 years and less than 1 year respectively. These investors wanted to take short term gains from the

market. Also only 9% and 1% of the investors wanted to invest for 5 to 10 years and more than 10 years

respectively. So, it is quite clear that the risk appetite of the investors in the Rajasthan region is less for the

longer time horizon investment. This information can be used by the portfolio managers for knowing the

preference of the investors with regard to the time horizon.

Table V

Preference of the Investors With Regard To Their Reason for Investment

Reason Of Investment No. of Preferences Percent

Safety Of Money 63 37.3%

Growth 56 33.1%

Liquidity 7 4.2%

Tax Advantage 33 19.5%

Constant Income 10 5.9%

Total 169 100.0%

Table 5 shows the reason of investing by the investors. Results reveal that about 37.3% and 33.1% : of the

investors invest for safekeeping and growth of money respectively, whereas only 4.2% and 5.9% of the

investors invest for liquidity and constant income. So, the people in Rajasthan region are conservative in

nature and want that their money to be safe. They are not much concerned for the liquidity and constant

income. Also, 19.5% of the investors invest their money for tax advantage. This information can be used by

the portfolio managers for knowing the preferences of the investors in regard to their reason of saving or

investment.


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Table VI

Preference of the investors with regard to the percentage of income they feel is sufficient to save for

future requirements

% of Income to be Saved No. of preferences Percent

0-15% 20 20.0

15-30% 41 41.0

30-40% 35 35.0

More than 40 % 4 4.0

Total 100 100.0

From the results revealed in the Table VI, it is clear that most of the investors want to save 15-30% or 30-

40% of their income for future requirements.

From the Table VII, it is revealed that there is a significant difference between the investors of different

income groups in regard to the percentage of savings they think is appropriate. As the investors whose

income is less than Rs 150000 prefer to save only up to 15%, whereas as the income level of the investors

goes from Rs 150000 to Rs 300000 and Rs 300000 to Rs 450000 their preference for percentage of income

saved increases from 15-30% to 30-40%. So, it is clear that investors falling in the higher income bracket

preferred to save more for future requirement.

H02 : There is no significant association between various demographic factors of the respondents and

the percentage of income saved

Table VII

Association of income with the respect to the percentage of income they saved

Average income

Total Less

Than Rs

150000

Rs

150000-

300000

Rs

300000-

450000

Rs450000-

600000

More

Than

Rs600000

Per

cen

tage

of

incom

e s

aved

0-15% 14 4 2 0 0 20

15-30% 4 19 11 7 0 41

30-40% 3 8 16 4 4 35

More than 40

% 2 0 0 1 1 4

Total 23 31 29 12 5 100

Chi-square Test

Chi Square Value 52.736

Df 12

Tabulated value 21.026


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Table VIII

Association of Age with respect to the percentage of income they saved

Age

Total

Less Than

30 years

30-40

years

40-50

years

50-60

years

More than

60 years

Percentage of

income saved

0-15% 16 1 3 0 0 20

15-30% 10 8 16 7 0 41

30-40% 7 10 11 6 1 35

> 40 % 2 1 1 0 0 4

Total 35 20 31 13 1 100

Chi-square Test For Age

Chi-Square Value 27.502

Df 12


Interpretation : The Table 8 brings out that there is a significant difference between the age of the

investors of different age group in regard to the percentage of savings they think is appropriate. With the

increase in age, the inclination towards percentage of income saved also increases. It is revealed from the

table that the 45.7% of the investors in the age of less than 30 years saved their income up to 15%, whereas

40% and 51.6% of the investors in the age group of 30-40 years and 40-50 years respectively saved their

income between 15-30%. As the investors of the age group of 30-40 years were active to earn more income

so they save more income as compared to investors of other age group. From table it is clear that 50% of

the investors in the age group of 30-40 years prefer to save 30-40% of their income for future requirement.

Table IX

Association of Gender with respect to the percentage of income they saved

Gender

Total Male Female

Per

cen

ta

ge

of

inco

me

sav

ed

0-15% 6 14 20

15-30% 28 12 41

30-40% 29 6 35


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More than 40 % 3 1 4

Total 66 33 100

Chi-square Test


Df 6


The Table 9 shows that there is significant difference between the investors of different gender in regard to

the percentage of savings they think is appropriate. It is revealed that the 42.4% and 43.9% of the male

investors prefer to save 15-30% and 30-40% respectively for future requirement, whereas 42.4% and

36.3% of the female investors prefer to save up to 15% and 15-30% respectively for future requirement.

Table X

Association of Occupation With Respect To the Percentage of Income They Saved

Occupation Total


Per

cen

tag

e

of

Inco

me

sav

ed

0-15% 5 4 0 10 1 20

15-30% 9 16 12 4 0 41

30-40% 5 11 14 5 0 35

More than 40 % 0 0 3 1 0 4

Total 19 31 29 20 1 100

Chi-square For Occupation


Df 12


Table X reveals that there is a significant difference between the investors of different occupation in regard

to the percentage of savings they think is appropriate. As it is clear from the table that the most of the

professional and service sector investor prefer to save 15-30% of income, whereas, most of the

businessman prefers to save 30-40% of income for future requirement. Most of the students, as they do not

earn much save only up to 15% of their income.


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Table XI

Association of Qualification with respect to the percentage of income they saved

Qualification

Total Post graduate Graduate Non-graduate

Per

cen

tage

of

Incom

e S

aved

0-15% 15 5 0 20

15-30% 24 13 4 41

30-40% 19 12 4 35

More than 40 % 2 2 0 4

Total 60 32 8 100

Chi-square test for Qualification


Df 6


The Chi-square test in the Table 11 reveals that there is no significant difference between the investors of

different qualification in regard to the percentage of savings they think is appropriate.

Table XII: Association of Age with respect to the appropriate investment period

Age

Total

Less Than

30 years

30-40

years

40-50

years

50-60

years

More

Than 60

years

Invest

men

t P

eri

od

Less than 1 year 3 0 1 0 0 4

1-3 years 17 6 8 4 0 35

3-5 years 15 9 18 8 1 51

5-10 years 0 4 4 1 0 9

More than 10

years

0 1 0 0 0 1

Total 35 20 31 13 1 100

Chi-square Test for Age


Df 16

Tabulated Value 26.296


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From Table XII it is revealed that the relationship between age and appropriate investment period is

insignificant or there is no relationship between them

Table 13

Association of Gender with respect to the appropriate investment period

Gender

Total

Male Female

Inv

est

men

t P

eri

od

Less than 1year 4 0 4

1-3 years 21 14 35

3-5 years 32 18 51

5-10 years 8 1 9

More Than 10 years 1 0 1

Total 66 33 100

Chi-square Test for Gender


Df 8


Table 13 shows that the relationship between gender and appropriate investment period is insignificant or

there is no relationship between them.

Table XIV

Association of Income with respect to the appropriate investment period

Average income

Total

Less

Than Rs

150000

Rs

150000-

300000

Rs

300000-

450000

Rs450000-

600000

More Than

Rs600000


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Invest

men

t P

eri

od

Less Than

1year

2 1 1 0 0 4

1-3 years 12 10 10 2 1 35

3-5 years 9 18 15 7 2 51

5-10 years 0 2 2 3 2 9

More Than 10

years

0 0 1 0 0 1

Total 23 31 29 12 5 100

Chi-square Test For Income

Calculated value 20.321

Df 16


Table XIV shows that there is no relationship between income and appropriate investment period.

Table XV

Association of Occupation with respect to the appropriate investment period

Occupation

Total


Invest

men

t P

eri

od

Less than 1 year 1 0 0 3 0 4

1-3 years 7 10 9 9 0 35

3-5 years 8 19 15 8 1 51

5-10 years 2 2 5 0 0 9

More than 10

years

1 0 0 0 0 1

Total 19 31 29 20 1 100

Chi-square Test For Occupation


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Calculated Value 20.204

Df 16


According to the result in the Table XV, the relationship between occupation and appropriate investment

period is insignificant or there is no relationship between them.

Table XVI

Association of Qualification with respect to the appropriate investment period

Qualification Total

Post graduate Graduate Non-graduate

Investment

Period

Less than 1year 2 1 1 4

1-3 years 22 9 4 35

3-5 years 30 18 3 51

5-10 years 5 4 0 9

More than 10

years

1 0 0 1

Total 60 32 8 100

Chi-square Test For Qualification

Value 4.889

Df 8


Table XVI shows that the relationship between qualification and appropriate investment period is

insignificant or there is no relationship between them.

VII. Conclusion

There is association of demographic profiles and personality type of the investors with investment choice.

The differences among the different genders were found to be significant for post office schemes, real

estate, gold/commodities and shares/equity. The females were conservative while investing, whereas males

were aggressive. The investors in the lower income groups did not prefer real estate as an investment

option, but the investors in higher income group preferred real estate as an investment avenue. Most of the

investors preferred to consult their family members for taking investment decision and invest for 3-5 years.

Most of the investors invested their money for the safety and growth of money. This shows that people in


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Rajasthan region are conservative in nature and want that their money should be safe. They are not that

concerned for the liquidity and constant income. There is no association of income, age, gender,

occupation on the percentage of income an investors wants to save for the future requirements, but there is

significant relationship between qualification and percentage of income save for future requirements. There

is also no association of income, age, gender, occupation, qualification with the appropriate investment

period.

The results of this study could help the wealth managers in the wealth management process and in building

a successful wealth management relationship. The analysis of how an investment choice gets affected by

the demographic variables could help the financial advisors to give better suggestions to their clients.

References

[1] Agnew, J. (2003), Inefficient Choices in 401(k) Plans: Evidence from Individual Level Data. Working

Paper , pp 1-41.

[2] Bajtelsmit, V. L., & Bernasek, A. (1996), Why Do Women Invest Differently Than Men? Financial

Counseling and Planning, pp 1-10.

[3] Croson, R., & Gneezy, U. (2009), Gender Differences in Preferences. Journal of Economic Literature,

pp 448-474.

[4] Grable, J. E., & Lytton, R. H. (1999), Assessing Financial Risk Tolerance: Do Demographic

Socioeconomic and Attitudinal Factors Work? Journal of the FRHD/FERM, pp 1-9.

[5] Papke,L.E (1998), How are participants investing their accounts in Participant Directed Individual

Account Pension Plans? The American Economic Review, pp 212-216.

[6] Lusardi,A.,Mitchell,O.S.(2007C), Planning and Financial Literacy: How Do Women Fare? Pension

Research Council Working Paper, pp 1-24.

[7] Barber, B. M., & Odean, T. (1999), Boys will be Boys: Gender, Overconfidence, and Common Stock

Investment. Working Paper , pp 1-39.

[8] Hinz, R. P., McCarthy, D. D., & Turner, J. A. (1997), Are Women Conservative Investors? Gender

Differences in Participant-Directed Pension Investments. Positioning Pensions for the Twenty-First

Century (pp. 91-103). Philadelphia, Pennsylvania: University of Pennsylvania Press.


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AN EMPIRICAL STUDY ON BARRIERS OF INNOVATION IN INDIAN SMES

S.Poornima1 and K. Nithya Kala2

1Associate Professor/ 2Research Scholar,Department of Business Management, PSGR Krishnammal

College for Women, Coimbatore, Tamilnadu, India.

ABSTRACT: Small and Medium Enterprises (SMEs) have emerged as the drivers of growth in several

developed and developing economies across the world. Innovation has become the vital factor for the

growth of small and medium scale enterprises. Hence, Innovation has turned out to be nucleus issue of

various studies all over the world. In today‘s competitive world, India is far behind in innovation. The slow

growth of innovation across various manufacturing sectors in India is cited as root cause for business

failures in turbulent business environment. This paper aims at highlighting the barriers faced by

entrepreneurs in SMEs in India. This study further makes sector wise analysis and suggests policy

measures to enhance the adoption of innovation in SMEs. This study would serve as a guide to the

entrepreneurs to compete internationally.

Key words: SMEs, India, Barriers, Entrepreneurs

Introduction: Innovation is thought to provide organizations with a means of creating a sustainable

competitive advantage that is imperative in today‘s turbulent environment. Innovation is positioned as a

driver of economic growth. Competition in global markets in virtually every product, service, and industry

market segment is fierce, and in coming decade will grow even fiercer. In order not only to endure but to

prevail, global organizations will find that bringing products to market that are relative to existing products

is a strategy doomed to failure. Only innovative differentiated products that create substantial additional

value, relative to what customers can buy already, can succeed.

To many Small Medium Enterprises, innovation is considered to be an upshot for their success in their

current competitive, complex and capricious business environment. Evidence can be seen from the rapidly

changing industries, such as information technology, automobiles, textiles, foundries, engineering, banking,

etc., where innovation is a prescription not just for organization to succeed but to survive in their particular

industry. Innovation is one of the fundamental instruments of growth strategies for Small Medium

Enterprises (SMEs) to enter new markets, to increase the existing market share and to provide the company

with a competitive edge. Motivated by increasing competition in global markets, small scale companies

have started to grasp the importance of innovation, since swiftly changing technologies and severe global

competition rapidly erode the value added of existing products and services. Thus, innovations constitute

an indispensible component of the corporate strategies for several reasons such as to apply more productive

manufacturing processes, to perform better in the market, to seek positive reputation in customer‘s

perception and as a result to gain sustainable competitive advantage.


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Innovation Barriers in Indian SMEs: The term ―Small and Medium-sized Enterprises‖ (SMEs) consists

of two components: The first component ―small and medium-sized‖ relates to the size of an entity while the

second component ―enterprise‖ relates to the economic nature of that entity. Notwithstanding their large

share in all enterprises and the overall employment generated, SMEs in India continue to remain week on

the revenue front when compared with their large counterparts. At the same time, the increasing

globalization is bringing in more competition in the home market, the traditional stronghold of many SMEs

in India as well as in many other Asian countries. SMEs usually operate under high overhead costs, such as

labour costs, and find themselves faced with tough price-oriented competition from low-cost producers

from emerging economies in Asia and Europe.

Besides, the globalization does not bring in only challenges but also presents an opportunity to

internationalize sales in new, rapidly growing markets and thereby to generate additional revenues. New

markets however (may) also require products and services which are adapted to the local needs and tastes

of those markets.

SMEs operating in India frequently operate in niches and have direct contact to customers thereby

potentially gaining valuable impulses in the form of customer feedback. Acting often in a more informal

manner and confronted with fewer intra-firm hierarchy levels than large firms, SMEs seem to be, in many

respects, better placed for innovations than their large counterparts. This potential edge, in normal course,

enables them to develop products better suited to market demands and thus bring more success. In practice,

however, the resource constraints coupled with market uncertainties and regulatory factors (and a few other

factors) limit the ability of SMEs to indulge in dedicated R&D and to experiment with the purpose of new

product development.

Objectives of the Study: The main objective of the study is to identify the barriers faced by entrepreneurs

in SMEs in India and to make comparative study between industries and suggests policy measures to

enhance the adoption of innovation in SMEs.

Review of Literature

Barriers to innovation in SMEs have been the object of investigation in a large body of national and

international studies. A few are mentioned here: Acs and Audretsch (1990) worked on this topic in the US,

Ylinenpää (1998) in Sweden, while Mohnen and Rosa (1999) as well as Baldwin and Gellatly (2004)

researched on them in Canada. In Germany the Centre for European Economic Research (ZEW), has

conducted several studies in recent years (e.g. ZEW and DIW, 2004), Rammer et al. (2005), and Rammer et

al. (2006). Further studies dealing with the German situation have been conducted by the Friedrich Ebert

Stiftung (2004), and Hamburg Institute of International Economics (HWWA, 2004). The study results

highlighted the problems such as


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Studies Barriers to Innovation in SMEs

Acs and Audretsch (1990), Baldwin and

Gellatly (2004), Rammer et al. (2006)

Financial bottlenecks

- hindered access to external finance, high innovation

costs (and therefore). high economic risks and

Bureaucratic hurdles

- long administrative procedures, restrictive laws and

regulations

Ylinenpää (1998), FES (2004), Rammer et al. (2005),

Rammer et al. (2006)

Shortage of and hindered access to qualified personnel

Mohnen and Rosa (1999), Rammer et al.

(2005), BMBF (2006)

Limited internal know-how to manage the innovation

process effectively and efficiently.

Ylinenpää (1998), Friedrich Ebert Stiftung

(2004), HWWA (2004)

Missing market know-how

- to meet customer‘s needs, to enter foreign markets

Research Methodology: Research Design and Data Collection: The present study is descriptive in

nature and used both the primary data and secondary data. The primary data has been collected through

questionnaire and secondary data has been collected through journals and websites.

Sample Size: 84 small scale entrepreneurs in India.

Sampling Design: Non-probability Convenience Sampling.

Research Tools: Descriptive analysis like Percentage analysis, Mean and Standard Deviation were

performed, to find the importance of each variable given by respondents.

Analysis:

Table 1 showing percentage of sectoral representation of the respondent’s

Industry/ Sector Number of Respondents Percentage %

Textiles 19 22.6

Wet Grinder 10 11.9

Pumps 11 13.09

Foundry 3 3.57

Engineering 25 29.7

Automobile 13 15.47

Others 3 3.57

Total 84 100

Source: Primary Source

From the above table 1, it is inferred that the majority of the respondents were from engineering firm

(29.7 %), and textiles firm (22.6 %), with about 3.57 percent from other sectors namely agro based.


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Table 2 showing comparative summary of barriers of innovation in selected industry

Source: Primary Data

Note: Minimum score=1; Maximum Score=2; M= Mean; SD= Standard Deviation; H= High score; L= Low Score;

Description Textiles Wet grinder Pumps Foundry Engineering Automobile Others

Variables: Barriers M SD M SD M SD M SD M SD M SD M SD

Lack of funds within business 4.21 0.71 3.8 1.033 3.6 1.2 3.66 0.57 3.88 0.83 3.92 0.64 4 1

Lack of funds from outside 3.68 0.94 3.8 1.31 3.45 1.03 3.66 0.57 3.8 0.91 3.84 0.89 4 1

Lack of qualified personnel 4.1 0.8 4.4 H

0.51 4.09 H

0.83 3.33 1.53 4.04 0.84 3.46 1.12 4.6 H

0.57

Lack of information on technology 3.84 0.89 4.1 1.1 3.18 1.25 2.66 L

1.53 3.36 1.03 3.7 1.16 4.33 0.57

Lack of information on markets 3.57 1.01 3.6 0.69 3.09 1.37 3 1 3.6 0.91 3.6 0.65 3.66 1.15

Lack of effective collaboration with

Universities and R&D labs

3.68 1.33 3.9 1.19 3.36 1.28 3.33 0.57 3.36 1.52 3.76 1.23 3.66 1.15

Market dominance by established

Business

3.52 0.96 3.9 0.737 3.54 0.93 3.66 0.57 3.4 1.25 3.53 0.66 3.33 0.57

Uncertain demand for innovative

Products

3.15 1.21 3.9 0.875 3.45 0.82 4.66 H

0.57 3.64 0.75 3.3 1.1 2.6 L

1.52

No need due to prior innovation 2.94L 1.07 4.1 1.03 3.09 1.13 4 1 2.88

L 0.97 3 1.22 4.33 0.57

No need because of no demand for

innovation

3.00 1.05 3.2 L

0.99 3.00 L

0.77 3.66 0.57 2.96 1.05 2.5 L

1.05 4.33 0.57

Excessive government regulation 4.31H 0.8 3.5 1.43 3.72 1.19 3.33 0.57 4.08 0.86 4

H 1 3.33 0.57

Lack of government incentives 3.84 1.01 4 1.41 3.09 1.7 3 1 4.24 H

0.96 3.38 1.04 3 2

Average Mean Score

3.65 3.85 3.38 3.49 3.60 3.49 3.76


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From the above table it is inferred that average mean score of ―Barriers of Innovation‖ variable were above

the medium level of 3.00, ranging from 3.38 to 3.85 between industries.

Barriers in Textile Industry: From the above table it is found that excessive government regulation in

industry with the highest mean of 4.31 and no need due to prior innovation as a reason not to innovate has the

lowest mean of 2.94. The average mean was found to be 3.65. The results infer that excessive government

regulation acts as barriers of innovation and has an impact on innovation in textiles. Regulatory factors have

to be addressed to improve innovation in textile cluster.

Barriers in Wet Grinder industry: The table shows that lack of qualified personnel has the highest mean of

4.40 and no demand for innovation as a reason not to innovate has the lowest mean of 3.20. The average mean

in Wet grinder industry was found to be 3.85. It is inferred that barriers of innovation are slightly higher in

Wet grinder cluster compared to other clusters also lack of qualified personnel in this sector has an impact on

innovation.

Barriers in Pump Industry: The above table shows that lack of qualified personnel has the highest mean of

4.09 and no demand for innovation as a reason not to innovate has the lowest mean of 3.00. The average mean

in pump industry was found to be 3.38. The average mean in pump industry was found to be lower when

compared to other industry also knowledge factor such as lack of qualified personnel is hampering innovation

in pump cluster.

Barriers in Foundry Industry: From the above table it is identified that uncertain demand for innovative

products has the highest mean score 4.66 and lack of information on technology has the lowest mean of 2.66.

The average mean in foundries was found to be 3.49. The results infer that market factors such as uncertain

demand for innovative products has acted as major barriers in innovation among foundry cluster.

Barriers in Engineering Industry: The above table shows that lack of government incentives have the

highest mean of 4.24 and due to prior innovation has the lowest mean of 2.88. The average mean was found to

be 3.60. The results indicate that regulatory factors such as lack of government initiatives are acting as major

barriers of innovation in engineering industry.

Barriers in Automobile/ Auto component Industry: From the above table it is identified that excessive

government regulation has the highest mean of 4.00 and no demand for innovation has the lowest mean of

2.5. The average mean was found to be 3.49. The results indicate that excessive regulatory factors are acting

as major barriers in automobile/ auto component innovation.

Barriers in Other Industry: From the above table it is found that lack of qualified personnel with the highest

mean of 4.60 and uncertain demand for innovative products has the lowest mean of 2.66. The average mean

was found to be 3.76. The results infer that knowledge factors such as lack of qualified personnel acting as

barriers of innovation which has to be address to improve innovation in Agro or Agro based cluster.

Findings and Suggestions:

1) Regulatory factors such as excessive government regulation have the highest mean of 4.31.The results

infers that excessive regulatory factors and lack of funds within the business to invest in innovation are

perceived as barriers of innovation among textile cluster. Government has to curtail some regulatory factors to

improve innovation among textile industries.


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2) Lack of qualified personnel have the highest mean of 4.4 indicating lack of knowledge factor such as

effective collaboration with universities and R&D labs and qualified personnel has a negative effect or acting

as barriers of innovation amongst wet grinder clusters. Cluster based R&D centers at district levels can be

made available at low fee to enhance innovation in wet grinder industry. The average mean score of wet

grinder industry was found to be 3.85; it indicates that compared to other clusters barriers of innovation is

higher in this sector.

3) Lack of qualified personnel and lack of funds from other sources have the highest mean of 4.09 and 3.45.

It indicates that cost factor and knowledge factors are acting as barriers of innovation in engineering cluster.

Technology utilization fund which are available to textile industry can also be made available to other

engineering clusters.

4) Uncertain demand for innovative products has the highest mean score of 4.66. The results indicate that

entrepreneurs in foundry cluster highlight uncertain demand for innovation as reasons not to innovate.

Common facility center and collaboration tie ups with universities can be made used by the foundry cluster to

improve innovation. Barriers of innovation is slightly less when compared to other sectors.

5) Lack of government incentives for innovation has the highest mean of 4.24. The results indicate that due

to non recognition of innovation and due to non availability of incentives from government in engineering

sector have acted as barriers of innovation in engineering industry.

6) Excessive government regulation has the highest mean of 4.0. It is inferred that excessive regulatory

factors are acting as barriers of innovation in Auto component or in Automobile sector. Government has to

make less stringent regulations which supports innovation in this sector.

7) Lack of qualified personnel in Agro based industry has the highest mean of 4.60. The results suggest that

knowledge factor has to be improved in the agro based industry.

Conclusion: Global innovation opens up new arenas for Indian firms, especially for SMEs, so SMEs has to

strengthen their innovation capabilities and thereby has to increase their competitiveness in a global world. In

order to mitigate the effects of innovation barriers SMEs have to find qualified personnel i.e. skilled labors

and motivate them to innovate. Co-operative agreements with the local research institutions or universities,

making use of common facility centers etc does not require high capital investments and thus SMEs can make

use of these facilities with low fees which substantially limits the financial burden of the firms. Also

government support such as Technology Up gradation Funds and curbing excessive regulations are sorted by

the entrepreneurs to improve innovations in their cluster. Thus a meticulous understanding of internal

business processes, organizational backing by management and by other employees, especially in R&D

departments, as well as a profound analysis of business environment conditions of the target market are

prerequisites of a successful Innovation management. Empirical evidences reveals that for triumph of SME`s

constant innovative practices and successful diffusion down their organizations becomes imperative to face

the stiffened international competition.


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Reference:

[1] Acs, Z. and Audretsch, D. (1990): Innovation and Small Firms, Cambridge.

[2] Baldwin, J.R. and Gellatly, G. (2004): Innovation Strategies and Performance in Small Firms, Ottawa.

[3] Ernst, D. (2006): Innovation Off shoring: Asia‘s Emerging Role in Global Innovation Network, East-

West Center Special Reports, No. 10/2006.

[4] FES (2004): KMU und Innovation – Stärkung kleiner und mittlerer Unternehmen durch

Innovationsnetzwerke, Friedrich-Ebert-Stiftung, Paper 10/2004, Bonn.

[5] Rammer, C., Zimmermann, V., Müller, E., Heger, D., Aschhoff, B., and Reize, F. (2006):

Innovationspotenziale von kleinen und mittleren Unternehmen, Centre for European Economic

Research (ZEW), Mannheim.

[6] Rajnish Tiwari and Stephan Buse (2007), ―Barriers to Innovation in SMEs: Can the Internationalization

of R&D Mitigate Their Effects?‖, Technology and Innovation Management, Hamburg University of

Technology, pp.1-31

[7] Rogers, E.M. (2003): Diffusion of Innovations, 5th Edition, New York: Free Press.

[8] The Hindu (2003): ―Google to set up R&D centre in Bangalore―, in: The Hindu, 13.12.2003.


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IMPLICATIONS OF INTERMEDIARIES IN GLOBAL LOGISTICS OF FOREIGN TRADE

C. Muthuvelayutham1 and R.Karuppasamy2

1Associate Professor/ 2Research Scholar,School of Management Studies,Anna University of Technology

Coimbatore, India.

ABSTRACT: The world towards traveling in integrated phenomena which require more needs. That it is

fulfilling by the trade between the countries. Because of each country continuously transferthe goodsto other

country as same as another country transferring to that country. That make as a global logistics belongs to

foreign trade. Also it clears from the past literatures. Being a shipper or buyer can export or import the goods as

directly they meet more complexity like business contacts, forwarding, transportation arrangements and customs

clearanceetc.By those reasons, a shipper and buyer can export and import using indirect involvementmeans that

the firm participates in worldwidecommerce through an intercessor and does not deal with foreign customers or

markets. In that situation, the intermediaries get the huge place of contribution in global logistics belongs to

foreign trade.

The study focuses on the significant role of major intermediaries in export and import of goods in global

logistics and structure of intermediaries‘ services. Also the previous literatures taken to this case towards

conclude the intermediaries‘ supportiveness to global trade. As itgiven more solution about various

intermediaries,in the case should consider significant intermediaries to international trade based on location of

India.

Key words: Global Logistics, Trade Intermediaries, Shipper and Buyer, Warehousing.

INTRODUCTION

As increasing importance of global logisticssuch the main reasons of effective logistics is becoming a

key to winning and possession customers, logistics is a most important cost component for most businesses, the

detonation in product multiplicity has formed a need for enhanced logistics management, and information

technology has created opportunities for major gains in distribution efficiency. Universal logistics and

distribution have joke a perilous role in the evolution and improvement of world trade and in the assimilation of

business on a worldwide scale.A set of codependentestablishments (intermediaries) complicated in the course of

making a product existing for use or ingestion. The network will be utmostoperative when each associate is

consigned tasks it can do best and all members cooperate to attain overall channel goals and satisfy the target

customer.

As firms start operating on a global basis,firms or shipper needs to manage shipping of goods or

cargoto various buyers or importers at the most easiest, economical and reliable rates. Because of the shipper

keeping touch and communicate with trade intermediaries as indirect trade involvement.Trade intermediaries are

instrumental in the expansion of global trade.Improving the performance of intermediaries will contribute to the

developmentof world trade. Intermediaries often find it difficult to develop relationalpartnerships because supply

chain members operate in different countries andoften have inconsistent business goals (Bello and Gilliland,

1997; Cavusgil,1998; Morgan and Katsikeas, 1998).Intermediaries and direct exporters respond differently to


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exchange ratefluctuations both in terms of the total value of shipments and the number of products exported as

wellas in terms of prices and quantities. Aggregate exports to destinations with high shares of indirectexports

are much less responsive to changes in the real exchange rate than are distributes to nationsfunctionedprincipally

by direct exporters.The main objectives of the paper is to highlight the significant work of intermediaries in

global logistics to both break bulk and containerized cargo, to shows the shipper and buyer how to use major

intermediaries to global trade in India and to track the set-up function of major trade intermediaries in global

logistics at India.

LITERATURE REVIEW

Buyer and Seller coordinate the flow of materials and resources between customers and suppliers.

Intermediaries help clients search for new opportunities to trade, new sources of products, new materials and

design, new ways in which supply and demand can be integrated (Popp, 2000).Trade intermediaries play an

important role in international trade. They enhance the productivity of host economies, improve efficiency of

distribution, open up new markets, provide marketing technology, credit, managerial training and minimize

costs incurred in overcoming barriers to trade (Ellis, 2003b). Intermediaries in global supplier and customer

markets have their operations anchored in a supply chain. A supply chain is a complex of establishments that are

involved through upstream and downstream linkages, and engaged in different practices and accomplishments

that produce value in the form of products and services in the indicators of the definitive consumer such that

customers are serviced at higher levels and at a lower cost (Christopher, 1992).

Revolutions in electronic commerce have a crucial role to play in managing inter-organisational networks

of supply chain members. The evolution of electronic commerce technologies is having a considerable impact

on the communication patterns in supplier networks in many industries (McIvor et al., 2000). Electronic

commerce can reduce the costs of closely integrating buyers and suppliers and through electronic networks;

firms can achieve an integration effect by tightly coupling processes at the interface between stages of the value

chain (Benjamin et al., 1986). Researchers working in the export development area often approach problems

from the point of view of the manufacturer, e.g. by examining their channel choices (e.g. Aulakh and Kotabe,

1997; Klein et al., 1990; Li, 2002; Peng and Ilinitch, 1998; Trabold, 2002) and the intermediaries‘ perspective is

often neglected. When researchers do study intermediaries, common research themes are:

Their fluctuatingparts and functions (Brasch, 1978; Shao and Herbig, 1993; Mattson, 1990; Wichmann,

1997; Perry, 1992);

Precursors of cooperative relationships (Balabanis, 1998; Bello et al., 2003;Matear et al., 2000);

Their service aids (Balabanis, 2000); and

Theirpart as an information hub (Casson, 1997; Hsing, 1999; Popp, 2000).

METHODOLOGY

It follows case study approach whereby highlights the significant role of major trade intermediaries

(Trading Company, Steamer Agent, Liner, Freight Forwarder, Custom House Agent, CFS/ICD, Port and

Stevedore Agents) in global logistics belongs to foreign trade. The evidencecharity in this study wascomposed

from the custom house authority of India, Ministry of Commerce and Industry and some logistics service

provider of India. Also considered the previous literature.


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INTERMEDIARIES IN GLOBAL LOGISTICS BELONGS TO FOREIGN TRADE

International logistics is well-defined as the design and executive of a system that leads and pedals the

flows of tackleshooked on, through and available of the firm diagonally national boundaries to attain its business

objectives at a least total cost. The Global Logistics includesvarious service activities such as Order Processing,

Warehousing,Inventory Management, Transportation, Trade Intermediaries, Design system to minimize costs of

attaining objectives etc. In such that international trade intermediaries are play a significant role in foreign trade.

That it is only providing supportive services to their clients such as shipper and buyer. The Figure 1 shows a

place of trade intermediaries in international trade.

Figure 1. Global Logistics in Foreign Trade

(a) MAJOR TRADE INTERMEDIARIES

This study mainly focuses on the major intermediaries for international trade. That it is continuously using

by most of shipper and buyer in India. The major trade intermediaries for transferring the goods between

countries are clearly shows in figure2.

Figure2. Major Trade Intermediaries for International Trade

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There is various trade Intermediaries. But those five intermediaries are providing significant services to

shipper and buyer which easily do make the trade. In such that didn‘t includes the Trading Company and

Transportation. Because manufacturing firm or owner of the goods and original buyer can directly export and

import the goods. Also those possibilities defined in previous literatures. The transportation mode also important

one in international trade like as Road, Rail, Ocean, and Air Transports. As the transportation different from

those intermediaries and also it is studied in most previous literatures, Those intermediaries might placein this

study.

(i) STEAMER AGENT

The Steamer Agent acts as an agent for owner of the ship which is operated in various countries by

providing agencies to others. As the reasons of unable to operate in various countries by own, the steamer agents

providing those services behalf of ship owner.Shipping corporation of India providing ship transport facilities by

own but it is operate various areas by help of steamer agent. It given some important logistics services to their

clients (shipper/buyer) such as arrange the vessel, sign on and sign off the vessel in port, making other

requirements ship officers and cruises, vessel expectation, anchorage, sailed information given to the port, pay

the all marine charges to the port.

Vessel size has increased dramatically in recent years (a trend termed by some as ―gigantism‖). Maersk

Line‘s new flagship vessel the ―Emma Maersk, which won the title of ship of the year at the 2007 Lloyd‘s List

awards in London, is said to be the world‘s largest container vessel with an operating capacity of some 11,000

twenty foot equivalent units (TEUs) (BBC, 2006).

(ii) LINER/FREIGHT FORWARDING AGENCY

Freight Forwarding Agency acts as an independent business that handles export/import shipments for a

fee. A freight forwarder is amid the best sources of information and aid on export rules and documentation,

shipment methods, and foreign import regulations. Forwarder assembles, collects and consolidates low container

load (LCL) freight. Forwarder consolidates freight for many shippers, arranges for shipment and delivery via

LCL carriers and gets lower (freight) rates based on volume than the individual shippers could obtain.At the

appeal of the shipper, the forwarder makes the definiteengagements and offers the essential services for

furthering the shipment to its overseas destination. The freight forwarder does not essentiallytransmit the

consignment or conduct business for the ship. It is an intermediary among carrier and owner of goods being

transported. The forwarding agencyhelps the exporter in discovery the most economic and efficient systems of

transporting and storing cargo.

Liner is an owner of the container and also providing ship transport facilities by own. They are giving

container facilities to forwarding agents or direct shipper at rental basis. Also freight forwarders are same as

liner. But they arrange those facilities to export. There are various types of liner such as mother liner, non-vessel

operator, Freight forwarder etc.

(iii) CUSTOM HOUSE AGENT

Customs House Agent(CHA) is a person who is licensed to act as an agent for operation of whichever

business concerning to the access or parting of conveyances or the import or export of goods at any Customs

station. Section 146 of the Customs Act of India is the assistingestablishment, which permits agents of importers

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and exporters to act on behalf of importers and exporters. This is obliged by the extremely involved and

technical nature of the work to be complete in construction with clearance of imports into and exports out of

country. The importers and exporters themselves may require neither interval nor the obligatory knowledge on

their own. Hence, agents are permitted to act on their behalf. The work of the agents is governed by the Customs

House Agents Licensing Regulations, 1984 of India.

Multimodal transport operators (MTOs) are appointed under Multimodal Goods Transportation Act,

1993 by the Ministry of Surface Transport. Their exertionencompassesbearing of goods by more than one mode

of transport between India and any place overseas. They switch export consignment stuffing and destuffing.

This does not mechanicallydeliberate any right on them to obtain appointment as steamer agents or CHAs unless

they are otherwise qualified for such appointment. Their part is dissimilar from that of a CHA or a steamer

agent.Each CHA has to join himself as anassociate of a CHA association registered with the Custom House and

familiar by the Commissioner. Regulation 25 deliberatesauthority on the Commissioner to fix rates which may

be accused to the punter for services extracted by the CHA. This is complete in session with aacknowledged

association of CHAs. The CHAs are obligatory to sternly adhere to these rates.

(iv) CFS/ICD

An Inland Container Depot / Container Freight Station is a mutual user facility with public right status

fortified with fixed systems and proposing services for handling and impermanent storage of import/export

laden and empty containers carried under customs control and with Customs and further agencies proficient to

clear goods for home-based use, warehousing, short-term admissions, re-export, impermanent storage for ahead

transit and outright export. Transshipment of consignment can also take place from such locations. For example

Central warehousing Corporation and Container Corporation Of India Ltd etc.Functionally there is no

dissimilarityamong an ICD/CFS as both are transit facilities, which compromise services for containerization of

break bulk goods and vice-versa. These could be obliged by rail and/ or road transport. An ICD is

commonlysituated in the interiors (freestanding the port towns) of the country away from the servicing ports.

CFS, on the supplementarypointer, is an off dock competencesituated near the servicing ports which

helps in decongesting the port by shifting consignment and Customs associated activities outside the port area.

CFSs are largely expected to deal with break-bulk cargo originating/terminating in the instant hinterland of a

port slightly may also deal with rail borne traffic to and from inland locations. Custody in view the necessities of

Customs Act, and need to introduce lucidity in nomenclature, all containers terminal amenities in the hinterland

would be designated as "ICDs".

(v) STEVEDORING AGENT

The stevedoring agent acts as an agent to shipper and buyer for loading/unloading the cargo. The stevedore

agent services to candle the cargo form the vessel in port area behalf of shipper and buyer. Everystevedore agent

must be registered in port for provide this those services. The key services of the stevedores are as request to

port for loading/unloading the cargo using cargo handling labour, Pay the advance levyfor cargo

loading/unloading, Loading/unloading the cargo.

3PL LOGISTICS

http://www.chennaicustoms.gov.in/actrules/chalicensing.htm

http://www.chennaicustoms.gov.in/actrules/chalicensing.htm

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3PL - Third party logistics provide services for shipper and buyer. Certain of these services comprise, but

are not inadequate to: transportation, (including domestic and international) warehousing, distribution,

fulfillment and packaging, customs brokerage, freight payment services and trade compliance. Most of the trade

intermediaries provide this all services to clients through their one company. For example Freight forwarders

providing forwarding, custom clearance and warehouse. It should be effective in recent global logistics.

CONCLUSION

The study emphasized the significant role of major trade intermediaries in international trade and

structure of service supportive to shipper and buyer. In the case the major intermediaries should make easy to

export and import process belongs to shipper and buyer. Being shipper and buyer can export and import in

directly mode, they are using trade intermediaries at maximum where more complexity should reduce. Also

intermediaries contributing to increase the trade when providing value added service, reverse logistics service

and 3PL service. However those intermediaries robust a significant role in global logistics of international trade

which the case should emphasis.

REFERENCES

[1] Andrew B. Bernard, Marco Grazzi and Chiara Tomasi (2011). Intermediaries in International Trade:

direct versus indirect modes of export.

[2] Carolyn M. Jones Carr and Michael R. Crum (1995). The U.S. Customs Modernization and Informed

Compliance Act: Implications for the Logistics Pipeline, The International Journal of Logistics

Management, Vol. 6, No. 2, 1995.

[3] Danny C.K. Ho, K.F. Au, Edward Newton (2003). The process and consequences of supply chain

virtualization. Industrial Management & Data Systems Volume: 103 Issue: 6 2003.

[4] Hammer, M. and Mangurian, G.E. (1987), ―The changing values of communications technology‖,

Sloan Management Review, pp. 65-71.

[5] Helpman, E., Melitz, M. and Rubinstein, Y. (2008). Estimating trade flows: Trading partners and

trading volumes. The Quarterly Journal of Economics 123(2): 441–487.

[6] John Mangam and Chandra Lalwani (2007). Port-centric Logistics, International journal of Logistics

Management, Vol. 19, No. 1.

[7] Marijn Janssen and Henk G. Sol Evaluating the role of intermediaries in the electronic value chain.

Internet Research: Electronic Networking Applications and Policy Volume 10. Number 5.2000.

[8] Melitz, M. J. (2003). The impact of trade on intra-industry reallocations and aggregate industry

productivity, Econometrica 71(6): 1695–1725.

[9] Paul Humphreys, Ronan McIvor and Trevor Cadden (2006). B2B commerce and its implications for

the buyer-supplier interface. Supply Chain Management: An International Journal 11/2 (2006) 131–

139.

[10] Poul Houman Andersen (2003). Export intermediation and theinternet: an activity-

unbundlingapproach.International Marketing Review Vol. 22 No. 2, 2005 pp. 147-164.

[11] Richard M. Castaldi, Alex F. De Noble, Jeffrey Kantor (1992). The Intermediary Service Requirements

of Canadian and American Exporters. International Marketing Review Volume: 9 Issue: 2 1992.

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A STUDY ON CONSUMERS BRAND PREFERENCE TOWARDS PURCHASING CAR

IN TIRUNELVELI DISTRICT

T. Samson Joe Dhinakaran

Asst. Prof of Commerce, St. Johns College, Palayamkottai, Tirunelveli

ABSTRACT: The consumer attaches considerable importance to the brand image in the purchase of products.

Several branded cars are sold in Tirunelveli. There is cut turn out competition among manufacturing companies.

Therefore every company has to make a study about the psychology of consumers and their attitude towards

brand preference of cars. There fore studying psychology of consumers and to recommend to the companies

about the consumers brand preference towards cars was taken by the researcher. Hence there is strong

competition among sellers. The necessity arrives among these forms to conduct a study about consumer brand

preference. The researcher realizing their necessity and understanding the present problem, undertaking this

study and wants to give suggestion for this problem in his findings at the last.

Key words: Brands, Consumer, Product and Brand Preference.

Introduction

In the present age of Liberalization, Privatization and Globalization, a lot of changes have taken

place because of development activities. The growth of automobiles industry in India and especially in

Tamilnadu in enormous. It began to start their production also in Tamilnadu. Between 1910 and 20‘s the

automobile industry made a humble beginning by setting up assembling plants in Mumbai, Calcutta and

Chennai. Indian automobiles industry in India offers significant employment opportunities. The industry

including component industry employs 0.49 million. The automotive research association of India research

organization formed by the Indian automotives industry information about services offers membership and

activities. Since time immemorial man has been seeking means to transport himself and his belongings and

produce from one place to another. In his quest for better and cheap means of transportation, he is making many

breakthroughs. Invention of motorized vehicles may be said to be the landmark in transportation or movement

of persons and things. Since then, different kind and models of motorized vehicles suiting the varied

requirements of diverse users are produced by many manufacturers throughout the world. Among powered

motorized vehicles, passenger cars have come to occupy an enviable position both among the young and the old.

Man‘s desire to possess his own personal transportation mode and to have social status, and versatility of

passengers cars are a few of the manifold reasons for purchasing them. A consumer purchases a product to

Satisfy his select needs among the unlimited requirements. In present ―Buyers` Markets‖ state, every product

has substitutes or alternative products of same kind; so, the consumers are at liberty to choose from the many

products available in the markets. Once the consumer decides to purchase a product, he first selects a brand and

then model (style) from within the select brand. Thus, purchasing a product may be for satisfying a single or a

group of needs. But the decision to purchase a particular model from among the several models of select brand

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is mainly made on the basis of taste, suitability, requirements, price, utility, etc. this perception is pertinent to

every type of product and to every type of consumer.

Objectives of the Study

To find out particular brand preference of car among various brands of cars available in the

market.

To ascertain the factors influencing purchase of car

To evaluate the purchasing power of the customer

To analyse the satisfaction level of the customer

To identify the advertising media that influences the brand preference of the consumers.

Methodology: The present study is an empirical research based on survey method. About 200 customers were

surveyed to study Brand Preference towards Purchasing Car. Primary data were collected directly from the

customer by using questionnaire. The relevant secondary data have been collected from the Journals, and

Internet. The Collected data were coded, calculated and analyzed with the help of statistical tools like measures

of chi-square test, Anova table, percentiles and tabulation were used.

Operational Definition

Brand

―A brand is a name, term, symbol or design or a combination of them, which is intended to identify the

goods or services of one seller or group of sellers and to differentiate them from those of the competitors‖.

Brand name

―A brand name consists of words, letters and or numbers which may be vocalized and refers to

products‖.

Brand mark

―A brand mark is that part of brand which appears in the form of a symbol or design or distinctive

coloring or lettering. It is recognized by sight but is not expressed when a person pronounces the brand name.

E.g. symbol of Maharaja of air India, the symbol of Tiger and Gopuram of the Cholan roadways corporation etc.

Trade mark

Trade mark has been defines as, ―Any sign, mark, symbol, word or words which indicate the origin or

ownership of a product as distinguished from its quality and which others have not the equal right to employ for

the same purpose‖.

Consumer behaviour

Consumer behaviour can be defined as those acts individuals directly involved in obtaining

using and disposing of economic goods and services including the decision process that proceed and determine

these acts.

HISTORY OF INDIAN CAR INDUSTRY

The motor car originated in Europe in the latter half of the 19th century. The first car was driven on

British soil in 1894.it had been Imported from the French car company called Panhard and Lavassor, which was a

leading car company at that time. Panhard and Lavassor had commenced production in the early 1890s, after

licensing gasoline engine technology form Gottlieb Daimler, the original inventor. The automobile era began in

India in 1898when the Bombay cycle and motor agency imported four cars for display. India imported a large

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number of vehicles, mainly motor cars, during First World War. There seems to have been no attempt made by

any Indian organization to either manufacture or assemble automobiles for a fairly long time. The Indian

automobile industry can be considered to have got off the ground when Ghanshyam Das Birla promoted

Hindustan motors ltd., in 1942 at Port Okha in Gujarat as a small assembly plan for passenger cars. The first car

was named Hindustan. Walchand Hirachand also started premier automobiles ltd., in 1942. The company rubbed

shoulders with HML for kicking off the automobile revolution in India by assembling De Soto and Ply with

Chrysler from the US. The year 1949 is considered a landmark year in the history of the automobile industry in

India as the first partially manufactured car rolled out of HML`s factory during that year. During the 1950s was

relatively liberal. However, in 1959, India`s foreign exchange reserves nearly ran out and automobile imports

came to an end. The import licensees were asked to promise progressive import reduction befor3e they were

allowed to import technology. But the structure of the Indian automobile industry has altered dramatically since

the 1960s as an explicit policy emerged during the latter half of the 1960s. In 1960s commercial vehicles

accounted for more than 50% of the total four wheelers produced. Tata engineering and Locomotive Company

(TELCO) was the pioneer in commercial vehicles in India. In 1954, it collaborated with Daimler Benz AG pf

Germany for the manufacture of commercial vehicles. The relative dominance of commercial vehicles

production continued till 1985. In 1985, the production of cars increased by around 60% over the previous year,

and from this point onwards, the dominance of commercial vehicles` production declined in relative terms. There

was a time in India when the portly Ambassador was the country‘s most coveted and popular car. The Indian car

buyer had to wait for months and at times even for years before he could lay his hands on an Ambassador or a

Fiat 1100 which was usually handed over by nonchalant supercilious salesmen. It was the Maruti 800, a product

of the Japanese car giant Suzuki collaborating with the Indian government which led to a veritable market. It

became the small car which the Indian nuclear middle class families could aspire for. It was compact and

economical. It could be easily maneuvered through Indian by lanes and `gallis`. But now that too is history. India

has become one of the world`s fastest growing car markets with scores of models plying the city roads and

highways, from the home grown Tata and Maruti vehicles to Toyotas and Mercedes Benzes. Indians have

emerged as avid car enthusiasts flaunting their proved possessions as status symbols and speed machines.

Foreign car companies have discovered the Indian consumer as well as the research and development potential

among the Indian technical fraternity and are setting up manufacturing plants right and left across the country at

lower costs. The growing desire for cars is also a sign that Indian roads are finally good enough for international

cars to ply on. According to surveys, millions of more Indian families will buy motor cars within the next few

years. The car market witnessed a 29%growth in 2004 followed by a lull in 2005 due to meteoric rise in fuel

costs and more stringent anti-emission policies implemented by the Indian government. Increased auto- loan

interest rates from the banks also added to the slowdown. But the demand has picked up once again. And now,

we have the Tata Nano, which can be picked up at an all –time low on-road price of just Rs.1.4lakh. The Indian

automobile market is projected to grow by 7% a year and economy is booming and the middleclass is getting

easy finance schemes to upgrade to four-wheeler from two-wheeler. In post-liberalization India, backward

linkages into the manufacturing of auto components have enabled many Indian vendors to foray into core

manufacturing.

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EVALUATION OF PASSENGER CAR

The invention of automobiles has been one of the greatest milestones that have been achieved by

mankind. The‖ Horseless carriage‖ has been used since the late 1800s. But it looks ―Hendry Ford‖ to find a way

to make cars affordable. Born as the son of an agriculturist in Michigan U.S.A, it was Hendry ford (1863-1947).

He was a brilliant inventor, whose vision of mass production qualified him as a genius. In America the

automobile age begin in 1908. When Hendry Ford unveiled his ―car for great multitude ―, the introduction of

automobile has brought about a big change in the life of America. In 1925, when a few sociologists asked the

resident of India and Chicago, how their life is changing, one respondent offered a simple answer. I can tell you

what‘s happening in just four letters-―A.U.T.O. the Indian car market ―Fiat was first company to launch a car. As

the year progressed; Hindustan motors came up with their first model ―land master in 1957.

EMERGING CAR INDUSTRY IN INDIA

Since the opening of the Indian economy, the automobile sector in India has been playing a vital role in

the adoption of advance technology. Industrial majors in the automobile sector, which started operations in India

immediately after liberalization, consolidated their positions. Today, India‘s car market is the 12th largest in the

world. Though India is lagging behind several developed and developing countries with much smaller

populations, the trillion-dollar economy has immense potential to outgrow some of the others in the near future.

The Indian car market has come a long way since the launch of Maruti 800 in December 1983. From stagnant

sales of about 35000 cars a year between 1977 and 1982, the market size increased to about 150,000 in 1991. The

rapid pace of growth continued there after, reaching a figure of 1,078,408 cars during the financial year 2006-

2007, showing an impressive compounded annual growth rate of 22% post-liberalization. It is further expected to

grow at 11% over the next decade, making it the third largest car market in Asia though this growth looks

impressive, it would still have a long way to go when compared to the numbers in Japan and China. The total

number of cars on the Indian roads is just around 8 million in china. At present, there are only 7 cars for every

1000persons in India. This is very low when compared to other emerging and developed markets. All these

suggest that there is tremendous untapped potential for motor cars in India. With India poised to become the third

largest economy by 2050, the growth of the car industry is unquestionable. The future growth in passenger car

market will be driven by higher GDP growth, improved road infrastructure (such as the GOLDEN Quadrilateral,

the North-South, East-West corridors and several express ways), improved urban infrastructure, etc., together

with increased disposable income, easy finance, replacing of aging four-wheelers, graduation from two-wheelers

to four - wheelers and the growing concept to pre-owned car in urban areas. The demand is expected to grow at

11%per annum for passenger cars and at 6%for multi utility vehicles over the next decade, making India one of

the top five car markets in the world.

Chi – square test

For the calculation of the chi-square test the researcher considered the factors of company name on which,

Maruti, Tata, Honda, Ford, Mahindra and Chevrolet and the level of brand preference on which, Low level,

Medium level and High level.

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Calculated

value

Tabled

value

Chi-

square

8.8720 18.307

Hence the Researcher Accepted the Hypothesis because the calculated value is Less than the table

value.

Chi – square test

For the calculation of the chi-square test the researcher considered the age of the respondents on which below25,

26-35, 36-45 and above 46. And the level of brand preference on which, Low level, Medium level and High

level.

Calculated

value

Tabled value

Chi-square 0.2344 5.991

Hence the Researcher Accepted the Hypothesis because the calculated value is Less than the table

value.

FINDINGS

In this survey out of 200 respondents 69% of the respondents are male and 31% of the

respondents are female. The study reports that majority of the respondents are in the age group of 20-30.It is

derived from the analysis that 31.5% of respondents are post graduate and 26.5% respondents are

Undergraduate. It is evident from the study that 26% of respondents are business people and 23% of

respondents are salaried people. This analysis denotes that Majority of the respondents (68.5%) are married

people. The survey depicts that 61% of respondents belong to an individual family type. Most of

respondents (39.5%) are having 3 to 4 members in their family. It is evident from the analysis that most of

the consumers (40.5%) belong to the income level of Upto Rs.25000.Most of the respondents (44.5%) have

owned Ordinary type of car.54% of the respondents are influenced to buy the car through their family

members. Most of the respondents own Maruti and Tata company car. It is found that Maruti 800 is the top

brand preference of majority of the people. It is found that most of the respondents (32%) choose particular

car for quality. Majority of the respondents (31.5%) purchase the car for the purpose quick and easy

travel.50.5% of the respondents are purchasing the car for credit basis. Many of the respondents (44.5%) are

purchasing the car at festival season. Majority of the respondents (36%) are getting the finance from private

sector bank. Many people owned the car engine capacity is 1000cc.61% of the respondents replacing the car

at time of necessary. Majority of the respondents (34.4%) attracted by the advertisement for the reason is

that giving more important for car in daily life.

CONCLUSION

The globalization has increased competition in the passenger car industry. It is important for auto

carmaker firms to have competitive advantage so that they can meet the consumer‘s expectations well and

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command the position of leader in the business. The customer relationship management is the only tool for

the survival in business. The firms should try hard to retain the customer for business growth. Customer

relationship management is focused on creation and maintenance of long-term, mutually beneficial

relationship with the customers. CRM is introduced to tailor the customer and to develop long term

relationship. The biggest disadvantage of is customer relationship management is expensive, time

consuming and complex proposition. This is an opportunity to rise above minor advantages and develop an

actual relationship with the customers. Passenger car companies that are the most successful at delivery

what are the most likely to be the leaders in future. CRM may or may not prove to be the answer to

providing excellent customer care, but the philosophy of putting customers at the heart of the business is

definitely a step in the right direction.

BIBLIOGRAPHY

[1] Carl Mc Deniel Jr., The Nature of Marketing, Mac millian publishing Co., New York, 1974.

[2] David j. Luck and Ronald S. Rubin, Marketing Research, Hall of India private limited. NewYork,

2007.

[3] Dr.Gupta S.L and Sumitra pal, Consumer Behaviour An Indian perspective, Sultan chand and

sons, New Delhi, 2006.

[4] Kothari C.R., Research Methodology Method and Techniques, New age international (p) Ltd.,

New Delhi, 2007.

[5] Ranganadathan ―A study on consumer markets and buying behaviour of cars‖, Indian journal of

marketing, vol.xxxv, No.4, April 2005, pp 3-7.

[6] Rudra saibaba, ―Consumer bhaviour towards Two-wheelers A comparative stuty of Rural and

Urban consumers of Warangal District (Andhra predesh)‖. Marketing Mastermind, April 2008,

vol.8, issue.4, pp 63-66.

[7] Varshney S.C. and Sonia kalia, ―Consumer perception and marketing trend of cars‖, Southern

Economist, Dec 15 2006, vol.45, No.15$16, pp 51-54.

[8] Vijayalakshmi N. ―Indian automobile industry‖, Infra structure development in India, March 2008,

vol.xi, issue.3, pp 59-61.

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WORD OF MOUTH: THE KEY TO UNLOCK HINTERLAND

P.Prialatha1 and K.Malar Mathi2

1Doctoral Scholar/ 2Associate Professor, Bharathiar School of Management & Entrepreneur Development,

Bharathiar University, Coimbatore, India.

ABSTRACT: Advertising and other promotional efforts form crucial part of rural marketing communication,

that to with increasing rural prosperity, marketers are keen to inform villagers about the benefits of buying and

consuming their products and services. The promotion aspects always create a challenge in rural markets

because of the fact that villages have thin population density and are widely spread over large remote areas.

Some of the rural markets are also inaccessible to television signals and are often designated as ―media dark‖.

Interpersonal communication accounts for over 80% of the rural communication process. ‗Word of Mouth‘

form of communication plays a vital role in rural consumer purchase decisions. The study was conducted

among rural areas of Coimbatore district in Tamil Nadu, to identify rural consumer‘s exposure to different

media vehicles and to understand the importance of ‗Word of Mouth‘ in influencing rural consumer‘s purchase

decision with regard to personal care products. The study throws insight into the need for positive word of

mouth generation, thorough right media mix decisions targeting rural consumers. ‗Word of Mouth‘

communication rules brand building in Hinterland and the marketers foraying into it must focus on a long term

effect and decide on innovative and feasible media options to capture the mind space of rural consumers.

Key words: Hinterland, Media Mix, Word Of Mouth & Opinion Leader.

1. Introduction. The promotion aspects always create a challenge in rural markets because of the fact that

villages have thin population density and are widely spread over large remote areas. Some of the rural markets

are also inaccessible to television signals and are often designated as ―media dark‖. Therefore, the rural poor are

not only denied access to products and services, but also to knowledge about what is available and how to use it.

What marketers and advertisers today are worried about is how to develop a scalable model for influencing the

rural consumer‘s decision over a period of time. One basic problem of using the mass media for marketing

communication in rural India is the time gap between the point of exposure and the time of purchase, which is

long. The memorability of the message cannot be expected to be strong enough, to last till the time of purchase,

if the impact of communication is not very effective (Bhatia, 2007). (Kashyap & Raut, 2008) state that having

developed a good communication package aimed at the rural masses, it is equally important to deliver the same

through a combination of mass media and unconventional media. Even today, interpersonal communication

accounts for over 80% of the rural communication process. The authors further propose an ideal media model to

reach rural audiences in which ‗Opinion Leaders‘ are given center stage. The marketers must influence the

opinion leaders first and win them over before targeting the rural masses, as the former guide the latter in their

purchase decisions.

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The regional press plays a very important role in reaching opinion leaders in villages, who are generally literate

and exposed to rural masses and the mass media. Since such opinion leaders are few and can be identified

easily, direct marketing efforts such as road shows, direct mailers and one-to-one contact programs specifically

aimed at them can help create a favorable image about a product. In addition, messages conveyed through the

mass media like television and radio are understood by these opinion leaders in the same way as they are by

urban audiences. Dealers too, play a major role in influencing the choice of a brand at the point of sale for both

the target audiences.

2. Media Vehicles and Rural Market. Television plays an important role in rural life, with regard to social,

economic and political processes that have been revolutionizing the landscape of village India in recent years.

The ethnographic fieldwork in two remote villages in the mountains of Western Maharashtra - Danawli and

RajPuri, shows that there is social change at both the structural as well as psychological levels and indicates that

the village audience is an active and vibrant participant in the use of media, which has ramifications for

`development' both at the village level and beyond (Johnson, 2001). (Bhawna, 2007) conducted a study among

150 rural consumers of Jhangadi (Mawana) to understand the brand preference of hair oil. The research showed

that TV advertising had a deep impact on the minds of consumers (47%) from the villages. (Das & Ashutosh

Ka, 2009) analyzed the growing popularity of radio and its impact on the listeners. 1872 respondents from

Barrackpur Municipal area of West Bengal were taken up for the questionnaire survey. The study found that

respondents, irrespective of their occupation variation, opined that, popularity of audio media has significantly

increased after privatization. The various categories of respondents also favored the opinion that the spreading

of information has increased significantly after the introduction of FM channels. Radio Mirchi was ranked first

by the respondents. Thus FM radio as a medium was found to have considerable impact in spreading of

information and upliftment of lifestyle of its listeners.

Marketers should use organized media-mix like TV, radio, cinema and POP advertising for their marketing

communications in rural areas. Television is gaining popularity in rural areas but due to the poor supply of

electricity, radio is performing significantly better than TV. Since the rural people have a need for

demonstration, short feature films with disguised advertisement messages, direct advertisement films and

documentaries that combine knowledge and advertisements will perform better rural communication. Hence the

companies may also use audio-visual publicity vans, which may sell the products with promotional campaign.

To attract the rural consumers, companies can organize the puppet shows, village fairs, dance and drama shows,

group meetings to convince the rural consumers regarding the products and services (Srivastava, 2005). (Faldu,

2009) intended to understand whether customer recognition of a selected brand of Personal Care Industry in

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Print media is influenced by certain personal variables. 300 respondents of Gujarat were taken for the study. He

found that Advertising plays a vital role in boosting the sales through brand recognition in the Personal care

Industry. Advertising needs to be evaluated for its effectiveness. Increasing number of firms go for combination

of Print as well as Television advertising. While designing advertisements, certain variables viz. Age, Sex,

Occupation and Education need to be taken into consideration as significant difference in recalling ability was

found to exist between the respondents of different age, sex, occupation and education groups. (Kirti, 2009)

through her study delineated the dimensionality of advertising attitudes across rural and urban India. It was

observed that advertising attitudes did consist of believability, trust and control dimensions. The study shows

that the prolific advertisements and the various media options available have resulted in the consumers loosing

interest in the ads, giving rise to selective attention and absorption. It was observed that traditional media scored

better than the Internet. In both urban and rural India, newspapers scored as the number one media, but it also

seemed uninteresting to the respondents. It was also observed that the Internet is gaining importance in the

media options in both urban and rural areas, and must be carefully explored by the marketers. The study

suggests that advertisers need to be more creative in their advertising copy for newspapers. The advertising

claims should be relevant and not deceitful, and the message should focus on product attributes and benefits.

Wall Paintings are an effective and economical medium for advertising in rural areas. Retailers normally

welcome paintings of their shops, walls, and name boards, since it makes the shop look cleaner and better. Their

shops look alluring and stand out among other outlets. Besides rural households, shopkeepers and panchayats do

not expect any payment, for their wall to be painted with product messages. The greatest advantage of the

medium is the power of the picture completed with its local touch (Sathyanarayana & Ramani, 2008). Brand

communication to the consumers is always an important marketing goal of marketers. In doing so, they spend a

lot through their marketing services firm, which provides the advertising and communication services to the

client firms. Most of the marketing services firms bill their client heavily mainly due to using easily deployable

medias, like TV, print papers, etc. But in South Asian countries like Bangladesh, there are many rural or semi-

urban areas which are traditionally media poor and have little access to print. Companies can use point of

purchases (POP), like retail outlets and surroundings, for brand communication. The author personally visited

some rural and semi-urban areas as part of the distributors‘ sales representative team and pointed out some

simple, cost-effective ways to effectively reach the customers, like: Product Card (picturesque) with Corporate

Identity for the Retailers, Brand List card with Corporate Identity for the Consumers, Classifying Educated and

Professional Traders, Running Promotion Cards, General Shopping List to the Consumers, Associating other

Value Added Item or hot FMCG in the Strategic CP campaign, Informing the Retailers of Upcoming Promos

Earlier, Company Named Shopping Bag for High Volume Purchases, Sun Shed for the Shop, Sorting the

products/ brands properly (visibly) in the shelf, Dedicated company display shelf space, Corporate or specific

brand labeled T shirts, etc. The author found that many of the above mentioned ideas are still underutilized or

unutilized by many companies. Especially in rural and sub urban areas with low media reach, these brand

communication techniques are more directly visible and related to customers, retailers, and distributors

(Moslehuddin, 2010).

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(Suresh & Sathyanarayana, 2008) states that rural marketing has been witnessing a lot of action from both the

fast moving consumer goods (FMCG) sector and consumer products manufacturers but, there has been little

success in the manner in which rural research is carried out. Media efforts for rural markets are usually never

looked at seriously, ultimately, what matters, is how well the medium is utilized and what innovations can be

created to attract and retain brand attention. With the huge geographical spread of rural markets, decentralized

promotion would also synergize with scrotal development of pockets of the rural consumer base. Companies

must also turn to innovative methods of advertising like non-conventional or traditional media, fairs or haats to

reach their potential customer base. The most important element in rural communications is to integrate three

things as companies communicate: communication (of message), trial or demonstration (convincing) and final

sale. This proved to be extremely effective in advertising to the rural market. (Baneriji, 2005) reveals that the

rural markets have already overtaken urban markets in many categories of mass consumption branded goods in

terms of both volume and growth. He observes that a rural business organization in India is expected to

communicate with various cultural and language groups. Hence multilingual abilities become necessary on the

part of rural marketing and rural business personnel. He adds that many business executives in India often fail to

be successful because of the language barrier. He states that Haats provide a good opportunity for promotion

after brand building has been done at melas. (Archna, 2006) through her study found that residents of atleast

four villages visit Saunda Haat in Meerut district of Uttar Pradesh every Thursday, as do merchants from the

same villages. There are around 60 stalls in Haat selling everything from groceries to apparel to kitchenware to

fresh produce. Few of the brands which are familiar include Parle- G, tiger, Parachute and Lifebuoy. She further

adds that Saunda Haat is one of the 47000 that is serving the needs of around 70% of India‘s rural population of

742 million. She concludes that despite constraints, the rural market especially for Fast Moving Consumer

Goods (FMCGs), apparel, footwear and fuel, is bigger than the urban market.

(Urvashi & Vijendra, 2010) surveyed the respondents who were in the age group of 21-30, literates, exposed to

media options, from rural and urban areas of NCR region, western Uttar Pradesh to find the factors affecting the

choice and preference of media vehicles among rural and urban population. Data was collected for 10 factors

and 8 media options. Customer perception in rural segment for different media options were as follows: (i)

Newspapers were found to be informative, reachable, believable, economical and attention seeking, (ii) TV was

found to be highly attention seeking, reachable, user friendly and helpful as a buying guide. But it also caused

wrong decision and exaggeration, (iii) Radio was considered to be economical, user friendly and reachable, (iv)

Internet was found to be informative, attention seeking and believable, (v) Magazines were considered

informative and believable, (vi) Movies were user friendly, but cause wrong decision and exaggeration, (vii)

Out of Home advertisements were economical and attention seeking and finally (viii) Mobiles as a media has

negative perception. Though it is considered User friendly, it is also exaggerated and misleading. (Pankaj &

Anurag, 2011) suggest that tie-ups with NGOs, Self Help Groups, Improving physical infrastructure and

stimulating the flow of market information can all help the marketers to cope up with the communication

challenges faced in reaching the rural consumer.

2.1. Right Media Mix for Positive Word of Mouth. The literacy scenario in rural markets shows a need for

special measures in promotion of brands. Due to the social and backward condition, personal selling efforts have

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a challenging role to play in this regard. The word of mouth is an important message carrier in rural areas. In

fact the opinion leaders are the most influencing part of the promotion strategy of rural promotion efforts.

Relevance of mass media is also a very important factor. Doordarshan has already acquired high penetration in

rural households. Now the cable and other channels have also penetrated in rural households. The Newspaper

and other printed media is also gaining importance but their role is still secondary in this regard (Hitendra et al,

2005). Research conducted among 250 rural consumers and 45 retailers in villages of Gujarat, indicates that the

rural retailer acts as an opinion leader and influences purchase decisions through Word of Mouth

communication and product display. Hence sheer product availability alone cannot determine brand choice,

volumes and market share. The relationship with local retailers must be maintained effectively. These retailers

play an important role in providing information regarding product features, quantity of pack available,

promotional schemes, POP display of print advertisements, consumer feedback, etc. They act as a bridge,

updating information to both rural consumers and companies (Naresh & Reshma, 2005). (Khare, 2008) state that

besides, TV & print media, nowadays marketers are opting for wall paintings, mobile vans and word of mouth

publicity with the help of opinion leaders to propagate their brand among the masses. To market its jeans,

Arvind Mills‘ promotional effort included teaching tailors in villages to stitch the jeans. As the tailors are

opinion leaders for clothing, they became votaries for jeans and for the ‗Ruf & Tuf‘ brand.

Media being the carrier of the advertisement content, smart choice of media could clearly make a difference. A

medium should be selected on the basis of its reach and its associated cost. At the same time, the medium should

match with the brand characteristics. Hence, there are a number of alternatives available to an advertiser with

both merits as well as demerits. An advertiser should do cost-benefit analysis of the alternatives in media

strategy and media choice, so that it serves the purpose (Rai, 2008). Companies could acquire customers through

costly but fast-acting marketing investments or through slower but cheaper word-of-mouth process. Their long-

term success depends critically on the contribution of acquired customers to the overall customer equity. An

application to a web hosting company reveals that marketing-induced customers add more short-term value but

word-of-mouth customers add nearly twice as much long-term value to the firm (Villanueva et al, 2008).

(Micael et al, 2009) conducted an experimental study of six (real) campaigns, manipulating media type and

brand reputation (with appropriateness and expense measured within subjects). It was found that non-traditional

media enhance consumer-perceived value. The effects are greater for low-reputation brands, than for high-

reputation brands. The paper shows that non-traditional media enhance the consumer-perceived value of

marketing, and suggests that consumer-perceived value is important in generating purchase and word-of-mouth

intentions.

(Ajith, 2010) explains the term ―Urban Myopia‖ and attempts to present a frame work named 3P Framework for

rural marketing in India. This model will not only help the marketing firm to develop innovative products for

rural markets but will help to align the CSR activities to its marketing activities. This will bring the rural

consumers into the value-net of the firm and help create innovative and green products. The 3P Framework

comprises (i) Push Approach where the products catering to urban consumers are pushed, without any

modification to rural folks through Rural Retail Outlets (RPO). It mainly aims at market penetration. Bharati

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Airtel is found to adopt this method effectively. Push Marketing is very important in Kerala since it is the only

state in India with no uninhabited villages (Census of India 1991), thus reaching every RRO is crucial. (ii) The

Pull marketing mainly aims at communicating with the rural consumers and reduce disconnect between what

marketing firms offer and what rural consumers want. Vernacular advertisements, local opinion leaders and

ambassadors are used to communicate with rural consumers. The products sold in urban markets are modified as

per the preferences of rural consumers in various regions. Majority of the modifications are at the packaging

level (smaller packs).Pull marketing use media, melas and haats as the focal approach to target rural consumers -

to attract, educate and make them brand loyal. The promotional efforts aim at motivating rural consumers to buy

company‘s brands from the feeder markets or small towns where the company‘s products are made available.

Messages are designed keeping in mind the rural psyche and unconventional media. Pull Marketing is very

crucial in Uttar Pradesh and Bihar as they have 11,147 and 10,184 uninhabited villages respectively(Census of

India 1991).Gujarat and Rajasthan are the most media dark states of India(IRS 2001 Round 2).The reach of

media(TV + Radio + Press + Cinema + Satellite) is 41.1 percent and 41.4 percent respectively. Non-

conventional media like Periodic markets, Melas, Wall paintings, Video-vans, Folk media, Rural sports,

Animal- parade will have to be used in the above states. HUL use street performers - magicians, singers, dancers

and actors-adjusting their scripts and acts based on the clientele the company wants to reach. Following a series

of street performances in northeastern India, the company saw public awareness of Breeze 2-in-1, its low-priced

shampoo-soap, increase from 22 to 30 percent. During a six-month period during 2005, it saw awareness of Rin

Shakti, a detergent bar, jump from 28 percent to 36 percent and finally (iii) The Pull Up marketing aims at co-

creation and innovation which involves collaboration with various organizations (both Govt. and NGOs) as well

as close interaction with the rural consumers to understand their needs better, to empower them(create a source

of livelihood) and also to capture their knowledge, wisdom and innovative ideas in the form of green products.

Pull up marketing use empowerment (CSR) and Co-creation (DART) as the focal approach to target rural

consumers. Shakti is HUL‘s rural initiative, which targets small villages with population of less than 2000

people or less. It seeks to empower underprivileged rural women by providing income-generating opportunities,

health and hygiene education through the Shakti Vani program, and creating access to relevant information

through the Shakti community portal. Many marketing firms are adopting just one or two components of the 3P

Frameworks, and face problems. They need to implement the missing component of the 3P Framework to

successfully capture rural market.

By 2017, per capita consumption of consumer goods in rural areas is expected to equal what is currently

witnessed in conurbans. The rural infrastructure program – ―Bharat Nirman Scheme‖ launched by Indian

Government in 2005 is the biggest in the world. In addition, its Employment Guarantee Scheme will ensure that

one member from every rural household will be given 100 days of paid employment. Many private banks are

opening in rural branches. All these situations provide huge opportunity for marketers, as the purchasing power

of rural consumer increases. He indicates that awareness of products or services on rural consumers requires

one-on-one communication and marketers must provide them with ‗touch & feel‘ experience through live

demonstration. India has 42000 regular markets (haats), each of which has around 300 stalls to which 5000

people repeatedly flock. He advises marketers to have distribution in larger villages and cites the example of

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Colgate‘s ―Last Mile Distribution‖, where young male entrepreneurs sold the brand on bicycles at haats and

village shops (Kashyap, 2008).

3. Method. The study was conducted among rural areas of Coimbatore district in Tamil Nadu during the months

from May to September, 2011. The sampling method adopted was simple random sampling whereby six

villages namely, Pitchanur, Valukkuparai, Divansapudur, Bilichi, ZaminKottampatti and Pannimadai were

selected and 50 respondents from each village were interviewed using a schedule. The sample size for the study

is 300 respondents.

3.1. Study Objectives. The objectives of the current study can be listed as follows:

(1) To identify rural consumer‘s exposure to different media vehicles.

(2) To understand the importance of ‗Word of Mouth‘ in influencing rural consumer‘s purchase

decision with regard to personal care products.

(3) To analyze the variation across Gender, Age group, Educational levels, Occupational groups and

Income groups of rural respondents with regard to their media preference.

3.2. Results & Discussion. The demographic profile of the rural respondents is summarized (Table 1), which

highlights the lack of importance given to education as a cumulative 83.4% of the respondents fall under the

range from ‗No formal education to School education‘.

TABLE 1: Demographic Profile of the Respondents

Age Group N (%) Educational

Qualification

N (%) Occupational

Groups

N (%)

Below

21 yrs

46

(15.3%)

Nil 53

(17.7%)

None 11

(3.7%)

21- 30 yrs 77

(25.7%)

Primary Education 33

(11%)

Student 47

(15.7%)

31- 40 yrs 69

(23%)

Higher Secondary 164

(54.7%)

House wife 69

(23%)

41- 50 yrs 59

(19.7%)

Under Graduation 29

(9.7%)

Employed 29

(9.7%)

51- 60 yrs 38

(12.7%)

Post Graduation 7

(2.3%)

Business 50

(16.7%)

Above

60 yrs

11

(3.7%)

Diploma 6

(2%)

Farmer 29

(9.7%)

Professional

Course

8

(2.7%)

Labour 60

(20%)

Others 5

(1.7%)

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Total 300

(100%)

Total 300

(100%)

Total 300

(100%)

Income Group (Annual

Income)

N (%)

Monthly Expenditure on

Personal Care Brand

Purchase

N (%)

Below Rs.50,001 8 (2.7%) Less than Rs.101 9 (3%)

Rs.50,001 to 100,000 79 (26.3%) Rs.101 to 200 16 (5.3%)

Rs.100,001 to 150,000 99 (33%) Rs.201 to 300 47 (15.7%)

Rs.150,001 to 200,000 65 (21.7%) Rs.301 to 400 83 (27.7%)

Rs.200,001 to 250,000 32 (10.7%) Rs.401 to 500 68 (22.7%)

Rs.250,001 to 300,000 9 (3%) More than Rs.500 77 (25.7%)

Above Rs.300,000 8 (2.7%)

Total 300 (100%) Total 300 (100%)

For the study, 15 media vehicles were taken into consideration and the rural consumer‘s exposure to these media

vehicles (Figure 1) shows TV has reached a majority of 89% of the respondents, in the mass media category.

While the next form of communication that has the second major spread across rural folks is the ‗Word of

Mouth‘. Further, the study focused on the Personal Care Segment. Though this falls under the convenience

goods category, the consumer often shows special interest in the products for his personal use and is more likely

to be well informed about the choices available to him in the market. The study intends to analyze whether the

interest to know about daily use personal care brands, holds good with the rural consumer also.

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FIGURE 1: Rural respondents Exposure to different Media Vehicles

On contrary to the rural respondent‘s Television exposure, ‗Word of Mouth‘ form of communication was found

to be the most preferred choice among rural respondents to get information on personal care brands before

deciding their purchase (Table 2). They trust the message from their opinion leaders more than mass media

vehicles like TV and Press, which take the second and third positions respectively. We also find poor use of

local media vehicles like Wall painting, Van campaigns, Mandis and Folk media, by the marketers, as Van

Campaigns and Wall painting have a relatively favorable preference among the rural folks.

TABLE 2: Rural Consumer Preference for Media Vehicles

MEDIA VEHICLES MEAN RANK

TV 1.89 2

Radio 1.20 8

Cinema 1.04 12

Press 1.55 3

Internet 1.04 12

Haats & Melas 1.06 11

Mandis 1.03 13

Wall Painting/Poster 1.27 6

0 20 40 60 80 100

TV

Radio

Cinema

Press

Internet

Haats & Melas

Mandis

Wall Painting/Poster

Van Campaign

Folk Media

Dealer

POP Display

Word of Mouth

Direct Mail (leaflets, Phone)

Sales Persons

89%

27.3%

12.3%

54%

6.7%

13.7%

1.3%

2.3%

21.3%

1%

31.7%

39.7%

87%

6.3%

37.3%

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Van Campaign 1.30 5

Folk Media 1.03 13

Dealer 1.42 4

POP Display 1.18 9

Word of Mouth 2.53 1

Direct Mail (leaflets, Phone) 1.11 10

Sales Persons 1.24 7

The importance of ‗Word of Mouth‘ form of communication is explained (Figure 2) by identifying the opinion

leader for the rural respondents. 35% of the rural respondents claimed that they do not seek advice from anyone

to decide their personal care brand purchase, the rest 65% of the respondents seek advice from a variety of

sources, among whom the contribution of shopkeepers is on the lead. It was also found that only 47.7% of the

respondents made their purchase of personal care brands from shops in town/city, while the rest 52.3% bought

from shops in their village. Thus we can understand the role played by shopkeepers as opinion leaders to rural

consumers.

FIGURE 2: Source of Advice for Rural Consumers

When we look at the differences in preference for media vehicles between male and female respondents (Table

3), Women have more preference for television than men, as watching serials is a routine part of their daily lives

and commercials in between the soaps also reach them better. Men on the other hand prefer Press, Wall

Painting/poster and Word of Mouth forms of communication more, compared to their female counterparts.

0

5

10

15

20

25

30

35

13.7%

9.3%

4.7%

12.7%

35%

17%

7.7%

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TABLE 3: Summary of T - Test for Gender of Respondents * Media Vehicle Preference

GENDER N MEAN T VALUE SIG. (2 TAILED)

TV

Male 138 1.72 -3.383** .001

Female 162 2.04

RADIO

Male 138 1.15 -1.721 .086

Female 162 1.23

CINEMA

Male 138 1.07 1.721 .086

Female 162 1.02

PRESS

Male 138 1.67 3.066** .002

Female 162 1.44

INTERNET

Male 138 1.04 .011 .992

Female 162 1.04

HAATS & MELAS

Male 138 1.03 -1.809 .072

Female 162 1.08

MANDIS

Male 138 1.03 .205 .838

Female 162 1.02

WALL PAINTING/

POSTER

Male 138 1.54 10.706** .000

Female 162 1.05

VAN CAMPAIGN

Male 138 1.33 1.037 .301

Female 162 1.27

FOLK MEDIA

Male 138 1.03 -.386 .700

Female 162 1.04

DEALER

Male 138 1.43 .244 .807

Female 162 1.41

POP DISPLAY Male 138 1.21 1.153 .250

Female 162 1.15

WORD OF MOUTH Male 138 2.69 3.771** .000

Female 162 2.39

DIRECT MAIL

(LEAFLETS, PHONE)

Male 138 1.11 -.219 .827

Female 162 1.12

SALES PERSONS Male 138 1.22 -.553 .581

Female 162 1.26

*Significant at 0.05 level & **Significant at 0.01 level

H0, there is no significant difference in mean preference for each media vehicle between male and female

respondents is rejected for cases where T Value is significant.

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With regard to other demographic variables, the media preference showed significant differences with regard to

the media vehicles (Table 4). Mass media vehicles, except Cinema (TV, Radio, Press & Internet) and three of

the Personalized media vehicles (Dealer, POP Display and Direct Mail) were found to significantly vary across

age groups. Among the different Educational and Occupational groups of respondents, preference for all mass

media vehicles showed significant variation. Dealer was a more preferred media vehicle for illiterates and

respondents with primary education, while direct mail was preferred more by respondents with Post Graduation

and Professional education.

TABLE 4: Summary of One Way ANOVA for Media Preference Across Demographic Variables

Media Vehicles Age Group

(F Value)

Educational

Levels

(F Value)

Occupational

Groups

(F Value)

Income

Groups

(F Value)

TV 20.098** 15.146** 11.649** 3.419**

Radio 4.318** 5.762** 3.931** 2.629*

Cinema 1.629 2.752* 3.140** .748

Press 4.473** 10.495** 4.822** 1.487

Internet 2.688* 25.649** 4.696** 6.878**

Haats & Melas 1.144 1.410 .921 1.628

Mandis .765 .425 2.908** .806

Wall Painting/Poster 1.423 .610 6.088** 1.793

Van Campaign .154 .934 2.501* 1.012

Folk Media 1.265 .740 .556 .703

Dealer 7.224** 4.141** 4.870** 2.730*

POP Display 6.430** .530 2.462* .636

Word of Mouth 1.807 1.714 1.147 2.482*

Direct Mail (leaflets,

Phone) 2.442* 10.925** 2.018 3.380**

Sales Persons .841 .641 2.170* 1.151

Degrees of

Freedom

Between

Groups 5 6 7 6

Within

Groups 294 293 292 293

Total 299 299 299 299

*Significant at 0.05 level & **Significant at 0.01 level

H0, there is no significant difference in mean preference for each media vehicle across different demographic

groups is rejected for cases where F Value is significant.

In the occupational category, Labor and farmer groups had more preference for local media vehicles namely

Mandis, Wall Painting/Poster and Van campaign as they were often in the field and these local media options

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have a lasting impression in their minds when delivered in local language/slang. Preference for Dealer, POP

display and Sales persons were also found to vary significantly among different occupational groups. While

preference towards TV, Radio, Internet, Dealer, Word of Mouth and Direct Mail options were found to vary

significantly among the different Income groups of rural respondents.

Preference for Word of Mouth form of communication does not show any significant variation across the age

group, educational levels and occupational groups of respondents, but among the educational groups,

respondents withless than 1 Lakh annual income were more influenced by shopkeepers and respondents in

income groups of above 3 lakh per annum were more brand consicious and consulted Doctors and Educated

Relatives to purchase a better brand. They often opted for premium brands like Dove, Garnier, Amway

products, Himalayas, etc. Similarly, Men preferred to purchase personal care brands suggested by their family

member (Table 3) and thus ‗family‘ acted as Word of Mouth means of communication to them.

3.3 Implications of The Study. ‗Word of Mouth‘ form of communication plays a vital role in rural consumer

purchase decisions and the opinion leaders are usually local retailers and educated relatives, who provide

information and suggest personal care brand to the rural consumers. Men are mostly influenced by Print media

and Word of Mouth communication from family, friends and relatives, when it comes to purchasing personal

care brands. Though penetration of TV is increasing, the urban targeted communication spills over to rural

consumers and there are few advertisements which are in local slang that could be easily understood by the rural

audience. Further, low educational background of rural folks; make recall of modern personal care brand names

difficult. They often tend to ignore the urbanized commercials in between programs. This calls for innovative

media-mix on the part of marketers to tap the potential of hinterland

The study shows a clear under-utilization of local media vehicles especially wall painting/posters which is both

economical and registers effectively in the minds of rural audience, generating a positive word of mouth

influence. The folk media is completely untouched in the rural parts of Coimbatore district. Local newspapers

and Radio have not been considered much. Vivel brand of soap from ITC is better recognized for their

newspaper advertisements, followed by some fairness creams like Vicco, Fairever, etc. Radio as a medium is

gaining popularity among youth, who often listen to the FM channels in their mobile using headphones.

Personal Care brand advertisements are very limited in Radio used by some local personal care brands. Local

retailers must be given sufficient attention as they are the key influencers of rural consumer who are illiterate

and daily wage earners. These retailers can effectively communicate the brand message in local slang and also

help in dealing with pirate brands. Further, the premium brands like Amway and others have ample market

among the high income group of rural consumers, who are willing to acquire premium quality personal care

brands. Hence Direct Marketing efforts must be enhanced to penetrate this segment of the rural market. It is

high time; marketers fill these gaps in media usage and generate a positive word of mouth in the emerging

markets.

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4. Conclusion. Rural people are often slow to adopt, but at the same time slow to give up when they start

preferring a brand (Malli, 2009). Pioneering marketers have used innovative means of creating their own

channels. Hindustan Unilever's micro marketing program in India tapped into women's Self Help Groups to

reach consumers in inaccessible rural markets. Besides selling products these women help transmit brand

communication within rural communities. Many marketers use publicity vans, which travel to remote and

scattered communities with portable communication devices (audio visual shows, live demos etc). Colgate has

created a powerful touch point with its Oral Health Program, which draws rural consumers who are lured by the

promise of a 'free oral check up'. The program provides Colgate with a captive audience for communication,

trial and brand building. These two companies have already reaped the fruits of rural marketing through their

first mover advantage and positive word of mouth generation about their brands. ‗Word of Mouth‘

communication rules brand building in Hinterland and the marketers foraying into it must focus on a long term

effect and decide on innovative and feasible media options to capture the mind space of rural consumers.

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[14] R. Malli (2009), Why the Rural Market is Different, Available:

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EVALUATION OF CONSUMER PROTECTION COUNCIL WITH SPECIAL REFERENCE TO

ERODE DIRSTRICT

N.A.Krishnamurthi1 and K.M. Suresh2

1Associate Profeesor, Department of Corporate Secretaryship,Erode Arts and Science College

(Autonomous),Erode.

2Research scholar, Bharathiar University, Coimbatore.

1 INTRODUCTION

India is a vast country where a majority of consumers are poor, helpless and disorganized. Further, the

Market in India is generally a sellers Market and it is very easy to cheat the innocent consumers. It is now

realized that a common consumer is neither knowledgeable nor well-informed. He/she needs support and

protection from the unscrupulous seller. A common consumer is not in a position to approach a civil court.

Quick, cheap and speedy justice to his/her complaints is required. The biggest help in this direction has come

from the Government. The Central Government enacted a Law known as ―The Consumer protection Act, 1986‖.

Consumer protection council is a social movement which seeks to protect and argument the rights of the

consumer in relation to the producers.

The following are the rights of the consumers:-

Right to safety

Right to be informed

Right to choose

Right to heard

Right to redress

Right to consumer Education, etc But many of the consumers are ignorant of these rights.

The consumer protection Act provides an opportunity to the consumer to approach a court if there is

any lapse in the quality of the a articles or services. He need not pay any fees to the court, but nominal fees is

levied from 2004 onwards. At the district level each state has established a consumer Dispure Redressal Forum

known as District Forum, while at the state level it is called ―Rashtriya commission or state commission‖. The

all India Forum is known as ―National Commission‖ for consumer welfare.

2. STATEMENT OF THE PROBLEM

The consumer has been considered as the king in a free market economy. A free market economy

largely permits the evolution of consumer sovereignty by allowing consumers to express their preferences and

tastes as between goods and services. However, in India, sovereignty of the consumer exists only in theory but

not in practice. Even in the so called affluent and highly competitive economies, the consumer is not a king and

in countries like India, where seller market exists, he is no where near a king without the ―privy purse‖.

Consumers are being exploited by the middle men and manufacturers, since time immemorial.

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Majority of the consumers in the study area are illiterate, residing in rural areas with low standard of

living. They are ignorant about the impliciations in trade and price policies adopted by the traders, which

directly affect on their condition and health. Most of the consumers have a lethargic attitude. The consumers in

the town areas are comparatively more vigilant and authority contains the grievances whereas the rural people

are totally unorganized and ignorant and they do not create enough pressure for the administration to look after

their interests. It is a fact that even the urban consumers are not alert and beyond the clutches of businessmen.

As the purchasing capacity of most of consumer is at a low ebb, they do not thing it terms of the quality of the

goods. Seldom the consumer insists upon businessmen for standardized product as they are totally unaware

about their rights. For most of the consumers, it hardly matters whether the product is marked ISI or Agmark, or

not marked at all.In view of the widely prevalent consumer exploitation in India, the government has brought

out a number of statutory regulations to protect the consumer‘s interest. Unfortunately, these measures are not

effectively working towards consumer protection due to multifarious reasons. Widespread illiteracy, poverty,

ignorance of consumers legitimate right and lack of organized efforts to check the market evil are among the

major factors contributing to the plight of the consumer in our country. Most of the rural poor live below the

poverty line and therefore are busy just keeping themselves alive. The mere struggle for survival uses up all

their energies. They have neither the time nor inclination to think of their rights. The literate and educated

consumer feels helpless before the might of the exploiters and therefore acquiesces to his condition.

3.OBJECTIVES OF THE STUDY

1. To study the origin and development of consumer protection movement

2. To study the problems and the services of consumer protection council.

3. To suggest better ways and means for effective functioning of consumer protection council and union

consumer protection councils.

4. METHODOLOGY

The study used both primary and secondary data. The primary data was collected from the members of

the consumer protection council. For this purpose a field survey was conducted comprising 400 respondents of

the Erode district. The respondents were chosen by simple random sampling method. Interview schedules were

used to collect first hand information from the selected sample respondents. The interview schedules were

prepared with the help of the guide, judicial officials and experts in the field of consumer protection council.

Field survey technique was adopted to collect pertinent information from the members of consumer protection

council. Twenty consumer protection councils were selected for the purpose of the study. The researcher

personally visited each and every respondent for this purpose after establishing a good rapport with them. The

same style of data collection was used to collect information from all the union councils located in the different

places of the study area.

The secondary data was collected from the records maintained by the union councils and the district

consumer court in the study area.

SAMPLING DESIGN

For collecting primary data, field survey technique was undertaken in the study area. First, for the

purpose of the study twenty consumer protection councils in the study areas were contacted in person and the

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data were collected as per the requirement. These twenty consumer protection councils were contacted with a

view to ascertain their role in the effective functioning of consumer protection council. The study was held for a

period of six months. The details of Location of all the consumer protection councils of the study are depicted in

the following table.

TABLE NO.4.1

Details of consumer protection councils in the study area

S.No Name of the

village/town

Number of union consumer protection

councils

1 Anthiyur 1

2 Arasur 1

3 Ayyampalayam 1

4 Bhavani 1

5 Bhavanisagar 1

6 Chithode 1

7 Chennimalai 1

8 Erode 1

9 Gobichettipalayam 1

10 Kavindapadi 1

11 Kanjikoil 1

12 Kodumudi 1

13 Modakurichi 1

14 Nambiyur 1

15 Perundurai 1

16 Salanga palayam 1

17 Sathiya mangalam 1

18 TN palayam 1

19 Thalavadi 1

20 Vellankovil 1

Total 20

First-hand information pertaining to the behaviour, satisfaction and problems in utilizing consumer

protection council for claiming compensation from the concerned service organization through consumer

protection council and the data were collected from four hundred members of the consumer protection council.

The respondents Council at the rate of twenty each. The selection of respondents was made in active

consultation with the Research Guide and office bearers of the consumer protection Council, So as to represent

all categories such as rural, urban, rich, poor, educated and illiterate. The respondents were selected on a simple

random basis from the list of members maintained by the consumer protection council office bearers.

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TOOLS OF DATA COLLECTION

By virtue of Mass data obtained from survey research, as well as data of secondary sources collected

and presented in the thesis, a descriptive analytical research was done, since it is considered as most appropriate

for the study. The research problem, questionnaire and interview schedule were all framed accordingly. The

research report emerged from the inferences drawn by using simple statistical analysis among the data collected

from the consumer protection council and the selected sample respondents. The data codified electronically have

been analysed with the help of several statistical tools such as Multiple regression analysis, Discriminant

Function Analysis and Henry Garret ranking techniques.

5.REVIEW OF LITRATURE

Hassan (1974) in his study entitled ―Contemporary consumerism- An Indian appraisal‖ states that

consumerism as movement would remain a weak slogan as long as public confidence is not restored in the

administrative and enforcement machinery of the Governments and as long as voluntary public operation

remains shy. He also emphasizes that it is not only the consumer who should be conscious of his rights or the

producer and the marketer who should be mindful of their duties and responsibilities but it requires an

incorruptible machinery to enforce the measure adopted and a very watchful the public to discourage the wrong

doer, so that the consumer feels safe.

Pat Tucker (1976) in his study entitled‖ Consumer reports in USA‖ describes the role played by the

consumers union in United States. Consumers Union in U.S. grew to become the giant in its field. It provides an

extensive series of manuals and other instructional materials for courses in consumer education, and it produces

Radio and TV Programmes on consumer topics. It Co-Operates with local and state consumer organizations as

well as the Consumer Federation of America, and contributes financially to grants and fellowships for research

on consumer problems. It testifies before legislative committees and Government bodies in consumer issues,

and it opened a new office in Washington to step up its monitoring and litigation efforts on behalf of the

consumer.

Gupta and Lodha (1976) in their study entitled ―Consumer protection need for the stringent measures‖,

state that the consumer sovereignty has remains an Utopia and consumers all over the world have grossly

suffered at the hands of businessman in one form or the other. He adds that the consumer awareness is high in

the western countries like USA as compared to India. In our country, the consumer at large is apathetic. No

amount of legal aids can protect an indifferent consumer. It is only a strong consumer movement that can be

effective. The voice of an individual is always lost in the wilderness. There is an urgent need for a network of

really effective consumer association in the country safeguard the interests of the consumers. They should

develop their own laboratories, arrange the tests for consumer articles and publish their findings as is being done

in developed countries. Consumer‘s own involvement to protect themselves, is a must in to statutory measures.

Machhindra K.Ghadage (1976) in his study entitled ―Consumerism in banking emphasizes consumer‘s

awareness on service oriented organization such as banking, insurance, hospital, etc‖. The author states that

consumer movements are indications of customer consciousness on one hand and sellers indifference towards

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customers through his products and service on other hand. The findings are arrived based on the sample survey

of one hundred and fifty customers of different public sector banks.

Mohammed Afifi Hamouda (1977) in his study on consumer protection in underdeveloped countries

emphasizes that the consumers are not fully aware of the rights and the movement of consumer protection

councils. The survey covered a sample of 2500 families in Kuwait from various strata of the society. Out of the

selected sample survey it is noted that fifty percent families are not aware of consumer protection aspects.

6. ANALYSIS AND INTERPRETATIONS

TABLE NO: 6.1

MULTIPLE REGRESSION ANALYSIS - LEVEL OF UTILISATION

OF THE CONSUMER PROTECTION COUNCIL

S.

No. Variables Mean Std. Deviation

Standarised

coefficients t-value Sig S/NS

Beta

(Constant ) 33.158 5.579 22.685 .000

1 Age 2.385 .8768 -.010 -.196 .845 NS

2 Sex 1.07 .260 -.163 -3.208 .001** S

3 Marital status 1.10 .300 .006 .115 .909 NS

4 Community 2.29 .611 -.009 -.186 .852 NS

5 Educational

qualification

2.44 .531 .066 1.265 .207 NS

6 Occupation 2.86 .908 -.195 -3.867 .000** S

7 Annual income 1.40 .539 .089 1.688 .092 NS

8 Place 2.08 .752 .113 2.230 .026** S

9 Size of the family 10.50 5.774 -.047 -.968 .334 NS

** - Significant at 1% level * - Significant at 5% level NS - Not Significant S – Significant F-Value

8.936 p-value 0.000

The table gives the variables included in the equation corresponding regression co-efficient and simple

correlation value of each predictor variable with the dependent and partial correlation of each variable with that

of dependent variables. Partial correlation is another important statistic which tells us what is the correlation of

the each predictor variable with that of satisfaction value in the equation concerned, when the effect of

remaining other predictor variable is held constant. In the same table, the table indicates that the coefficient of

place are positively associated with the level of satisfaction towards consumer protection council. On the other

hand the co efficient of sex and occupation are negatively associated. It indicates that sex, occupation and

place are statistically significant implying their influence on level of satisfaction is stronger than other variables.

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R2 is calculated to ascertain the goodness of fit of the regression equation. The R2 has been found to be

significant at 1 per cent level.

6.2DISCRIMINANT ANALYSIS FOR THE PROBLEM UNDER STUDY

Discriminant function analysis involved classification problem also to ascertain the efficiency of the

discriminant function analysis all the variables which satisfy the entry and removal criteria were entered into the

function. Normally the criteria used to select the variables for inclusion in the function is minimum F to enter

into the equation (i.e) F statistic calculated for the qualified variable to enter into the function is fixed as ≥ 1.

Similarly any variable entered in the equation will be removed from the function if F statistic for the variable

calculated is < 1. The two groups are defined as

Group 1 - Low level And Group 2 - High level

The mean and standard deviation for these groups and for the entire samples are given for each variable

considered in the analysis.

TABLE NO: 6.2 GROUP MEANS (BETWEEN LOW AND HIGH GROUPS)

S.

No Factor

Low High Total

Mean SD Mean SD Mean SD

1 Age 2.3744 .89579 2.3951 .86033 2.3850 .87675

2 Sex 1.0718 .25881 1.0732 .26105 1.0725 .25964

3 Marital status 1.0615 .24093 1.1366 .34425 1.1000 .30038

4 Community 2.2462 .56616 2.3366 .64844 2.2925 .61064

5 Educational qualification 2.2872 .45361 2.5805 .55977 2.4375 .53085

6 Occupation 3.1436 .90240 2.5854 .82769 2.8575 .90788

7 Annual income 1.2308 .43444 1.5561 .57991 1.3975 .53872

8 Place 2.0256 .74222 2.1220 .76039 2.0750 .75219

9 Size of the family 10.7282 5.15762 10.2829 6.30888 10.5000 5.77350

The overall stepwise D.F.A results after all significant discriminators have been included in the estimation of

discriminated function is given in the following table.

TABLE NO: 6.3 SUMMARY TABLE BETWEEN LOW LEVEL AND HIGH LEVELGROUPS

Step Variables entered Wilk’s Lamda Minimum D2

p-value S/NS

1 Educational qualification .905 .623

.000** S

2 Occupation .865 .600

.000** S

3 Annual income .842 .591

.000** S

** - Significant at 1% level * - Significant at 5% level NS - Not Significant S – Significant

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The summary table indicates that variable educational qualification entered in step 1, occupation

entered in step 2 and annual income entered in step 3. The variables such as educational qualification,

occupation and annual income are significant at 1 per cent significance level. All the variables are significant

discriminators based on their Wilk‘s lambda and D2 value. The multivariate aspect of this model is given in the

following table.

TABLE NO: 6.4CANONICAL DISCRIMINANT FUNCTION

(BETWEEN LOW AND HIGH GROUPS)

Canonical correlation Wilks

Lamda Chi -square D.F Sig

S/NS

.398 .842 68.265 3 .000** S

** - Significant at 1% level * - Significant at 5% level NS - Not Significant S – Significant

The canonical correlation in the discriminant group can be accounted for by this model, Wilks lamda and

chi square value suggest that D.F is significant 1 percent level significance.The variables given above are

identified finally by the D.F.A as the eligible discriminating variables. Based on the selected variables the

corresponding D.F coefficients are calculated. They are given in the following table.

TABLE NO: 6.5DISCRIMINANT FUNCTION COEFFICIENT

(BETWEEN LOW USER AND HIGH GROUPS)

Educational qualification .841

Occupation -.555

Annual income .949

(Constant) -1.789

Z = -1.789

+ .841 (Educational qualification)

-.555 (Occupation)

+.949 (Annual income)

Using this D.F coefficients and variables discriminating scores for 2 groups are found out and are

called group centroids or group means

For low level user (Z1) = -.443

For High level user (Z2) = .422

Discriminating factor is the weighted average of Z1, Z2

(195x Z1) + (205 xZ2)

(.i.e) Z = 195+205

It is represented diagrammatically

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Z1 Z Z2

-.443 0 +.422

Low level High level

Thus to classify any respondent as to low or high user the Z score for the respondent is found out by

using the equation. If the score found out for any respondent is Z0 and if the value is > Z (i.e. Z0 > Z) then it is

classified into high user and if Z0<Z then (i.e. Z0<Z) it is classified into low user.

Now the questions remain to be answered are

1. How efficient are the discriminating variables in the D.F.A?

2. How efficient the D.F itself is?

The first equation cannot be answered directly however the discriminating power or the contribution of

each variable to the function can sufficiently answer the question. For this consider the following table

TABLE NO: 6.6 RELATIVE DISCRIMINATING INDEX

(BETWEEN LOW USER GROUP AND HIGH GROUP)

Group I

Mean X1

Group II

Mean X2

Unstandarised

coefficient

Ij=ABS (Kj)

Mean (Xj0-

Xji)

Rj=Ij/sum

Ijj*100

Educational qualification 2.287

2.581 .841 0.247 28.55

Occupation 3.144

2.585 -.555 0.310 35.84

Annual income 1.231

1.556 .949 .308 35.61

Total .865 100

For each variable the respective D.F coefficient its mean for each group and Rj are given. Rj called

relative discriminating index is calculated from the discriminant function coefficient and group means. Rj tells

how much each variable is contributing (%) to the function. By looking at this column one education is the

discriminating variable and the family income the least discriminating variable.The second question is answered

by reclassifying the already grouped individuals into low or high level using the D.F (Z) defined in the equation.

This classification is called predictor group membership .In short the efficiency of the D.F is called

predictor group membership. In short the efficiency of the D.F. is how correctly it predicts the respondents into

distinct groups.

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TABLE NO: 6.7 CLASSIFICATION RESULTS

(BETWEEN LOW USER GROUP AND HIGH USER GROUP)

Actual group No. of cases Predicted group membership

Group I Group II

Group I 195 118 77

60.5% 39.5%

Group II 205 60 145

29.3% 70.7%

Per cent of grouped case correctly classified: 65.8 per cent

The above table gives the results of the re classification. The function using the variables selected in

the analysis classified 65.8 per cent of the cases correctly in the respective groups. It is found that the

Discriminant function analysis was applied to the respondents on low user and high user. The following factors

significantly discriminate the two users. They are Educational qualification, Annual income and Occupation

(1% per cent level).

6.8 PROBLEMS FACED BY CONSUMER PROTECTION COUNCILS

There are number of problems faced by consumer protection council. Some of the problems idenfied

are lethargic attitude of consumers, lodging complaints without evidences, unable to force the court for speedy

disposal of cases, no consumer court at taluk level, seeking irrelevant information by the members, disturbing

the office bearers with the repeated questions, illiteracy ignorance, lack of proper organisation etc. the union

councils were asked to rank the problems faced by them according to the magnitude of the problem. The

following table shows a clear picture of the problem faced by the union councils. Henry Garret ranking

technique was used to identify the ranks.

TABLE NO: 6.8RANK FOR PROBLEM FACED BY YOUR CONSUMER PROTECTION COUNCIL

S.NO. FACTORS TOTAL

SCORE

MEAN

SCORE RANK

1 Lethargic attitude of the consumer 1535 76.75 I

2 Lodging complaints without evidences 1398 69.90 II

3 Unable to force the court for speedy disposal of cases 708 35.40 VII

4 No consumer court at Taluk level 424 21.20 VIII

5 Seeking irrelevant information by members 823 41.15 VI

6 Disturbing with the repeated questions 962 48.10 V

7 Illiteracy ignorance 1193 59.65 III

8 Lack of proper organization 972 48.60 IV

Source: Primary Data

The above table 6.8 reveals the ranking of problem faced by your consumer protection council.

―Lethargic attitude of the consumer‖ was ranked first by the selected sample respondents with the total score of

1535 and mean score of 76.75. ―Lodging complaints without evidences‖ was ranked second with the total score

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of 1398 and mean score of 69.9. ―Illiteracy ignorance and Lack of proper organization‖ occupied third and

fourth position with the total score of 1193 and 972 and mean score of 59.65 and 48.6 respectively. ―Disturbing

with the repeated questions‖ was ranked fifth with the total score of 962 and mean score of 48.1. ―Seeking

irrelevant information by members‖ occupied sixth position with the total score of 823 and mean score of 41.15.

―Unable to force the court for speedy disposal of cases and No consumer court at taluk level‖ occupied seventh

and eighth position with the total score of 708 and 424 and mean score of 35.4 and 21.2 respectively. It is

evident that most of the respondents gave top priority to ―Lethargic attitude of the consumer‖ as the first rank

for of problem faced by your consumer protection council.

7. SUGGESTIONS and CONCLUSION:

1. Giving wide publicity to these provisions of Consumer Protection Council Act, 1986 through the media

like press, TV, Radio and public meetings are very much essential to create awareness among the

public.

2. Providing the Consumer education, lectures, Seminars, dramas, folk arts, street plays, posters,

pamphlets, and books, may create consumer consciousness, discerning shopping skill and make them

assertive of their rights.

3. Consumer rights and responsibility may be included in the school level syllabus starting from fifth

standard onwards. The curriculum should be spread over primary sections and it will help students to

learn the basic concepts of consumerism, the students who enter into higher secondary classes are

required to study the laws and regulations pertaining to Consumer Protection.

4. Establishment of mobile Consumer courts and offices of settlement commissioners for free, easy and

speedy means of legal redressal to aggrieved consumers is a must.

5. ―No, pain, no gain‖, is the right technique for Consumer protection. The Consumer must be aware of his

basic rights and should fight for these rights. The famous principle of ―Caveat emptor‖- Let a buyer beware

- must be replaced by ―Caveat Venditor‖- Let a seller beware- by strong determination on Consumer side‖..

A Voluntary activity is an activity in which people contribute their time and energy without compulsion.

The people in the Voluntary Organization should work with a spirit of dedication and fight for a common

cause which is in the interest of the entire society, with the same objective the Voluntary organizations

should work and render their services to meet specific goals which are important for the consuming‖ society

as a whole.

References:

[1] Hassan, N.Contemporary Consumerism- An Indian Appraisal, Indian Journal of Marketing, Vol.4, No.

7-8, March –April 1974.

[2] Gupta, U.I and Lodha, S.S. Consumer Protection Need for stringent measures, Indian Journal of

Marketing, Vol.6, No.2, Auguest 1976.

[3] Machhindra K.Ghadage, consumerism in Banking, Indian Journal of Marketing, Vol.11, No.3,

November 1976. [4] Mohamed Afifi Hamonda, consumer protection in under developed countries, Indian journal of

marketing Vol. V111, no.1, September 1977.

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