Tattva Final

Vol.
I Issue 1 October 2010
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JOURNAL
A RESEARCH JOURNAL OF BIMTECH STUDENTS
TATTVA is a forum for BIMTECH students to bring to light the outcomes of their journey of discovery into the issues on which they have been cogitating - whether the issues are in marketing, finance, world business, retail management, insurance or sustainability or livelihood or microfinance. It is aspirational in intent, striving for rigour and has something of importance or an insight to share. In short, it is a platform for full fledged researchers-in-themaking. We have christened it TATTVA, meaning essence or the most vital ingredient. Welcome to TATTVA - a Research Journal of BIMTECH Students!
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Preface
JOURNAL
Management educators and planners may not reach a consensus on the issue of curriculum design and the mix of conceptual knowledge, applied experience and ultimately assimilation of the knowledge, but there is no disagreement on the issue of integrating original and applied business research into management education. At BIMTECH we consider summer projects not only as an opportunity to expose students to the knowledge, practice, discipline, and ethics followed among corporate business community but also as a platform to encourage conducting original research, albeit on a limited scope and scale. In our journey to continuously improve and increase the research content of projects executed by students we have taken many concrete steps. Some of them being: Align Research Methodology course to bring focus on design of experiments Integrate SPSS and Excel into various courses through projects and assignments Deliver Management Sciences, Supply Chain and Business Simulation & Modelling courses using Excel Incorporate Multivariate Data Analysis tools as part of the course Encourage students to take up live projects requiring solution to real business problems by collecting primary data and analysing with some statistical tools Continuously enriching the course contents with Modelling and Simulation exercises This year, for the first time, BIMTECH has brought out TATTVA - a Research Journal of BIMTECH Students, for showcasing nine research projects. It was a tough task for the advisory board to select only nine out of so many excellent research projects. We plan to bring out second volume shortly. Such a venture like TATTVA cannot come to fruition without the active participation of motivated students, help and cooperation of faculty guides at different centres of learning at BIMTECH and the research project guides in the corporate sector who have given valuable guidance and quality inputs to our students. We hope you will appreciate the efforts put in by students under the guidance of industry and faculty guides. Your feedback on these projects will work as a motivator for all those who are involved in bringing out this issue. We would in future be publishing the research efforts of students such as short term, special research reports etc. in TATTVA. Dr. A. K. Dey
Professor Supply Chain & Operations Management Centre for Business Management
Advisory Board
Dr. A. K. Dey Prof. R. J. Masilamani Prof. Ashok Malhotra Prof. K. K. Krishnan Prof Sangeeta Shukla
Student Committee
R. Natraj (CBM) Parul Agarwal (CBM) Priyanka Raina (CBM) Sweta Behera (CIBM) Upasana Singh (CIBP) Rahul Goyal (CRM)
Industry Guides
Mr. Sukrit Vijayakar Head Product Trading International Supplies and Trading Division Essar Oil Limited, Mumbai Mr. T. Srinivas Head International Supplies and Trading Division Essar Oil Limited, Mumbai Mr. Ravi Arora Sr Manager (Sales & Marketing) New Holland Fiat (India) Ltd. Ms. Madhulika Mishra Deputy Manager (HRD) Corporate Office MMTC Limited Mr. Chandrashekhar Singh Business Manager MIRC Electronics Ltd. Mr. Jaspreet Jolly Store Manager (Rohini) Infiniti Retail Limited Mr. Sushil Gopinath Store Manager (South Ext.) Wills Lifestyle ITC Limited Mr Deepak Bhandari R K Feed Equipments Halol, Gujarat Mr. N. C. Dhal Former SDM, Sambalpur Division Principal, Sales Training Centre LIC of India Dr. Subhendu Chakrabarti Scientist & Head Business Processes Division Central Leather Research Institute Chennai
Faculty Guides
Dr. Anupam Varma Dr. A. K. Dey Prof. R. J. Masilamani Prof. K. K. Krishnan Prof. Pankaj Priya Prof. Ravi Agarwal Prof. Manosi Choudhuri
Student Contributors
Parul Aggarwal Sweta Behera Upasana Singh Pallavi Banerjee Vijay Gaur Mahima Gupta Rahul Goyal K. Natraj Sweta Agarwal
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JOURNAL
contents
R&D Intangibles Valuation - Integrating Monte Carlo and Real Options & Fund Allocation Process Through AHP: A Focus on Public Funded Research Organizations in India Nataraj K and Ravi Agarwal MMTC: A Case of Knowledge Management and Learning Organization Pallavi Banerjee and Manosi Chaudhuri Factors of After-Sales Service Affecting Customer Satisfaction in Indian Consumer Electronics and Appliances Market The Case of MIRC Electronics Ltd. (ONIDA), Pune Region, India Parul Aggarwal and R. J. Masilamani Introduction of Concierge Service in Vadodara Sweta Agarwal and A. K. Dey Evaluating Potential Market for Exporting Gasoline in Perspective with Nigeria Upasana Singh and Anupam Varma Factors Influencing the Purchase of Private Labels: A Case Study on Roma Mahima Gupta and Pankaj Priya Competitive Analysis of New Holland Tractors in Western U.P. and Haryana Vijay Gaur and R.J. Masilamani Underwriting of Female Lives vis--vis Underwriting Practices in General (A Case Study of the LIC of India, Sambalpur Divisional Office) Sweta Behera and K.K. Krishnan Fast Fashion Retail Strategy based on Consumer Perception: An Empirical Research in Delhi NCR Rahul Goyal and Pankaj Priya 1 13 23
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R&D Intangibles Valuation - Integrating Monte Carlo and Real Options & Fund Allocation Process through AHP
Nataraj K*
Abstract
Technological innovation involves extreme risk as the R&D activity is uncertain in terms of the cost involved in producing the output, time duration involved in creating the output and also most importantly the output itself is not certain. This intangible nature of the R&D projects makes it relatively hard to value when compared to other tangible projects. Hence capturing the actual value of the intangibles is considered to be highly challenging by the researchers. In this paper a holistic approach is made with the objective of valuing the intangibility of the R&D projects. The project starts by creating a framework for selection of the most appealing projects by evaluating the alternatives using multifactor criteria based on hierarchical considerations which help in fund allocation process, followed by the projects income projection using tabula rasa method and life cycle analysis method. After performing the basic discounted cash flow valuation, simulation analysis is done through Monte Carlo method to incorporate uncertainties involved. As R&D activity will be carried out in phases there exist some options with the management which adds more value to the R&D output. This is captured here by incorporating binomial lattice real options approach. The mentioned models are empirically implemented in a live project which involves creation of collagens. Keywords: Patent Valuation, Real Options, Binomial lattice, Monte Carlo simulation, AHP JEL Classification: G11, C15, C52
Introduction
Patent valuation problems currently hinder efficient transfer of technologyunlike the market for used cars, no equivalent of the used car lot has emerged in the context of patented technology.(Denton & Heald, 2003) Most of the public funded organizations pore on meliorating the small and medium scale industries. Also in transferring the technology these organizations do not have any rigid valuation framework and the technology is priced as per the buying power of the clients. But in order to have an internal evaluation mechanism they need a framework that can be applied to value the knowledge base being produced by their various departments. Also in order to carefully allocate the limited sanctioned budget a decision making tool is also needed in order to select the most valuable projects from the alternatives. Thus these two requirements are
the prime focus of this research paper. Also it will be clear from the next section that all the research done till now in this area are focused only on various methods of valuation. i.e. they straight away start with the valuation issue. But for the research organization, where the scientists are not familiar with much of the financial concepts it becomes difficult to understand and implement the process described. Hence another focus of this paper is to provide a complete framework starting from project selection till the valuation in a step by step fashion so that it might be easily implemented by the research organizations.
Literature Review
Myers (1984) was among the first to publish in the academic literature the notion that financial option pricing methods could be applied to strategic issues concerning real assets rather than just financial assets.
*Centre for Business Management 2009-11, Birla Institute of Management Technology Under the guidance of Prof. Ravi Agarwal, Centre for Business Management, Birla Institute of Management Technology
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TATTVA - Vol. 1 Issue 1 October 2010
(Myers S. , 1977) identified investments in real assets as mere options. (Dixit & Pindyck, 1994) argued that most investment decisions have three important characteristics in terms of real options. They are i) investment is partially or completely irreversible. ii) there is always uncertainty over the future return from the investment and iii) the investors have choices to invest at flexible time. The dynamics of the expected cost to completion of the R&D project are described by the controlled diffusion process by (Pindyck, 1993) and given as:
practices and discussed a licensing model that can accommodate open source software. (Carlsson, Fuller, Heikkila, & Majlender, 2007) in their paper presented a fuzzy mixed integer programming model for the R&D optimal portfolio selection problem. (Sereno, 2009) finds that Pharmaceutical IPR investments have the property that much of the value of the investment is associated with future cash flows that are contingent on intermediate decisions. (Mun, 2002) in his book have explained completely about various real options model and the procedure to solve them. Also (Razgatis, 2009) in his book have analyzed all the methods of valuation and have also discussed about the deal making process. Framework for R&D Portfolio selection/ Resource Allocation: Government funded research institutes like CLRI allocates the funds to various departments based on the knowledge base created by each of the department in the previous fiscal. Few might argue that this would motivate the departments to produce more knowledge base, but this might hinder the development of a most valuable patent or technology. Also allocating funds should not be like an appraisal mechanism. Hence what is required is a standard mechanism for fund allocation. In other words a framework that would prioritize the activities or rank the activities based upon the objectives of the firm. Any research organization will be having n number of crucial decision problems regarding the selection or accepting the project proposals. The obvious aim will be to select the most compelling project in terms of many factors which will be discussed below. The work from (Carlsson, Fuller, Heikkila, & Majlender, 2007), (Bekkum, Pennings, & Smit, 2009) all focuses on the R&D portfolio selection. (Suresh Kumar, 2004) provides a judgmental model for R&D project evaluation using multifactor criteria based on hierarchic considerations.
dK = _ Idt
IK dz
.....1
Where dZ is an increment to a Gauss Wiener process, the first term is the control of the diffusion process and the second term corresponds to what Pindyck calls technical uncertainty. (Luehrman, 1998) presented a framework that bridges the gap between the practicalities of real world capital projects and the higher mathematics associated with formal option-pricing theory. A simulation approach to value patents and patent-protected R&D projects based on the Real Options approach was given by (Schwartz, 2002). Similar to it a real options model of R&D valuation was given by (Hsu & Schwartz, 2003). (Lev, 2003) has reviewed the various aspects of intangible assets by focusing on the question, How can we accomplish the main objective of promoting improvements to the reporting of intangible assets? A unified approach to the valuation of an R&D project that integrates three analytical tools: Discounted Cash Flow, Decision Trees, and Real Options was proposed by (Boer P. F., 2004). The traditional valuation methods drawback in valuing intangibles and other suggested method for valuing them especially Brand names, flexibility and Patents were explained with examples by (Damodaran, Dealing with Intangibles: Valuing Brand Names, Flexibility and Patents, 2006). (Lerner & Farrar, 2006) Provided a review of patent licensing approaches which has aimed to better understand current practices and the theoretical underpinnings of those
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Model Formulation and Application:

The four perspectives of the Balance Score Card method are included in the AHP model. Several factors are identified under each perspective through which the proposals will be pair wise compared and rated. The proposed model is shown in the figure 1. Application of the AHP starts by disaggregating the problem structure into multilevel hierarchy. The decision authority might determine weights or priorities of a set of criteria in one level of the problem to the next level just above. By repetition of this process level by level the matrices summarizing the
priorities of the alternatives at the lowest level according to their influence on the overall goal or focus of the hierarchy. The proposals from different departments are analyzed using this model and the best proposal is selected whichever is having the highest score. The various steps involved are Fixing the AHP Judgment scale; Pair wise comparison of the factors; Normalization of the comparison matrix; Finding Normalized matrix for all the criteria involved; Calculation of composite hierarchical priorities; Grading Scale for project proposal; Proposal rating; Scoring the Proposal
Figure 1: AHP Model

Best Portfolio of Projects
Internal Business Process
Learning and Growth
Customer
Financial
Human Expertise Infrastructure Availability of Technology Inhouse Availablity of material resources
Probability of technical success Anticipated completion time Extent of innovation Technological relevance of the project
Relevance of projects objectives in the social context Reputation of project Leader Anticipated change of commercial success Utility of reginol resources
Financial Feasibility of the project Commercial Sponsorship Aids or collaboration for the project from outside source Expected economic benifit from the output
Intellectual Proper ty Income Projections:

Analyzing the income producing capability of the intellectual property is the primary step in the valuation process. The common methods that are used in practice are Extrapolation, Tabula rasa, Life cycle analyses, Sensitivity/scenario analyses, Simulation analyses Monte Carlo, Judgmental methods.
In case of projects involving R&D where the entire life of the project is imbibed with uncertainties and usually with no close comparables it is clear that the analyst should start from scratch. Hence Tabula Rasa method is preferred here.
Tabula Rasa method:

Tabula rasa in Latin means clean slate. Initially the process begins with a clean slate. The primary concern is the uncertainty involved in deciding from where to
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begin. Without any available past data the best way to proceed is to conduct extensive interviews with the inventor. The analyst should begin with detailed set of questions that help in filling the clean slate with data. Once the slate is filled with data the next step will be to prepare an income projection. Here Project life cycle analyses is used where the intellectual property is associated with the product or service.
include multiple flexibilities available with the decision maker. When closed form methodology is used, all the options cannot be applied simultaneously. i.e. option to choose cannot be valued using closed form methodology. Hence this project will focus on binomial lattice trees. Empirical application of the Valuation Model: Collagens from bio waste C L R I being operating in leather industry produces bio waste from its slaughtering house in bulk. The waste from slaughtering house includes, Blood, tissue, Lungs etc. Disposal of this waste was of a big problem faced. According to industry experts 90% of the waste when treated properly at source can be recycled. Scientists at CLRI have decided not only to handle the waste to dispose them but also to innovate a way in such a way that some valuable products can be produced from the bio waste produced. They have invented that from the soft tissues of the animal a medical product can be produced which is rich in fibrous protein called collagens. Now in order to find the value of the patent the following assumption is made, i.e. considering CLRI as a part of a company and not as a separate research institute. Hence now C L R I is a R&D department of the company. As this particular invention is in the medical side it is assumed that the company is operating in pharmaceutical company. Now let us apply the whole work of the project into this problem. Assume that the proposal is made and has been formally approved and fund is allocated to the project. The next step will be the income projection through tabula rasa and the life cycle analyses. Being in the pharmaceutical sector, the product is expected to face severe competition. First step is to find the useful life of the patent protected product. After expiry of the patent the products useful life can be calculated as the multiple of the cash flows received till that period.
Project life cycle analyses:

The stages involved are Development phase, Introduction phase, Growth phase, Maturity phase, Decline Phase. The product development stage begins when the company finds and develops a new product/service idea. During the product development stage, revenues are typically zero and profits are typically negative. During the introduction phase, as the product is new to the market the revenue will be low. In the market growth stage the company will begin to make significant profit also by the end of this phase the profit begins to decline. In the maturity phase the profit will see neither growth nor decline and will be leveled off. It is in this phase the competition will be at its peak. Due to emergence of the new products or services the decline phase starts for the current product or service. Input for Income based approach (DCF): The output at this point will be the required input for basic Discounted Cash Flow method. i.e. from the assumptions about the future prospects of the underlying project the estimates are made for the income producing ability throughout its useful life. This estimate will be used to find the present value of the project or patent or technology.
Which model to apply?

The elegance of the closed form Black Scholes equation for option value comes at the price of a set of assumptions that simply do not apply to technology valuations solutions. Also the important aspect for choosing real options methodology is its ability to
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The patent will be granted for the period of 20 years, consider that it takes 2 years to complete the invention and 2 years to set up the production facility and simultaneously for initial trial and drug approval the overall useful life of the patent is reduced to 16 years. But considering the fact that the pharmaceutical industry is highly competitive a better product is introduced in the market by the competitors in another 8-10 years, the useful life of the patent protected product is further reduced to 10 years, and the remaining years will view a decline in the revenue.
Uniform Distribution: A uniform distribution, or uniform prescribed randomness, is one that assigns equal probability to any value between prescribed upper and lower bounds. Here the COGS are assumed to follow the uniform distribution. Triangular Distribution: A Triangular Distribution is similar to the Uniform Distribution in that it also assumes zero probability of values below the specified lower bound and above the upper bound. It differs in that the Triangular Distribution uses a most likely value and constructs a triangle of probability that varies linearly from the maximum probability at the most likely value to zero at the upper and lower bounds. Here the WACC/discount rate is assumed to follow the triangular distribution. Beta Distribution: Beta key attributes are (effectively) a combination of the Triangle and Normal Distributions, with a smooth decrease in probability away from the peak value, similar to the Normal Distribution, but with exact upper and lower bounds like the Triangular Distribution. Here the S.G.A costs are assumed to follow the beta distribution. As the revenues are already adjusted according to the life cycle, no distribution is assumed for it. Else normal distribution can be assumed for the same. Figure 3: Distribution of NPV through Simulation
Application of Income Method/DCF Method:

Now for this 10 year period the income projection needs to be made along with the growth rate considering the life cycle analysis. The income generation for the next 16 years will begin after the initiation of commercialization phase. The first 4 years is meant for the development phase. The calculation of the value of the patent is given in the Figure 2. As it is very clear from the calculation that the normal DCF model is a static one and does not allow any variations. None of the business will be performing as per the basic initial assumption. Due to high uncertainty few factors will be varying which will affect the predicted NPV value and hence it is necessary to incorporate the variable nature of few factors to arrive at a close to actual value of the NPV. Hence in order to find the value close to the actual the approach is now towards Monte Carlo method.
Application of Monte Carlo simulation:

For performing the Monte Carlo simulation, Crystal Ball software from Oracle is used. This software has predefined distribution which can be applied to the various parameters involved in the valuation. To be selective in nature let us see only those distribution used in the project.
Once the required distributions are assigned to the corresponding parameters then the forecast
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06
Figure 2: DCF Calculation

1 Development 0.00 0.00 0.00 0.00 50.00 55.00 82.50 123.75 185.63 241.31 301.64 331.80 331.80 265.44 212.36 Introduction Growth Maturity 159.27 119.45 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Decline 89.59 67.19 50.39 19 20
Period
Phase
Revenues
Less: 0.00 0.00 15.00 30.00 -15.00 0.00 -15.00 4.80 -10.20 0.00 0.00 0.00 0.00 1.00 1.10 1.65 2.48 3.71 4.83 -10.20 -20.40 -20.40 12.24 13.46 20.20 30.29 45.44 59.07 4.80 9.60 9.60 -5.76 -6.34 -9.50 -14.26 -21.38 -27.80 -34.75 73.84 6.03 -15.00 -30.00 -30.00 18.00 19.80 29.70 44.55 66.83 86.87 108.59 0.00 0.00 0.00 1.00 1.10 1.65 2.48 3.71 4.83 6.03 6.64 119.45 -38.22 81.23 6.64 -15.00 -30.00 -30.00 19.00 20.90 31.35 47.03 70.54 91.70 114.62 126.09 30.00 126.09 6.64 119.45 -38.22 81.23 6.64 100.87 5.31 95.56 -30.58 64.98 5.31 80.69 4.25 76.45 -24.46 51.98 4.25 60.52 3.19 57.34 -18.35 38.99 3.19 45.39 2.39 43.00 -13.76 29.24 2.39 34.04 1.79 32.25 -10.32 21.93 1.79 25.53 1.34 24.19 -7.74 16.45 1.34 19.15 1.01 18.14 -5.81 12.34 1.01 3158.55 -10.20 -10.20 -20.40 -20.40 13.24 14.56 21.85 32.77 49.15 63.90 79.87 87.86 87.86 70.29 56.23 42.17 31.63 23.72 17.79 3171.89 15.00 0.00 0.00 0.00 11.00 12.10 18.15 27.23 40.84 53.09 66.36 73.00 73.00 0.00 0.00 0.00 20.00 22.00 33.00 49.50 74.25 96.53 120.66 132.72 132.72 106.18 58.40 84.94 46.72 63.71 35.04 47.78 26.28 35.83 19.71 26.88 14.78 20.16 11.09
C.O.G.S.
0.400
S.G.&A.
0.220
R&D costs
Set up costs
EBITDA
Less: Depreciation
0.050
EBIT
Taxes
0.320
NOPAT
Add: Depreciation
Terminal Value
Free cash Flow
Discount Rate 0.725 9.594 7.648 8.313 9.035 0.525 0.381 0.276
0.380 0.200 9.821 0.145 9.252 0.105 8.380 0.076 6.680 0.055 4.840 0.040 2.806 0.029 1.627 0.021 0.884 0.015 0.480 0.011 0.261 0.008 0.142 0.006 18.334
Discount Factor
Discounted Cash Flow
NPV
36.897
parameter (NPV) is defined for initiating the simulation after prescribing the required number of simulations. After the simulation is complete the distribution is obtained for the forecast parameter as shown in the figure 3. It can be inferred that the value of the patent is improved when compared to normal DCF valuation. In spite of this improvement in the value still this method valuation faces a strong drawback, i.e. the decision making capability of the management with respect to this patent which will add value is not captured. For this reason now the focus is shifted to Real Options approach.
After finding all the parameters involved both the lattice, lattice of the underlying and the option valuation lattice is derived. S0 = 37.48 Lacks (from Monte Carlo simulation results) s = 28.48% ; T = 15 years ; dt = 1
u = es d = e-s
p
dt dt
2 3
-d
=> u = 1.329 => d = 0.752 4 => p = 0.518
=s
(rf - b) (dt)
u-d
Application of Real Options Method:

Real Options tend to value the flexibility in terms of making business decisions. Due to confidentiality issues only the basic data were shared and in order to cover the full application of the real options method several assumptions will be made which will help in valuing any kind of projects in future by C L R I. The management can expand its operation by 30% which will incur an addition cost of 10 Lakhs at any point during the life of the project. Also they can contract its operation by 10% which will result in saving of 12 Lakhs. It has been assumed that the project can be abandoned at any point which will fetch 30 Lakhs. Initially each of the options will be valued separately followed by the valuation of the options considering simultaneously.
Lattice Evolution of the Underlying: The calculation of the lattice of the underlying is shown in the below figure 4. The highlighted upper node is calculated by (S0*u) which yields the value as Rs 49.83L. The highlighted lower node is calculated by(S0*d) which yields the value as Rs 28.19L. In similar way the lattice obtained for all 15 time steps. Option Valuation Lattice: Additional input required for this step, Expansion factor: 1.3, with additional cost of Rs 10 Laks. Calculation of the option valuation lattice starts with the terminal node of the previous lattice. i.e. the value of that particular node (Rs2685.99 L) is compared with the value after including the expansion factor. Then the maximum value is chosen as the value of the node in the option lattice. Value of that node = Max (Rs2685.99, {(2685.99 * 1.3) 10} = Rs 3481.79 Lakhs For highlighted intermediate node too comparison is made between the value of keeping the option as open and the value of expansion option. The value of keeping the option open is obtained by the process of backward integration. i.e. by applying the formula: [(p)up + (1 - p)down]e [-rf)( dt)] .....5 The calculation is shown in the below figure 5. On comparing both the lattice the expansion option is found to have the value of Rs 7.434 Lakhs (difference between the starting nodes of both the lattices).
Option to Expand:
The inputs required for solving the real options are: Calculated from Monte Carlo valuation Calculated by logarithmic cash flow returns approach by forecasting the free cash flow value while performing the Monte Carlo simulation method. t Number of years/number of steps in lattice Remaining parameters are either found directly or by using the formula mentioned in section 6.
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Option to Contract:
As we are dealing with the same project the lattice of the underlying will be the same. Hence only the option valuation lattice will be calculated keeping the lattice of the underlying from previous calculation. Additional input required for this step, Contraction factor: 0.9, with additional savings of Rs 12 Laks. Calculation of the option valuation lattice starts with the terminal node of the previous lattice. i.e. the value of that particular node (Rs2685.99 L) is compared with the value after including the expansion factor. Then the maximum value is chosen as the value of the node in the option lattice. Value of that node = Max (Rs2685.99, {(2685.99 * 0.9) + 12} = Rs 2685.99 Lakhs On comparing both the lattice the contraction option is found to have the value of Rs 8.252 Lakhs (difference between the starting nodes of both the lattices). Option to Exit/Abandon: Similar to the calculation of the above 2 options, the calculation is performed and on comparing both the lattice the expansion option is found to have the value of Rs 6.258 Lakhs (difference between the starting nodes of both the lattices).
Option to Contract Rs 8.252 Lakhs Option to Exit Rs 6.258 Lakhs Option to Choose Rs 13.283 Lakhs This implies that when the decision making is imbibed with multiple options the value also increase. Section 6:
Conclusion and Scope for further research

In this project a framework for stream lining the fund allocation process carried out in CLRI is proposed using AHP method and advanced valuation methods such as Real Options and Monte Carlo simulation are used to value the intangibles. It is also evidenced that these methods provide far better value than the traditional valuation methods. Also it is observed that these methods are best suitable in valuation of intangibles when the economic benefits of the underlying are known. It has been remarked from the empirical application of the advanced models to value the Collagens project that even the advanced methods betrays to capture the complete value of the patent or technology. i.e. when the option involves other benefits apart from economic benefits like social benefits, there are no strong framework or models to captivate the value of those benefits. Hence in public funded organizations like CLRI where the prime focus is on societal benefit and not economic benefit, there is a lack of valuation framework that proves the efficiency of their knowledge base. A basic approach has been put forward that would help in ascertaining the value of the intangibles which demands any kind of benefits valuation. It is also a known fact that this field valuation of intangibles through real options is much younger when compared to other financial concepts, the scope of further research is very wide open that in future a single framework might be applied to fetch the actual value of the intangibles involving any type of benefits. The proposed basic approach when further enhanced will do the needful and the valuation of intangibles might
Option to Choose:
In the real world business situations, all the options will be available simultaneously and the option that provides maximum value needs to be chosen. Real options provide the method for finding this value too through Option to choose method. Here too the option valuation lattice alone is done as the lattice of the underlying is the same. The methodology for calculating the option lattice is also similar i.e. the value of the nodes will be decided after comparing all the options value simultaneously and choose the option that gives the higher value. The option to choose has the value of Rs 13.283 Lakhs. from the results of various options value: Option to Expand Rs 7.434 Lakhs
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Figure 4: Lattice Evolution of the Underlying

37.48 0.2848 0.05 15 1 (15 steps for 15 years) 1.329496102 0.752164672 0.518084429 486.3883882 365.8441626 275.1750546 206.9769548 155.6807533 117.0975628 88.07664994 66.24814453 49.82951391 37.48 28.19113191 21.2043735 15.94918064 11.99641023 9.023275967 6.78698941 5.104933665 3.839750757 2.888124869 2.172345496 1.633961538 1.229008144 0.924416508 0.69531344 0.522990205 11.99641023 9.023275967 6.78698941 5.104933665 3.839750757 2.888124869 2.172345496 1.633961538 1.229008144 0.924416508 15.94918064 15.94918064 11.99641023 9.023275967 6.78698941 5.104933665 3.839750757 2.888124869 2.172345496 1.633961538 21.2043735 21.2043735 28.19113191 28.19113191 21.2043735 15.94918064 11.99641023 9.023275967 6.78698941 5.104933665 3.839750757 2.888124869 37.48 37.48 37.48 28.19113191 21.2043735 15.94918064 11.99641023 9.023275967 6.78698941 5.104933665 49.82951391 49.82951391 66.24814453 66.24814453 66.24814453 49.82951391 37.48 28.19113191 21.2043735 15.94918064 11.99641023 9.023275967 88.07664994 88.07664994 88.07664994 66.24814453 49.82951391 37.48 28.19113191 21.2043735 15.94918064 117.0975628 117.0975628 155.6807533 155.6807533 117.0975628 88.07664994 66.24814453 49.82951391 37.48 28.19113191 206.9769548 206.9769548 155.6807533 117.0975628 88.07664994 66.24814453 49.82951391 275.1750546 365.8441626 275.1750546 206.9769548 155.6807533 117.0975628 88.07664994 646.6514663 486.3883882 365.8441626 275.1750546 206.9769548 155.6807533 859.720604 646.6514663 486.3883882 365.8441626 275.1750546 1142.995192 859.720604 646.6514663 486.3883882 1519.607653 1142.995192 859.720604 2020.312451 1519.607653 2685.99753
Lattice Evolution of the Underlying
Present Value of the project
S0
Volatility of free cash flow
Risk Free Rate
rf
Time
Time Step
dt
Up Factor
e^s (dt)
Down Factor
e^-s (dt)
Risk Neutral Probablity
(e^(rf*dt) - d)/(u-d)
49.82951391
37.48
28.19113191
Calculation of nodes
Highlighted Upper Node
S*u
37.48*1.329
Highlighted Lower Node
S*d
37.48*0.752
09
10
Figure 5: Option valuation Lattice
Option valuation Lattice

3481.796789 2616.893893 1966.441574 1477.28667 1109.449478 832.8588983 624.8967224 468.5505304 351.0273788 262.7117646 196.3785149 146.5968111 109.2802249 81.34915166 59.97654093 44.47722842 32.54659878 24.08309606 17.54659378 12.78216067 9.346200828 6.886186763 5.122152001 3.839750757 2.888124869 2.172345496 1.633961538 1.229008144 262.0297227 259.0700412 *(p)up + (1-p)down+ e^*(-rf)(dt) + 1.3(value from previous lattice)-Additional Cost Involved 0.924416508 0.69531344 0.522990205 262.0297227 Max(Open, Expand) 9.208546014 6.821927999 5.104933665 3.839750757 2.888124869 2.172345496 1.633961538 1.229008144 0.924416508 12.55940114 12.33985154 9.094171611 6.78698941 5.104933665 3.839750757 2.888124869 2.172345496 1.633961538 17.24320566 16.91923788 23.7148695 23.30645754 22.85330053 16.5801284 12.14026813 9.023275967 6.78698941 5.104933665 3.839750757 2.888124869 32.08161958 31.55424113 43.98266467 43.41905167 42.77044253 30.95015285 22.35084643 16.24108993 11.99641023 9.023275967 6.78698941 5.104933665 59.40551457 58.75241994 57.99820985 42.01203314 30.24596731 21.79670128 15.94918064 11.99641023 9.023275967 80.78928964 80.15485708 79.43295801 108.6753422 107.9954837 107.2321987 78.60801531 57.11430779 41.09859376 29.39305392 21.2043735 15.94918064 145.9595546 145.2515208 144.4700523 106.3804606 77.66411505 56.05417136 39.91888022 28.19113191 195.7178215 194.9911127 262.0297227 261.2820333 194.1976718 143.6197519 105.4512707 76.61029364 54.77836809 350.3193888 349.5402635 260.4629614 193.3366051 142.7145374 104.4996449 467.8094035 624.1175971 466.9903316 348.6791968 259.5577469 192.3849793 832.0398264 623.2565304 466.0851171 347.727571 1108.588411 831.1346119 622.3049046 1476.381455 1107.636785 1965.489949
Expansion Factor
1.3 10L additional cost
60.47916463
44.914
32.95912785
INTERMEDIATE NODE
Open
Expand
Node Value
TERMINAL NODE 2685.99753 3481.796789 3481.796789 Q3 1.3(value from previous lattice)-Additional Cost Involved Max(Open, Expand)
Open
Expand
Node Value
become as straight forward as the valuation of the tangibles which are now well established.
References
Bekkum, S. V., Pennings, E., & Smit, H. (2009). A Real Options Perspective On R&D Portfolio Diversification. SSRN. Black, F., & Scholes, M. S. (1973). The pricing of options and corporate liabilities. Journal of Political Economy 83 , 637-659. Boer, P. F. (2004). Risk-adjusted Valuation of R&D Projects. Boer, P. (2002). The Real Options Solution: Finding Total Value in a HighRisk World. New Jersey: John Wiley & Sons, Inc. Carlsson, C., Fuller, R., Heikkila, M., & Majlender, P. (2007). A fuzzy approach to R&D project portfolio selection. International Journal of Approximate Reasoning , 93-105. Cohen, J. A. (2005). Intangible Assets-Valuation and Economic benifit. New Jersey: John Wiley & Sons,. Cotropia, C. A. (2009). Describing Patents as Real Options. The Journal of Corporation Law , 1128-1149. Damodaran, A. (2006). Dealing with Intangibles: Valuing Brand Names, Flexibility and Patents. Stern School of Business. Damodaran, A. The Promise and Peril of Real Options. Denton, F. R., & Heald, P. (2003). Random Walks, Non-Cooperative Games, and the Complex Mathematics of Patent Pricing. Rutgers Law Review. Dixit, A. K., & Pindyck, R. S. (1994). Investment under uncertainty. Princeton University Press. Hsu, J. C., & Schwartz, E. S. (2003). A model of R&D valuation and the design of research incentives. Cambridge: National Bureau Of Economic Research. Jeff, T., & Blatnicky, L. (2006, February 7). How to Value a Business Intellectual Property. SanFransisco, CA. Retrieved from www.hlhz.com. Lerner, J., & Farrar, A. L. (2006). Valuing Patents for licensing: A Practical survey of literature. SSRN.
Lev, B. (2003). Remarks on the measurement, valuation and reporting of Intangible Assets. FRBNY Economic Policy Review , 17-22. Luehrman, T. A. (1998). Investment Oppurtunities as Real Options: Getting started on the numbers. Harvard Business Review. Mun, J. (2002). Real Options Analysis: Tools and Techniques for Valuing Strategic Investments and Decisions. New Jersey: John Wiley & Sons, Inc.,. Myers, S. C. (1984). Finance Theory and financial strategy. Interfaces 14, 126-137. Myers, S. (1977). Determinants of Corporate Borrowing. Journal of Financial Economics 5 (2) , 147-176. Pindyck, R. S. (1993). Investments of Uncertain cost. Cambridge: National Bureau of Economic Research. Razgatis, R. D. (2009). Valuation and Dealmaking of Technology-Based Intellectual Property: Principles, Methods, and Tools. New Jerssey: John Wiley & Sons, Inc.,. Reilly, R. F., & Schweihs, R. P. (2004). The Handbook of Business Valuation and Intellectual Property Analysis. The McGraw-Hill Companies, Inc. Schwartz, E. S. (2002). Patents and R& D as Real Options. UC Los Angeles: Anderson Graduate School of Management. Sereno, L. (2009). Real options valuation of pharmaceutical patents. A case study. Pisa. Smith, G. V., & Parr, R. L. (2005). Intellectual Property: Valuation, Exploitation and Infringement Damages. New Jersey: John Wiley & Sons, Inc.,. Suresh Kumar, S. (2004). AHP-based formal system for R&D project evaluation. Journol of scientific and industrial research , 888896. Trigeorgis, L. (1996). Real options. Managerial Flexibility and Strategy in Resource Allocation. Cambridge: MIT Press. Weeds, H. (1999). Sleeping patents and compulsory licensing: An options Analysis. Cambridge: WARWICK ECONOMIC RESEARCH PAPERS.
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12
MMTC : A Case of Knowledge Management and Learning Organization

Pallavi Banerjee*
Abstract
PURPOSE: The vast subject of Knowledge Management has recently started gaining significance in India. However, despite the investment of time, resources and money, only few companies can claim to have successfully implemented an organization-wide Knowledge Management System. These past experiences reiterate technology infrastructure to be only an enabler of knowledge management and the employees to be the driving force. Thus, the purpose of the research is to explore the perception of employees towards knowledge creation, transfer and sharing practices in an Indian Public Sector Enterprise, MMTC. This case seeks to recognize and recommend characteristics that enhance knowledge sharing attitudes in employees and work culture in organizations. The project also explores the need of developing knowledge management strategy and linking it with corporate goals and human resources strategy and processes. It also identifies the existing knowledge initiatives and resources in the organization as a first step towards knowledge management in the firm. In a knowledge economy where knowledge is a source of competitive advantage for organizations, continuous learning can enable organizations to adapt to changes faster than their competitors. Thus, companies aim to emerge as Learning Organizations which is defined by Professor Garvin as an organization skilled at creating and transferring knowledge, and at modifying its behaviour to reflect the new knowledge. This definition emphasises the inter-relatedness of the two concepts of Knowledge Management and Learning Organization. The research describes the traits that define a learning organization and provides actionable steps which can enable this particular organization to emerge as one. APPROACH: The research uses primary data collected using two questionnaires. The first questionnaire attempts to capture the perception of employees towards knowledge management initiatives and their linkage to Human Resource processes. The second questionnaire is a learning Organization assessment survey developed by Garvin, Edmondson and Gino (2008) and published in Harvard Business Review (2008). The case contains an analysis of the primary data using factor and discriminant analysis and perception mapping. FINDINGS: This case provides a roadmap for knowledge management implementation based on two broad categories of knowledge Management strategy, namely Codification (which is Explicit knowledge oriented) and Personalisation (which is Tacit Knowledge Oriented). The paper emphasises on enhancing social interaction and collaboration within the organization to successfully share and transfer knowledge. To emerge as a Learning Organization, the organization would need to improve on processes of information collection and transfer as well as initiate openness to new ideas and experimentation as a part of their organization culture. Key words: Knowledge management, Learning organization, Explicit knowledge, Collective knowledge, Factor Analysis
Introduction
The post industrial society today is on the brink of change and is increasingly expressed as a knowledge economy. Scholars all over the world are defining knowledge as a powerful economic resource and a source of sustained and unique competitive advantage.
The importance of knowledge is not unknown to India and its government. The erstwhile President of India, Dr. A. P. J. Abdul Kalams work India 2020: A Vision for the New Millennium stressed on the importance of knowledge and ways to facilitate Indias transition to emerge as a knowledge economy. With this view, Prime
*Centre for Business Management 2009-11, Birla Institute of Management Technology Under the guidance of Prof. Manosi Chaudhuri, Centre for Business Management, Birla Institute of Management Technology
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Minister Dr. Manmohan Singh set up a knowledge commission in 2005 with the vision to develop India into a knowledge-leveraging 21st century society. There is vast amount of literature defining Knowledge differently. For the purpose of the case, it is defined as a whole set of intuition, reasoning, insights, experiences related to products, technology, processes, customers, markets, competition, etc. so as to enable effective action. In an organization, there is a continuous flow of knowledge through processes of creating, disseminating, applying, renewing and updating the knowledge. Bain and Company emphasises on the growing need to tap and manage the knowledge processes within an organization. Knowledge management is based on the premise of successful businesses being a collection of distinctive knowledge bases (Bain and Company, 2009). This case seeks to understand the broad concepts developed within knowledge management and the steps which can enable an organization to emerge as a Learning Organization. There is an attempt to develop a conceptual framework for knowledge management architecture as a part of the case.
distinguished in two forms, namely: Tacit /Explicit Knowledge Individual /Collective knowledge Hislop (2002) defines tacit knowledge is highly personal and difficult to formalise and even share with others. Subjective insights, individuals action and experience as well as the ideals and values are some examples of tacit form of knowledge. On the other hand, explicit knowledge is codified, impersonal and easy to communicate in an organization. Rules, documents and manuals are certain manifestations of explicit knowledge. These classifications form the framework of the Knowledge spiral suggested by Nonaka and Takeuchi, popularly denoted as the SECI model. SECI model suggests four modes of knowledge conversion, namely Socialisation (sharing of tacit knowledge from individual to organisation level), Externalisation (conversion of tacit to explicit knowledge), Combination (explicit knowledge sharing between organisations such as documents) and Internalisation (conversion of explicit into individual tacit knowledge). This process is closely linked to the concept of organisational learning, in which individual learning is converted into the organisational learning and memory. Mukherji (2005) involves one of the most popular frameworks to differentiate between two broad types of knowledge strategies namely, Codification and Personalisation. Codification strategy is primarily centred around creation of repositories for storage and easy use and retrieval of codified knowledge. Personalisation strategy on the other hand, is concerned with improving face-to-face knowledge sharing with its focus on tacit knowledge possessed by different workers. There is very little literature available in the context of Knowledge Management and Organizational Learning in India. World Bank (2004) emphasises that it is the opportune time for India to emerge as a knowledge economy. To enable the transition into a knowledge economy, India needs to focus on more skilled and
Literature Review
In one of his path breaking works, Peter Drucker acknowledges knowledge to be emerging as a critical resource. Thus, managements most significant responsibility is to ensure productivity of knowledge which is going to emerge as the competitive advantage of a nation, industry, a firm. Prahalad (1998) also reiterates this in his work as he quotes a recent survey where Japanese managers have rated knowledge creation and innovation and not quality as first source of competitive advantage. Knowledge gains its value when applied for social or commercial benefit. Thus, Knowledge Management encompasses creation, sharing and utilisation of knowledge whether at individual, group (or team) and organizational level. Knowledge has primarily been
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educated workers and identify and implement efficient innovation systems. Pillania (2006) finds that knowledge management continues to be considered a technology oriented strategy, instead of a human resources strategy in India. Knowledge Management is still considered to be a task of few designated ones and no requirement of knowledge sharing is felt. Communities of Practices are found rarely in Indian companies except in a few software companies. The literature available on the subject of Learning Organizations is extensive as well as largely subdivided into two camps- one which advocates the ideal of Learning Organization and the other camp which argues sceptically about its merits. Interest in the area of Organizational Learning predated that of Knowledge Management; however there is a large amount of overlapping between the two vast subjects. It is difficult to separate the two subjects as knowledge begins at the point where learning ends and learning begins with knowledge processes. Mohan Thite focuses on the need of learning organization in a knowledge economy and considers it to be a daunting yet pertinent ideal for organizations. To become learning organizations, firms would require fundamental changes in the mindset and remain openminded to constant change. Although there is vast literature available on Organizational Learning and becoming a learning organization, there are few assessment tools available to quantitatively measure and compare organizations on their Learning practices. Due to its comprehensive format and in-depth analysis of traits of learning Organizations, an assessment survey developed by Professors Garvin, Edmondson and Gino and published in Harvard Business Review (2008) was taken up to conduct a pilot study of learning practices in MMTC.
The assessment survey is based on three primary building blocks which Garvin et al. consider to be three broad factors identified as essential for organizational learning. These building blocks include several characteristics under each block. 1. A Supportive Learning Environment A work environment which is supportive of learning involves four characteristics which are: Psychological Safety Appreciation of differences Openness to new ideas Time for Reflection Concrete Learning Processes and Practices A learning organization requires a series of steps and implementation of learning practices. An organization should develop learning processes which involve: Experimentation Information Collection and Transfer Analysis Education and Training Leadership that Reinforces Learning Learning processes need to be strongly driven by top management. The leaders of the organization should: Demonstrate willingness to listen to divergent viewpoints. Advocate the importance of devoting time towards problem identification, experimentation, knowledge transfer, analysis and reflection. Initiate active discussion and questioning on major organizational issues.
2.
3.
Rationale for The Study

MMTC today faces the challenge of a major loss of its supervisory and managerial level employees due to employees reaching the age of superannuation in the next five-ten years. The challenge lies in not just acquiring and developing new talent, but in losing the wealth of knowledge existing within these employees. There is an immense need to harness the existing knowledge so as to prevent new employees from continuously reinventing the wheel.
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Knowledge from its primary definition is seen to reside within individuals. While intellectual assets in the organisation can exist in the form of documents and manuals, knowledge gained through experience and performance of the tasks is embedded in individuals. Thus, it is essential to adopt processes and practices which generate new knowledge as well as organise and share existing intellectual assets within an organisation. There is a need to assess the impact of adopting these practices on organisation culture. Since Knowledge Management processes require huge investment in form of time, money and effort, it is important to determine the motivation of employees towards such practices. The Project explores the need of Knowledge Management (KM) practices in MMTC. It attempts to identify the current knowledge assets in the organisation and evaluate the factors which can gain employee and leadership support towards it, thereby ensuring its success. Knowledge generation and sharing cannot be considered nor implemented without ensuring individual and team learning. A pilot study has been undertaken in MMTC to determine the characteristics required by the organisation to emerge as a learning organisation
While all organisations aim to emerge as a Learning Organisation, there are few standardised tools to assess the individual and organisational learning of firms. With this view, a standardised assessment survey developed by Professors Garvin et al. in 2008 has been applied as a pilot study on a smaller sample audience of 30 employees in the organisation.
Data Analysis and Results

Analysis of the primary data collected for Knowledge Management was undertaken through application of factor and discriminant analysis. The assessment survey of learning Organisation was primarily studied using the benchmark data given as a part of assessment tool. Factor and discriminant analysis was also applied to confirm the results acquired through the comparison with benchmark data. The primary data was utilised for analysis after conducting reliability analysis.
Knowledge Management
Factor analysis was applied on all twenty questions in the knowledge management questionnaire. However, to refine the results acquired through factor analysis, the anti-image matrix and communalities table were analysed. Factors with lower values in anti-image matrix and communalities table were dropped until the KMO value was found suitable for further analysis. Finally nine items of the questionnaire was considered suitable for further. These extracted factors include: Key Success Factors Organising available knowledge resources in MMTC can reduce duplication of work Innovation in daily routine tasks is not encouraged /practiced in your job Knowledge Management practices should be initiated by each department head Knowledge creation groups such as Learning teams(Informal self organizing groups that share knowledge and use it to solve problems together) is encouraged in MMTC
Methodology
To capture the perception of employees regarding knowledge management initiatives, a questionnaire was designed based on an extensive literature review. The questionnaire also seeks to identify existing knowledge resources and their usage in the organisation. A five point Likert scale was utilised in the questionnaire so as to maintain simplicity yet providing ample scope to agree/disagree. The design of the study undertaken is exploratory and descriptive in nature. An effective sample size of 40 employees was utilised for the research on Knowledge Management. Based on convenience sampling, employees of diverse departments and designations were included in the sample.
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A formal Mentoring program so that juniors can gain knowledge from their senior employees should be implemented in MMTC MMTC possesses a participative work culture where employees of different departments interact and formally share their expertise and knowledge. New practices related to the field of knowledge management cannot be implemented without support of top/senior management Organising and sharing Knowledge should form a formal part of your daily work Sharing of expertise and knowledge with peers is recognized and rewarded in MMTC
The rotated component matrix (included in annexure A) was examined to identify the loadings and determine the factors falling in each component. The established three dimensions included: Leadership and Social Interaction, which reflects the people aspect of Knowledge Management system. Organization of Knowledge assets and initiatives in the organization, which reflects the process aspect of Knowledge Management system. Work culture and innovation, which reflects the organizational culture of MMTC. Discriminant analysis was then applied to decipher any significant differences between the opinions given by employees at different designations. Discriminant Analysis is significant for a study which takes into account peoples perceptions. It can be considered to be a confirmatory factor analysis since the factors considered in factor analysis should be able to reclassify the responses correctly according to the dependant variable. Discriminant analysis was applied on the basis of four designations - deputy manager, manager, senior manager and deputy general manager. 82.5% of the data was reclassified correctly on the basis of the independent variables in the analysis. This reflected that the factors considered for factor analysis were successfully able to map perceptions across the groups/designations. The results achieved for Knowledge Management (three extracted components) were found to be similar to the three building blocks identified by Garvin et al. and utilised in the Learning Organisation assessment survey. The three critical factors for Knowledge Management architecture determined through application of factor analysis included leadership, Knowledge initiatives and processes, and conducive organization culture. The building blocks identified by Garvin for continuous learning in organizations also similarly involves leadership that initiates learning, learning practices and processes and supportive learning culture and environment. To further explore the long-term goal of MMTC emerging as a learning
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KMO and Bartletts Test of Sphericity With only the nine factors considered, KMO was found to be above 0.7 and the null hypothesis as given by Bartletts test stood rejected. This indicated that the correlation matrix was not an identity matrix at 0.05 level of significance and there was a degree of correlation amongst the factors considered. Thus, further analysis using factor and discriminant analysis could be further carried out.
Reliability Analysis
T-tests applied to each of the nine factors determined that the questions allowed the respondents to clearly agree or disagree. Each factor was rejected at 0.05 significance level. Reliability analysis was also carried out by testing the adequacy of sample size using Cronbach analysis. The analysis yielded acceptable result of 0 .794.
Validity of The Factors Included

To determine the primary components that can strongly impact knowledge initiatives in MMTC, Factor analysis was applied on all extracted nine factors. On application of factor analysis on nine factors, three components were extracted which explained 70% of the variance and the alignment of the nine factors within the three dimensions was noted.
organisation, data was collected and analysed through use of the assessment tool developed by Garvin et al.
Learning Organisation Analysis

The primary data collected in MMTC was organised according to each building block and their subcomponents. The data collected was further subdivided into two sets, one of which measured the perception of employees on the subcomponents of building blocks, while the other reflects the expectations of the employees from the organisation. For further data analysis, nine factors under perception and expectation each were considered. The building Block of Leadership in the assessment tool does not have sub components and cannot be easily scaled. It is therefore excluded from factor analysis and discriminant analysis. However, its overall scoring is included in perception mapping and assessment of the gap between Perception and Expectation.
significant difference between the expectation and perception of employees in MMTC. The perception about each subcomponent lies under a different factor as compared to the expectation of that subcomponent. Discriminant analysis was applied as a confirmatory factor analysis taking designation as dependant variable. 81.5% of the responses were correctly reclassified with few errors at the first two levels. The satisfactory results reflected that the perception at senior managerial positions could be clearly distinguished from that of the lower managerial positions through the components considered in the questionnaire.
Perception Matching
Primary data collected using the assessment survey developed by Garvin et al. was essentially analysed through the benchmarking scores provided as a part of the diagnostic tool. Comparison could also be drawn between the expectations of employees as compared to the ratings given by them for each questionnaire item which together form the perception of the employees. By assessing performance on each building block, the areas which require improvement can be identified. Garvin et al. believe the assessment tool can pinpoint areas where companies need to foster knowledge sharing, idea development, learning from mistakes and holistic thinking. On comparison of perception score with expectation score given by employees as well as comparison of perception score with benchmark score, the areas noted for improvement were Appreciation of differences(Supportive learning environment), Analysis and Information transfer(Concrete learning practices).
Reliability Analysis
Using SPSS, Cronbach Alpha was calculated separately for the two groups of data, namely Perception of Employees and Expectation of Employees. Cronbach Alpha measures slightly less than 0.7 in both the cases but this can be attributed to lower number of respondents. T-Test conducted on Perception and Expectation of Employees on the same parameters, was rejected at 0.05 level of significance and reflected significant differences between perception and expectation of employees.
Factor and Discriminant Analysis

On application of factor analysis, the perception and expectation of each sub-component loaded onto different components in the rotated component matrix. The purpose of factor analysis for this primary data is not data reduction; instead it validates the
Discussions and Recommendations

Before investment in knowledge management architecture, the organisation would need to establish
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a roadmap which would be followed to develop knowledge initiatives suitable for Indian PSU, MMTC. (Roadmap in Annexure C). The first step in the roadmap involves selection of a suitable knowledge strategy (Personalization or Codification). Based on the selected strategy, suitable knowledge program and practices could be developed. In case of MMTC, initiating personalization strategy would enable them to garner support of employees. The strategy would include knowledge sharing initiatives such as: Developing experience sharing sessions Sharing and recording best practices and lessons learnt from errors within the organization amongst the regions or departments. This could be done via email/newsletter Mapping employee competency and preparing a list of experts in different domains. The expertise can be channelized through the intranet as all employees have ready access to contact details of the experts. Implementing Mentoring and Peer Assist programs initiated by prospective mentees. Although MMTC assigns mentors to all new recruits, it is essential to devote resources to ensure that the mentor-mentee relationship is established and continuously worked upon. In India, Public Sector Enterprises (PSE) such as NTPC generally undertake codification strategy through development of a knowledge portal ,dedicated to sharing of knowledge through articles and documents on one hand and collaborative tools of online chat and discussion rooms on the other. The knowledge sharing practices and knowledge portal developed would have to be aligned closely to a Knowledge Management strategy which would be established on the basis of the needs of the employees. The knowledge management strategy would in turn be closely linked to the corporate strategy of the organization.
The final aim of the organisation should be to utilise the knowledge to ensure continuous learning throughout the organisation. Based on the results deduced from the assessment survey of Garvin et. al., a need was felt to not only establish knowledge sharing initiatives, but the significance of refurbishing the organization culture was also realised. Thus, there is a need to emphasise innovation, team building, and openness to divergent viewpoints, and leadership that believes in open-door policy as a part of the organization culture. The HRD department (training cell) should renew focus on leadership, team building and entrepreneurship skills which could be included in the training and development programmes designed by MMTC for both its corporate and regional offices.
Conclusion
The three focus areas to consider while tapping knowledge creation, generation, sharing and dissemination processes so as to emerge as a continually developing and learning organisation are organisation culture and the work environment , the knowledge sharing and Learning processes and practices and top management support and leadership in the organisation.
Limitations
The research was conducted on a small sample size due to restriction of time and access. It was also limited to the corporate office of MMTC and could not be extended to the various regional offices located in other cities of India. Knowledge Management was an unfamiliar term for many of the employees thereby securing fewer uptakes in terms of responses to interviews and questionnaires. Due to paucity of time and interest, research was restricted only to the people issues involved in implementation of Knowledge Management. Issues related to technology infrastructure related to KM were not given equal consideration in the primary research.
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ANNEXURES
Annexure A : Rotated Component Matrix for Knowledge Management Rotated Component Matrixa Component 1 Practiced by department head Organising knowledge reduces duplication Learning Teams Knowledge sharing part of daily work Top management support Formal mentoring program Knowledge sharing recognized Innovation encouraged Knowledge sharing work culture .790 .718 .707 .117 .150 .437 .104 -.387 .587 2 .170 .188 .178 .895 .881 .651 .033 -.113 .265 3 .006 -.167 .442 .162 -.035 -.078 .809 .622 .620
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 4 iterations.
Annexure B
BUILDING BLOCK 1 : SUPPORTIVE LEARNING ENVIRONMENT EXPECTATION Psychological Safety Appreciation Of Differences Openness Ideas to New TOP QUARTILE (90) TOP QUARTILE (80) BOTTOM QUARTILE(56) TOP QUARTILE (100) PERCEPTION TOP QUARTILE(100) THIRD QUARTILE(68) BOTTOM QUARTILE(62) TOP QUARTILE (97) BENCHMARKING SCORE TOP : 87-100 THIRD : 65-79 BOTTOM: 38-80 TOP: 65-100
Time For Reflection
BUILDING BLOCK 2 : CONCRETE LEARNING PROCESSES AND PRACTICES Experimentation Information Collection Analysis Information Transfer Education Training Leadership And THIRD QUARTILE (78) SECOND QUARTILE (78) THIRD QUARTILE(77) THIRD QUARTILE(79) TOP QUARTILE (100) BOTTOM (40) QUARTILE THIRD:72-82 BOTTOM: 18-53 SECOND: 71-79 THIRD: 72-86 SECOND: 57-70 TOP QUARTILE (100) TOP QUARTILE (98) THIRD: 72-84 TOP : 85-100 TOP : 90-100
SECOND QUARTILE (76) SECOND QUARTILE (61)
BUILDING BLOCK 3 : LEADERSHIP THAT REINFORCES LEARNING TOP QUARTILE(88) TOP QUARTILE(90) TOP: 83-100
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Annexure C
References
Drucker P. F. (1993), Post Capitalist Society, Butterworth-Heinemann, London. Garvin David A., Amy C. Edmondson, and Francesca Gino. (2008) Is Yours a Learning Organization? Harvard Business Review 86, No. 3 (March 2008). Hislop D. (2002) Knowledge Management in Organization - A Critical Introduction, Oxford University Press. Kalam, A. P. J. (2001) in Keynote Address at Indian Economic Summit 2001- Transforming India into a Knowledge Society organised by World Economic Forum. Mukherji (2005) Knowledge Management Strategy in Software Services Organization: Straddling Codification and Personalisation, Management Review Volume 17, No. 3. Nonaka I. and Konno N. (1998) The Concept of Ba: Building a Foundation for Knowledge Creation. California Management Review , Vol. 40, No. 3 Nonaka I. and Takeuchi H. (1995) The Knowledge Creating Company:
How Japanese Companies create the dynamics of innovation , New York: Oxford University Press Pillania, R. K. (2006) State of Organizational Culture for Knowledge Management in Indian Industry, Global Business Review, Vol. 17, Issue I. Prahalad, C.K. (1998), Strategies for Growth, Nicholas-Brealey Publishing. Rigby, K.Darrell (2009), Management Tools 2009: An Executives Guide, Bain and Company Inc. Rigby, D. and Bilodeau B. (2009), Management Tools and Trends 2009, Bain and Company Inc. The Human Factor, HR Transformation in PSEs, August 2009, Vol1, Issue 9 (Page 17) Thite M. (2004), Managing People in the New Economy: Targeted HR Practices that Persuade People to Unlock Their Knowledge Power, Sage Publications. World Bank (2004), India and The Knowledge Economy: Leveraging Strengths and Opportunities (www.worldbank.org.in) in Pillania R. K., Study of Knowledge Management in Selected KnowledgeIntensive SMEs in Clusters in NCR Delhi.
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22
Factors of After-Sales Service Affecting Customer Satisfaction in Indian Consumer Electronics and Appliances Market
(The Case of MIRC Electronics Ltd. (ONIDA), Pune Region, India)
Parul Aggarwal*
Abstract
Objective: This study was done to identify the factors of after-sales service affecting customer satisfaction in the Indian consumer electronics and home appliances market. The findings were extended to assess the after-sales service offered by MIRC Electronics Ltd. (ONIDA), Pune Region, India, for its products and suggest possibilities for improvement to the company. Approach: A questionnaire on sixteen parameters was constructed on a reverse five-point Likert scale, with 5 indicating Very Poor and 1 indicating Very Good. Response was collected from the 100 (Onida and non-Onida) dealers in the Pune Region of Maharashtra, covering eleven different cities and townships. The responses of the respondents were validated through the customer complaints registered at their respective counters. Responses were taken from only those dealers currently dealing in ONIDA products or who have dealt with them at least once in the previous year. Results: Using Factor Analysis, the 16 parameters were found to fall under three important categories Dealer-controlled Delivery, Companycontrolled Post-delivery (Installation and Warranty Service), and Dealer-controlled repair outside warranty. Using Regression Analysis, it was established that customer satisfaction and loyalty for a brand were most affected by company-controlled post-delivery factors. Improving and optimizing these factors would possibly lead to increase in market share of the company. Conclusion: This study will help the marketers and the service providers of MIRC Electronics and other major players in the industry to pay more attention to the company-controlled post-delivery factors of after-sales service to enhance satisfaction level of their customers and attract new customers. Similar studies can be done with other companies in the industry to validate the findings and to generalize the conclusions for the Indian and the global consumer durable sector. Keywords: After-sales service, Customer Satisfaction, Indian Consumer Electronics, Home appliances, Consumer Durables, Delivery, Postdelivery, Installation, Warranty
Introduction
Importance of Studying After-Sales Service: After-sales service is an integral aspect of Customer Relationship Management (CRM), which is a vital tool to enhance customer loyalty and retain profitable relationship with customers over the long-term. This is particularly important in the consumer durables industry, where the frequency of repeat purchase is low. The literature review suggested that there is a strong correlation between customer satisfaction, as a dependent variable, and the 3 independent variables Delivery, Installation, and Warranty. An attempt was made to find out which sub factors under these three categories are critical for business organizations like MIRC Electronics Ltd. to
create customer satisfaction and beyond that the elusive goal of customer delight. Satisfied customers will not only remain loyal, but will have increased positive perceptions about the companys products and services. This will lead to a positive word-of-mouth in the market, thereby resulting in an increase in the number of new customers and thereafter in overall market share. The Present Scenario: India is the worlds second largest growing economy, having a vast consumer class with increasingly high disposable incomes. This has made consumer durables one of the fastest growing industries in the country. Various drivers, like housing and real estate demand, an emerging retail boom, increase in the
*Centre of Business Management 2009-11, Birla Institute of Management Technology Under the guidance of Prof. R. J. Masilamani, Centre of Business Management, Birla Institute of Management Technology
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level of affluence of a part of the population, easy availability of finance, emergence of double-income families, fall in prices due to increased competition, government support, growth of media, improvements in technology, reduction in customs duty, growth in the consumer base of the Indian rural sector, and greater disposable income of people, have all contributed to the spectacular growth of this sector. Currently the Indian consumer electronics and household appliances market is dominated by major Indian and international brands, including LG, Samsung, Whirlpool, Videocon, Godrej, MIRC Electronics (ONIDA), Blue Star, Bajaj, Panasonic, Haier, etc. LG and SAMSUNG, the two major Korean companies, are the leading players in this sector, with LG being the market leader in almost every product category of consumer electronics and household appliances. Product Categories: The consumer durables sector can be segmented into two broad categories Consumer Electronics and Consumer Appliances, which is further segmented into Brown and White Goods. The product line included under each of these categories is as follows: Consumer electronics: VCD/DVD, home theatre, music players, color televisions (CTVs), LCDs, Mobile Phones. White goods: Air Conditioners, Washing Machines, Refrigerators, etc. Kitchen appliances/brown goods: Mixers, Grinders, Microwave Ovens, Chimneys, Cooking Range, Irons, Electric Fans, etc. Amongst all the product categories, the CTV segments enjoys the maximum share (nearly 30 percent) and provides the largest contribution to overall growth of the industry, in terms of both volume and value. CTVs, Refrigerators and Air-conditioners together constitute more than 60 percent of the sales in terms of the number of units sold. Companies like LG, Whirlpool and Samsung have registered double-digit growth in the direct- cool refrigerator market. In the washing machines segment, the semi-automatic category and the fully-automatic categories have grown annually by 4 percent and 8 percent
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respectively. In the air-conditioner segment, the sale of window ACs has grown by 32 percent and that of split ACs by 97 percent. The Indian household appliances market generated total revenues of $4.8 billion in 2008, representing a Compound Annual Growth Rate (CAGR) of 12.5 percent for the period spanning 2004-2008. In comparison, the Japanese and Chinese markets grew with CAGRs of 1.1 percent and 7.5 percent, respectively, over the same period, to reach respective values of $18.6 billion and $24.4 billion in 2008. Market consumption volumes increased with a CAGR of 13.2 percent in 2004-2008 to reach a total of 34.7 million units in 2008. This is expected to rise to 52.2 million units by the end of 2013, representing a CAGR of 10 percent for the 2008-2013 periods (McKinsey Global Institute MGI report, 2008) The MNC Challenge: This particular sector in India is characterized by the emergence of MNCs, exchange offers, discounts, resulting in intense competition. The market share of MNCs in the consumer durables sector is 65 percent. The major target of all the companies competing in this sector is the growing Indian middle class. MNCs offer superior technology to the consumers whereas the Indian companies compete on the basis of the firm grasp of the local market, their well acknowledged brands, and wide and effective distribution networks. The Rising Rural Market: Since the penetration in the urban areas for these products is already quite high, the markets for both C-TV and Refrigerators are shifting to the semi-urban and rural areas. The rural sector, constituting nearly 70 percent of the total Indian population, offers a huge potential for consumer durables. However, the penetration level in still very low in the rural market. An important factor behind the low penetration is the poor government spending on infrastructure specifically in electrification programs in rural areas. This discourages the consumer durables companies from investing adequately and pursuing effectively this potentially large market. However, despite a low penetration level, the growth rate is much more than that of the urban market and is now seen as a product replacement market.
Winning the Customer: The bottom line is Indian market is changing rapidly and showing an unprecedented business opportunity. The penetration level of consumer durables is very low in India, as compared with the other countries. This translates into a vast unrealized potential. In light of the intense competition facing the consumer electronics industry and the vast untapped potential of the Indian market, manufacturers are now constantly engaged in the creation of new innovative products and introduction of new technologies that would hopefully win consumers' acceptance. However, against a backdrop of changing technology and increasingly sophisticated consumer wants, gaining customers acceptance and increasing the market share for both the existing and the new products becomes an uphill task. Key Factors: In order to improve the market share and increase the scope for repeated purchases and brand loyalty that eventually leads to optimum profitability, it is important for the marketers to first understand the consumers buying behavior including his perceptions and preferences towards choosing a specific offering. At the same time, after-sales service is equally important in satisfying consumer needs, and in creating a long term mutually beneficial relationships with customers. According to Alexander et al, 2002, effective after-sales service may generate more than three times the profit of the original purchase during a given products life-cycle. Investigating After-Sales Service: This study, thus, attempts to identify the factors of after-sales service that affect customer satisfaction in Indian consumer electronics and home appliances market so as to help the companies competing in this sector to determine which aspects of after-sales service require more focus and investment. By extending the findings to discover factors that existed and impacted customers satisfaction in the after-sales service offered by MIRC Electronics Ltd. (ONIDA), Pune Region, India for its products, and consequently the companys market share, the study attempts to pinpoint aspects of after sales service that can be directly correlated with customer satisfaction and could on the other hand lead to drastic fall in market shares, if ignored.
MIRC Electronics Ltd. (Onida) Company Background

The History- Onida is one of India's leading electronics brands, established as "MIRC Electronics" in 1981. Onida was started by G.L. Mirchandani and Vijay Mansukhani in 1981 in Mumbai. In 1982, Onida started assembling television sets at their factory in Andheri, Mumbai. Since then, Onida has evolved into a multiproduct company in the consumer durables and appliances sector. Onida achieved a 100 percent growth in ACs and microwave ovens and a 40 percent growth in washing machines last year. ONIDA created the famous caption "Neighbors envy, Owner's Pride", and a legendary character, the devil complete with horns and tail. This character has now been replaced by a young married couple- Siddharth and Ritu marking the transition from bold new entrant attracting deep envy to established, reliable market leader. ONIDA Today- MIRC Electronics Ltd. is a leading Consumer Electronics Conglomerate of India with 2008-09 turn over of Rs.1800 Cr. It has the ownership of the Popular 'ONIDA Brand with 3200 Employees, 33 Branch Offices, 233 Service Centres, 1200 Trained Engineers, Network of 9000 Dealers & 180 Distributors and International Presence in CIS, UAE, Africa & China. MIRC Electronics won an Award for Excellence in Electronics in 1999, from the Ministry of Information Technology, Government of India. Onida with its Sales & Marketing office in Dubai reported a 215 per cent export growth in two years, setting the base for an increased robust international presence. Onida products have been favored by hypermarkets like Lu-Lu Centres, Carrefours, Geants and Dasmans in the Gulf Cooperation Council (GCC) countries. ONIDA Product Range - Today, in the Indian market ONIDA competes with all the local and international brands in the following product categories CTVs, LCDs, DVDs and Home Theater Systems, Washing Machines, Microwave Ovens, Air Conditioners, Presentation Products, and Mobile Phones.
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ONIDA Manufacturing Facilities: ONIDA has 3 Manufacturing Plants across the country - Wada, Mumbai (7sigma plant), Roorkee, and Noida. These Mfg Plants are ISO 9001 and ISO 14001 certified and having all world class facilities for Designing and Manufacturing of LCD TV, CRT TV, Projectors, Air Conditioner, Microwave, DVD Player, Washing Machine etc. After Sales Service System Pune Region: The After Sales Service has been outsourced to ADONIS, which operates 3 branches, 1 each in Pune, Kolhapur, and Goa. The Pune Branch operates 5 service centers 4 service centers (Sholapur, PCMC, Kotrud, and Swargate) run by individuals, and 1 service depot (Ahmednagar) run directly by ADONIS. The Kolhapur branch, on the other hand, has its service centers in Kolhapur, Sangli, and Ratnagiri. Goa Branch has 1 service center at Panjim and 1 CRC (Customer Relation Center) at Madgaon. A vast majority of customers (80 percent) directly log complaints at AEGIS, a centralized call center located at Yerwada, Pune. Technicians - A Key Resource: The number of technicians at each service center varies according to the complaints registered on the firms products. These technicians are required to make 8 calls per day and are paid incentives on a per-call basis. They are required to report to their respective Group Leaders at their service center after the call is closed, after which relevant details are fed into a centralized CRM database. The spare part non-availability complaints are recorded in the PNA database and are monitored accordingly. Technicians are incrementally trained on new product launched by the company. They are also responsible for installation and demos at the time of installation. Service Agents: Regular visits are made by the service agents to the dealer counters to resolve any issues. A centralized call service center number is provided to all the dealers and on all the products and catalogues. Nearly 20 percent complaints that are launched at the dealer counters are reported by the dealers to the main service center or the centralized call center of the company. A small customer call center is also operated
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in the regional branch office of the company to follow up with the dealers and handle the day-to-day complaints launched at dealer counters. While delivery of the product and providing accurate information regarding time of installation are handled by the respective dealers, installation, repair, and warranty issues are dealt by companys (ADONISMIRC) technicians, customer care executives, and ISDs. Purpose of Studying the Various Factors Affecting Customer Satisfaction in ONIDAs After-Sales Service: MIRC Electronics offers a wide range of consumer durables, including C-TVs, LCD TVs, Air Conditioners, DVD Players, Microwave Ovens, Washing Machines, and Mobile Phones, under the brand name ONIDA. Although the brand has been performing extremely well in the TV, DVD, and AC categories, it is lagging behind LG, Samsung, Whirlpool, and IFB in most product categories. For instance, it lags other major players in the categories of washing machines and microwave ovens, with a market share of only 5% and 8% respectively. Therefore, it was important for the company to know the areas where improvements were required. Therefore, the study was taken up to identify the factors that affect customer satisfaction in aftersales service in the Indian electronics and appliance market and to recognize those particular aspects of MIRCs after-sales services that affected customer satisfaction levels and needed to be improved.
Literature Review
Creating innovative products of superior value and attaining customer satisfaction towards the offered products and services are the prerequisites for building a lasting customer relationship. According to Kotler, P. and Armstrong, G. (Principles of Marketing, Thirteenth edition), profitable customer relationships can be built and maintained for the long-term success of any company only if the various aspects of acquiring, retaining, and growing customers are dealt with properly using effective customer relationship management (CRM).
After-sales service, an integral part of CRM, refers to all the activities that are organized by business organizations after the purchasing stage. Traditionally, the term After-sales services has been used to describe services that are provided to the customer after the products have been delivered. On other hand, many other authors have suggested that after-sales services are nothing but product support activities, that is, all activities that support the product-centric transaction. A study by Loomba, A.P.S., 1996, defined it as customer support elements where all activities that ensure that a product is available to consumers over its useful lifespan for trouble-free use. It is worth mentioning that after-sales plays a vital role in supporting marketing activities to enhance customer loyalty, and thus to increase profitability in the long term (Gaiardelli, P., Saccani, N., and Songini, L., 2006). According to Alexander, W.L., Dayal, S., Dempsey, J.J. and Vander Ark, J.D. (2002), profit margins can be significantly increased by delivering the after sale service compared to product sale without it. It may generate at least three times the profits from the original purchase during a given product lifecycle. After sale services represent one of the few constant connections those customers have with a brand (Gallagher, T., Mitchke, M.D. and Rogers, M.C., 2005). Gallagher et al. (2005) point to after-sales as a way to recover profits lost due to the fierce competition on sales prices of original equipment, representing at the same time one of the few constant connections that customers have with a brand. After-sales is thus a potential source of competitive advantage for the firm (Armistead and Clark, 1992; Goffin, 1999). The same services are sometimes called fields services, when they are organized in the main characteristics that are located at a customers site (Simmons, 2001). After-sales service is often referred to product support services where all activities will support the sold product (Lele and Karmarkar, 1983). However, most of the business organizations are not aware about the after-sales service factors and its impact on customer satisfaction. Failure to realize the importance of these factors can lead to poor and sometimes disastrous business relationships. Dissatisfied customers will turn to competitors who
can offer better after-sales services. Although profitable business relationships require enormous efforts and cost to build on, they are not something that a company can take lightly as they can lead to huge benefits in the long-term once established. According to Irini D. R. (2008) installation and delivery are the keys to positive influence on the customer. Beyond this buyers of product want assurance that the product will perform satisfactorily over its useful life. This is achieved through post-sale support such as installation, warranties, extended warranties, maintenance service contracts, provision of spares, training programs, product upgrades and etc (Murthy D.N.P. et. al, 1995). Value-conscious consumers would demand that a companys products provide more value than its competitors offerings not only in design and manufacturing, but also in product delivery and aftersales service support (Sherman, 1992). Increasingly, distribution and service support options available for a product are key determinants in consumers product purchase decision (Lele and Sheth, 1987). Levitt (1993) opined that manufacturers and retailers cannot presume that their active role ends with the sale but should continue supporting their customers with after-sales service including reliable delivery of spare parts. According to Goffin (1999), installation is one of the seven elements of customer support, with installation being the first. For a complex product, or where safety issues are involved, the installation is usually performed by personnel from the manufacturing company. The rationale of installation packages are based on three main factors which are after-sales economics, customer requirements, and competitive arguments (Oliva and Kallenberg, 2003). However, according to Murthy D. N. P., et al. (2004) customer dissatisfaction can arise due to poor performance of the purchased item and/or the quality of warranty service provided by the manufacturer. In either case, it results in a negative impact on the overall business performance. This may lead to the dissatisfied customers switching to a competitor or the company losing potential customers due to negative word-ofmouth effect.
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The consequence of poor warranty servicing is more difficult and costly to rectify and hence it is very important that manufacturer avoids this occurrence in the first instance. Since non-conforming items have a higher failure rate, they tend to fail early and this affects consumer satisfaction. One way of overcoming this is through a consumer incentive warranty policy (Murthy D. N. P, et al., 1995). Offering better warranty terms convey greater assurance to buyers and can result in greater sales. This implies that product warranty logistics are very important from the customer satisfaction as well from the manufacturers profitability point of view. (Murthy D. N. P., et al., 2004). Lastly, a study done on factors affecting customer satisfaction in after-sales service of Malaysian electronic business market (Mohd Rizaimy Shaharudin et. al, 2009) revealed various factors of delivery, installation and warranty and assessed the extent to which these factors affect customer satisfaction. The study established a strong correlation between customer satisfaction, as a dependent variable, and 3 independent variables Delivery, Installation, and Warranty.
market (ii) To suggest possible areas of improvement in after-sales service of ONIDA, based on findings arising from the study. Factors of After-sales Service Chosen for Study: In light of the preceding discussion and based on initial field surveys and companys secondary data analysis, 16 different aspects of after-sales services under three broad categories of installation, delivery, and warranty, were taken as independent variables to study their correlation with the dependent variable of Customer Satisfaction. Some of these factors have already been shown to have an impact on customer satisfaction in the Malaysian market (Shaharudin et al 2009). The factors however were categorized, based on the extent of control the company had over each of them, as follows: Dealer-Controlled Delivery Factors: Reception of Invoice, Transfer of product to customer place, Reliability in delivery times, Quality of product when delivered at home, quality of product packaging when delivered, Accurate Information about time of installation Company-controlled Post-Delivery Factors (Installation & Warranty): Time elapsed between delivery and installation, Attentiveness of technicians to avoid damage, Demo/advice given by technicians, Quality of response to complaints, Time taken to respond to complaints, Satisfaction after 1st complaint resolution, Time taken to rectify failed item, Availability of spare parts, Replacement of defective product after 2-3 repairs Dealer-Controlled Warranty: Dealer repair quality outside warranty claim. The sub-objective of the study was to study correlation of each of the aforementioned factors with customer satisfaction in after-sales service provided by MIRC Electronics for ONIDA products. Proposed theoretical framework is illustrated in Fig.1
Statement and Importance of Problem

The above findings led to making an attempt to find out which factors under the three categories delivery, installation, and warranty - are most essential for business organizations in the Indian electronics and appliances market to ensure customer satisfaction, eventually leading to delight. If the customer is satisfied, he will not only remain loyal, but will also have a good perception about the companys products and services. This will lead to positive word-of-mouth in the market, thereby resulting in an increase in number of new customers and hence in the overall market share. Customer loyalty, on other hand, is particularly important for success in long term in consumer durables industry, where frequency of repeat purchase is low. Research Objective: Thus, the main objectives of the study were (i) To identify the main factors of aftersales service influencing customer satisfaction in the Indian consumer electronics and household appliances
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Fig.1 : Proposed Theoretical Framework

Independent Variables
Dealer Controlled Factors Delivery (C2) Dealer Repair outside warranty (C3)
Company Controlled Factors Installation (C1) Warranty (C1)
CUSTOMER SATISFACTION Dependent Variable
towards after-sales service quality of ONIDA vis--vis other major players in the market. This helped to identify the alternative courses of action, define the problem more precisely, isolate key variables, identify relationships, gain insight on developing an approach to the research problem, and to establish priorities for further research. It also provided clues to the various aspects of after-sales service where the company lagged behind the market leaders. Conclusive Research was then carried out to identify various factors affecting customer satisfaction in after sales service. Both descriptive and causal data was collected and used for arriving at conclusions. Questionnaire and Scaling Te chniques: A questionnaire on the aforementioned 16 aspects of after sales service was constructed on a Reverse 5point Likert scale, with 5 indicating Very Poor and 1 indicating Very Good. Pre-testing of the questionnaire was done during a pilot study featuring a sample of thirty respondents, which included 8 area sales managers of different territories, 2 ISDs (In-shop demonstrators), 3 ADONIS customer-care executives, 7 Onidian, and 5 non-Onidian dealers, and 5 Onidian consumers. Data Collection: Secondary data regarding the current scenario of the consumer durable market in India and Pune region was collected from the past research data, latest ORG reports, the companys official records, internal sources and company market researches, channel partners, and the internet journals. As tracking and reaching Onida consumers was not possible, primary data was collected by making personal visits to 100 Onida and non-Onida direct dealers and distributors, sub-dealers, from Pune Region, comprising 11 cities and towns of Maharashtra, including Goa, Ratnagiri, Kolhapur, Sholapur, Osmanabad, Pimpri-Chinchwad Municipal Corporation, Pune City, Sindudurg, Sangli, Satara, and Ahmednagar). The dealers were asked about customer satisfaction levels and their perceptions and experience of the companys after-sales service. Responses from each of the 100 dealers were validated through customer complaints registered at their respective counters.
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Research Methodology
Hypothesis: Given the preceding problem statement and defined research objectives, the following hypothesis: H01: There is no significant difference between dealer-controlled delivery factors towards customer satisfaction H02: There is no significant difference between company-controlled post-delivery factors towards customer satisfaction H03: There is no significant difference between dealer-controlled warranty factors towards customer satisfaction. Research Design: This research is a quantitative research where sources of information are gathered from questionnaire. Instrument utilized was the selfadministered questionnaire featuring closed-ended responses and scales to matrix questions. This study is oriented towards describing the characteristics of a population or phenomenon, thus qualifying as a descriptive study. It also featured hypotheses testing to determine the influence of dealer-controlled delivery, company-controlled post-delivery, dealercontrolled warranty factors contributing to customer satisfaction. Both, an exploratory and a conclusive research, were carried out to collect and analyze data in accordance with the objective. Exploratory research was done to study the after sales service system and the perceptions of the dealers
Sampling: Out of the 100 dealers interviewed from the major markets of Pune Region, sampling was done in a manner to collect data from a more or less equal number of Class A+, A, B, and C dealers (as per turnover done for ONIDA) to remove any bias. Similarly, out of the 100 dealers thus surveyed, 51 were Onida direct dealers, 26 were Onida sub-dealers, and 23 were nonOnida dealers. The type of sampling chosen was probability sampling. Data collected was based on stratified sampling. Responses were taken from only those dealers who are currently dealing in ONIDA products or have dealt with them at least once in the previous year. Data Analysis Method: To compute all the data gathered from questionnaires and carry out factor and regression analysis, the Statistical Software Package for Social Sciences (SPSS) Version 17.0 was used. The techniques of analysis used in this study were descriptive (mean, standard deviation) and inferential analysis (regression) to sum up the data collected. The questionnaires used are adopted from the questionnaires developed by past researchers. Dealer controlled delivery was constructed in five measurement items, Company-controlled Postdelivery was constructed in ten measurement items, and dealer-controlled warranty was constructed as a single item. Factor Analysis and Regression Analysis was used for data-reduction and summarizing. Factor analysis is a multivariate technique and is employed in the study for the purpose of analyzing the data. The Principal Component Method is considered appropriate, as the primary purpose is to determine the minimum number of factors that would account for the maximum variance in the data collected. Regression analysis would be used to assess the correlation between the dependent and independent variables and assess the influence of the relevant factors on sales or customer satisfaction.
Pilot Study: Improvement based on feedback has been effected by reducing the questionnaire Likert scale rating from a 7 point rating to a 5 point rating. This has improved respondents understanding and interpretation of each question. It also helped to shortlist and finalizes the 16 aspects of after sales service that best suit the present condition in the Indian market. Calculation of Mean Rating: On calculating the mean rating, the following results were obtained. (Table 1) A close observation of the average ratings of these factors affecting customer satisfaction in ONIDAs after-sales service suggests that the overall satisfaction in after sales service was nearly poor. While the satisfaction in dealer-controlled deliveries and warranty was found to be good, the companycontrolled installation and warranty, was rated from satisfactory to poor, and needed considerable improvement. Factor Analysis: Based on KMO measure of sampling adequacy test in Table 2, it was found that the factor analysis data was appropriate with the value of 0.777, which falls between the permissible ranges of the factor analysis data. Bartletts Test was utilized with the result indicating a highly significant result with p=0.000 (p<0.001) and therefore establishing that factor analysis is appropriate. From the results obtained in rotated matrix Table 3, all three factors can be accepted with attributes required for reshufflement and reduction. This reduction is possible because the attributes are related. The rating given to any one attribute is partially the result of the influence of other attributes.
Results and Discussion

This section presents the findings of this study. The data is interpreted using the mean, factor analysis and regression methods of SPSS.
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Table 1: Mean Rating of Factors of ONIDAs After-Sales Service

COMPONENT C 2 (DealerControlled Delivery) X1 X2 X3 X4 X5 X6 C 1 (CompanyControlled PostDelivery) X7 X8 X9 X10 X11 X12 X13 X14 X15 X16 X17 FACTORS Reception of Invoice/Delivery Papers Transfer of Product to your Place Reliability in delivery times Quality of product when delivered at home Quality of product packaging when delivered Accurate info about installation Time elapsed between delivery and installation Attentiveness of technicians to avoid damage Advice and demo/instructions given by technicians ONIDA's quality of response to complaints Time taken to respond to complaints Repeat complaints; Satisfaction after 1st resolution Time taken to rectify failed item Availability of spare parts Replacement of defective product, after 2 -3 repairs Dealer repair quality outside warranty claim Customer Satisfaction in AFS Mean Rating on scale of 1-5 1.8 1.9 2 2.3 2.4 2.4 3.6 3.4 3.9 3.8 3.9 3.7 3.8 4.3 4 2.3 3.8
Rating Good Good Good Good Good Good Nearly Poor Satisfactory Poor Nearly Poor Poor Nearly Poor Nearly Poor Poor Poor Good Nearly Poor
C 3 (dealercontrolled warranty) Dependent Variable (DV)
Table 2: KMO and Bartletts Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Approx. Chi-Square Sphericity df Sig. .777 1263.526 120 .000
a. Based on correlations Regression Analysis: Table 4 shows the R-Square and Durbin-Watson test. R-Square test result of 0.936 can be accepted for the regression analysis. The DurbinWatson test result of 1.963, an indicator that the autocorrelation approaches zero or there is a significant difference that exists between the dependent and independent variables (no autocorrelation). A strong R value of 0.968 shows a significantly high correlation between the listed factors and the overall satisfaction in after sales service of the company.
There is a significant correlation (0.80 and above) between overall customer satisfaction and company controlled post-delivery factors (C1), like the efficiency of the spare part availability, response to complaints, time taken to respond and rectify the failed items, etc. Lesser correlation (<0.70) was found between customer satisfaction and variables under C2 and C3 (dealer-controlled factors). From the ANOVA in Table 5, it is clear that the predictor variables are not equal to each other and that they can be used to predict the dependent variable, customer satisfaction, as is indicated by F value of 54.967 and strong significance level of 0.000 (p<0.05). Further as shows in Table 6, the results show that all of the variables are significant (p<0.001) with high Beta (0.324, 0.398 and 0.356) and t value (5.569, 5.678 and 4.167). The VIF value of less than 5 for all the three components (predictor variables) and tolerance values of less than 0.20 show that the problem of multicollinearity have not existed and all data are mutually exclusive.
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Table 3: Rotated Component Matrix a

Raw Component 1 Reception of Invoice Transfer of product Reliability of delivery times Quality of product when delivered at home Quality of product packaging when delivered Accurate info about installation Time elapsed between delivery and installation Attentiveness of technicians to avoid damage Advice and demo/instructions given by technicians ONIDA's quality of response to complaints Time taken to respond to complaints Repeat complaints; Satisfaction after 1st resolution Time taken to rectify failed item Availability of spare parts Replacement of defective product, after 2 -3 repairs Dealer repair quality outside warranty claim 2 3 1 Rescaled Component 2 3
.019 .484 .131 .536 .002 .395 .068 .365 .035 .360 .102 .421 .710 .038 .624 .297 .701 .121 .775 .068 .791 .186 .638 .058 .768 .086 .588 .182 .769 .208 .039 .169
.166 .032 .815 .279 .055 .221 .904 .093 .125 .004 .772 .245 .131 .126 .676 -.243 .002 .070 .711 -.003 .021 .175 .728 .037 .179 .854 .046 -.216 .108 .782 .372 -.136 .385 .806 .139 -.443 .055 .939 .083 .066 .045 .928 .218 .053 .096 .827 .075 .124 .048 .946 .106 .059 .325 .716 .221 .396 .151 .839 .227 .165 .431 .066 .283 .720
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a.Rotation converged in 5 iterations.
As for the interpretation, the test indicates that all the three components dealer-controlled delivery, company controlled post-delivery (installation and warranty), and dealer repair outside warranty have significant influence towards customer satisfaction. By examining the t statistic for all the independent variables it is apparently confirmed that the three components have significant relationship due to strong significance level (p<0.05) with customer satisfaction, indicating that the null hypotheses are wrong and can be rejected. However, on closely studying the means and correlation matrix, the findings were extended to determine the possible areas of improvement in aftersales service provided by MIRC Electronics. It was observed that company-controlled installation and warranty issues were not dealt with properly and were major reasons for customer dis-satisfaction.
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Discussion: The statistical result corroborated the earlier findings that dealer-controlled delivery, company-controlled installation and warranty, and dealer repair outside warranty are all significantly related to customer satisfaction in after-sales service of the company. All of these factors are important in delivering an acceptable after sales service performance that will be able to ensure customer satisfaction leading to customer delight. A good delivery system always derives from a pull strategy where demand pulls rather than product push through marketing channels lead to customer satisfaction (Shaharudin et al, 2009). Customers require products to be delivered at the right place, time and at the right price, and in the right condition. Accurate information regarding time of installation should also be provided at time of delivery.
Table 4: Result of R- Square and Durbin Watson Test

Model 1 R .968 R Square .936 Adjusted R Square Std. Error of the Estimate .919 .25157 Durbin-Watson 1.963
Table. 5: Results for ANOVA Test

Model 1 Regression Residual Total Sum of Squares 55.657 3.797 59.455 Mean Square 3.479 .063 F 54.967 Sig. .000
a
Table 6: Results of Coefficients

Variables Standardized Coefficients Beta 0.356 0.324 0.398 0.356 Collinearity Statistics t 0.508 5.569 5.678 4.167 Sig. 0.612 0.000 0.000 0.000 Tolerance 0.451 0.589 0.602 0.750 VIF 2.213 1.451 2.234 1.333
1 (Constant) Dealer Controlled Delivery Company Controlled Post-Delivery Dealer Controlled Warranty
These delivery factors are usually controlled by the dealer, with the company having no say in it. The fact that dealers try their level best to maintain a good relation with the customers is the reason why these factors were not the key reasons behind the poor customer satisfaction in ONIDAs after-sales service. Usually, companies pay too little attention to their distribution channels, sometimes with damaging results (Kotler and Armstrong, 2010). Apparently such circumstances can threaten the existing sellerconsumer relationship. But, MIRC Electronics (ONIDA), being a long-established Indian brand, has a very strong distribution network, with strong relations with dealers. Furthermore, factors such as a superior installation process and good warranty service proved to have a very strong influence on customer satisfaction. This is because these factors reduce risk of damages to the product as well as provide assurance of the product quality and reliability. Moreover, installation carried out by an experienced and expert employee, contributes to satisfaction and delight in the postpurchase environment, thereby leading to increase in sales.
Thus, manufacturers of consumer electronics and appliances cannot consider that their active roles have ended with the sale, but rather must provide their customers with a set of supporting after-sales services, such as installation packages, technical advice for use, maintenance/repair, spare parts delivery, product upgrading, etc. Failure to deliver proper warranty service can have a negative impact on sales through spread of negative word-of-mouth in the market about the brand. This implies that product warranty logistic is very important from customer satisfaction as well from the manufacturers profitability point of view (D. N. P. Murthy et al. 2004). Outsourcing of Critical Activities: In the Indian market, the installation and warranty functions are controlled by the company. The functions are usually outsourced to a service provider that operates in sync with the company. This arrangement is followed by MIRC, who has outsourced the work to ADONIS, who takes care of installation and post-installation warranty issues. Statistical results clearly showed that the company was lagging behind in these areas, thus emphasizing the need to pay more attention to customer care service quality, time taken to rectify failure, spare part availability, time taken for installation, and demos
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given during installation. In a parallel study, it was found that other major players enjoying a much larger market share than ONIDA in all product categories were strong in these company-controlled installation and warranty areas. This is a clear indicator that these factors are very strongly correlated with customer satisfaction and have a direct bearing on current and future sales. The above findings were further validated and backed by the following general observations made regarding the companys after-sales service during field surveys: Product Replacement: Although the company claims to have a policy of replacing the product if it doesnt work properly even after 3 repairs/repeat complaints, the field study revealed that at most dealer counters more than a month is taken for replacement of defective/damaged products. At times, dealers replace the product with other brand offerings (some people prefer to take a different brand on replacement) themselves but do not get replacement for the defective product from Onida. This has led to a situation where almost 60% dealers claim to have lost confidence in the services of the company and have stopped dealing in low moving products like Washing Machines and Microwave Ovens, for which spare part availability has been a major problem with the company Spare parts availability for both new and old models of all product categories is a major issue faced by the company. LG, Samsung and others take no more than 15 days after requisitioning for spare part supplies to their dealers. Response to Complaints: Time taken to respond to complaints and repair is more than one week. No follow up is done with customers after complaint launch. Training of Technicians: Almost every dealer out of 100 claimed that the technicians are not trained properly to handle electronics as well as appliances. Most technicians are not aware of product details like warranty period, and functioning. They are less motivated partly because of low salaries and do not pay regular visits at counters to make calls registered at the
34
dealer counters. Installation is usually delayed and demos given during installation are poor. Authorized service centers and technicians are not available in remote areas on the outskirts of Pune including Uruli Kanchan, Shirwal, Chakan, PCMC, and Baramati. Just two technicians are assigned to handle all these areas and even these two do not visit these areas often. Complaints over phone are not responded to effectively. No call monitoring system is in place at the call center. Sub-dealers are not followed up on service issues and they are the ones that spread the negative word-of-mouth in the market. Since the number of these sub dealers is large, they contribute disproportionately to the companys poor image. Complaint registering system at the dealer counters and the service center system is not integrated well. Dealers are not informed about the follow up done or about complaint resolution.
In light of the findings of this study, the above loopholes should be immediately taken care of if the company wants to gain a competitive edge in the market and regain its earlier market position in CTV segment. Inadequate service provided for newly launched products, like washing machines, will lead to negative word-of-mouth in market, thereby affecting sales of established products like CTV. Therefore, after-sales service is clearly important in satisfying consumer needs, and in creating long term profitable relationship with the customer. Good aftersales support may generate more than three times the profit from the original purchase during a given products life-cycle (Alexander et al., 2002).
Conclusion
Based on the study, it can be concluded that the three significant factors involved in after-sales service are delivery, installation and warranty, with installation and warranty functions being controlled by the company. If all these all three factors are being looked at professionally and efficiently, the reputation of the company will be enhanced and this will contribute to
the companys positive image with its customers and an advantage compared to its competitors. ASS is of utmost importance for building a long lasting profitable relationship with the existing customer and creating new customers. Such relationship will create a strong loyal customer base that will give the company a lasting competitive edge. Recommendations: In light of the statistical findings of this study and the presented case of MIRC Electronics (ONIDA) in Pune Region, the following recommendations can be made to ensure maximum customer satisfaction, retention, and new customer creation: Outsourcing of after-sales service: It is a serious mistake to outsource after sales service. No company that calls itself a good company can afford to outsource this absolutely critical function. Other requirements for after-sales service: The head of service must be a very senior person and he should equally be seen to have the confidence and support of the top management. The service people also must be superior if not excellent performers because it is here that customer loyalty is built and repurchase decisions can take place when customers are satisfied. The feedback and complaints of the dealers regarding service issues must be addressed on a regular basis to maintain good dealer-company and company-customer relationship. Top Priority: What is required is giving top priority to After Sales Service, with the company taking the initiative on warranty complaints ensuring prompt and effective attention to complaints including handling the logistics and then training, motivating and incentivizing dealers who do good after sales service The Marketing including Sales and after sales service functions should establish the need for drastic improvement in the delivery as measured by promptness and effectiveness to each and every complaint. Adequate infrastructure in terms of place, people and materials especially critical spares must be set up and kept in place.
The company must set targets for time duration and quality of service including repairs for all service centers and for operatives. The service technicians should be trained and motivated before being assigned to their respective jobs. Parts availability has also to be accorded top priority. For critical parts even if excessive inventory levels have to be maintained it should be considered as acceptable. Unfortunately most companies fail here because these parts are also needed for production and if there is a lack of full availability the spares function always suffers. Therefore instructions have to come from the highest level and compliance monitored also at the highest level. Thus, companies need to improve on their inventory management by keeping acceptable safety stock to avoid the delay in product delivery to the customer. Furthermore, it must always keep the lead time at the minimum possible as to meet urgent needs of the customer. The company must always train its staff to give consistent and reliable services to the customers. Here, a good attitude towards working together throughout the installation process with the customer is needed so that the customer will be satisfied and delighted with the service. There is a need to respond within a reasonable and acceptable period of time to the customer regarding replacement claims. The company should not delay the claim made by a customer and try to fulfill it promises by replacing with a new product. Finally, continuous improvement is required through integrated functional activities in order to produce high quality products which in turn can lead to customers high satisfaction and confidence. Every department be it Marketing, Finance, Operations or Human Resources must work together to achieve the mission, vision and objectives of the company.
Limitations: The service centers of ADONIS and the service network could not be studied for further recommendation on after sales service to the
35
company, as tracking and reaching 100+ consumers of different ONIDA products was not possible. Survey data was collected from both Onida and non-Onida dealers in the local market. This can lead to the possibility of the results being biased in favor of dealers. However, this bias was removed to a great extent by verifying the response of each dealer with the consumer complaints registered at that particular counter. Further verification of responses and results was done by matching them with customer complaints lodged in the central customer care center of ADONIS as well as those recorded in the CRM database of the company. Scope of Contribution of Study: This study will help marketers and service providers of MIRC Electronics and all other major players in this industry to pay more attention to the company-controlled post-delivery factors of after-sales service to enhance satisfaction level of their customers and attract new customers. Similar studies can be done with other companies in the industry to validate the findings and also with similar industries like Construction, Manufacturing, and Automotive, to generalize the conclusions for both the Indian and global consumer durable sectors.
References
Armistead, C. and Clark, G. (1992). Customer Service and Support: Implementing Effective Strategies. FT Books, London Corey, R.E., Cespedes, F.V. and Rangan, V.K. (1989), Going to Market: Distribution Systems for Industrial Products. Harvard Business School Press, Boston, MA, pp. 22-59. Gallagher, T., Mitchke, M.D. and Rogers, M.C. (2005). Profiting from spare parts. The McKinsey Quarterly, 2 March. Goffin, K. (1999). Customer support: a cross-industry study of distribution channels and strategies. International Journal of Physical Distribution & Logistics Management, Vol. 29, pp. 37497. Irini D. R., et. al. (2008). After-sales service quality as an antecedent of customer satisfaction, the case of electronic appliances. Journal Managing Service Quality, Vol. 18 No. 5, pp. 512-527 Kotler, P. and Armstrong G., 2010. Principles of Marketing. Pearson Prentice Hall, Thirteen Edition, New Jersey, NJ Lele, M.M. and Karmarkar, U.S. (1983). Good product support is smart marketing. Harvard Business Review, Vol. 61 No. 6, pp. 124-32. Lele, M.M. and Sheth, J.N. (1987), The Customer Is Key, John Wiley & Sons, New York, NY, pp. 179-207. Levitt, T. (1983). After the sale is over . . .. Harvard Business Review, Vol. 61 No. 5, pp. 87-93. Loomba, A.P.S. (1996). Linkages between product distribution and service support functions. International Journal of Physical Distribution & Logistics Management, Vol. 26 No. 4, pp. 4-22. Murthy D.N.P., et. al (1995). A consumer incentive warranty policy and servicing strategy for products with uncertain quality. Quality and Reliability Engineering International 11, pp. 155163. Saccani, N. et. al. (2006). The role and performance measurement of after-sales in the durable consumer goods industries: an empirical study. Journal of Productivity and Performance Management, Vol. 55 No. 3/4, pp. 259-283 Shaharudin M. R. (2009). Factors affecting customer satisfaction in after sales service of Malaysian electronic business market; Canadian Social Science, Vol 5, No. 6 Sherman, S. (1992). How to prosper in the value decade. Fortune, p pp. 103. Simmons, D.E. (2001). Field service management: a classification scheme and study of server flexibility. School of Management, Binghamton University, State University of New York, Binghamton, NY. Oliva, R. and Kallenberg, R. (2003). Managing the transition from products to services. International Journal of Service Industry Management, Vol. 14 No. 2, pp. 160-72.
36
Introduction of Concierge Service in Vadodara

Sweta Agarwal*
Abstract
Problem Statement: The research was undertaken to identify the bundle of services preferred by households and corporates from an outside agency. The study also identified which key parameters i.e. cost, time, quality etc were considered important by the respondents by recording preference given to different alternatives for service fulfilment i.e. services rendered by outside agency, online help and maids help with regard to the above mentioned parameters. The research also studied what were the preferred combination of attributes i.e. cost alternatives, service add on, time execution and type of service by respondents and how each attribute added utility to the preferred set. Ultimately, it also studied if there were differences in perception based on income, gender and working/nonworking spouse. Approach: After exploratory research, two questionnaires were prepared to cover households and corporates. Analysis: The results were analysed using SPSS and Excel. The basic tools used were Factor Analysis, Analytical Hierarchy Process (AHP), Discriminant Analysis and Conjoint Analysis. Research Type: Case Key Words: Concierge services, Factor Analysis, Analytical Hierarchy Process, Conjoint Analysis, Outsourcing
Introduction Concierge Services

While people want things done, they do not have the time to do them. They would be happy to pay someone who can take care of their business efficiently with a touch of class. With the advent of improved opportunities, dual careers, increased burdens, extended geographical coverage, higher disposable income, quick paced urbanisation, and intense competition, people have started seeking services which will make their life more comfortable and daily work less cumbersome. While people are getting resource and time constrained, the service industry is being looked upon with greater expectations to solve everyday problems. Many new services - never heard before - have now come up around the globe fulfilling the anticipations of
customers. With a large young Indian population, demand for concierge services for taking care of routine chores as well as special services is on a rise. Trivia Advertising, an established player in the field of promotions and communications in Vadodara, is studying the local market for concierge services and plans to enter. As an extension to its existing services, Trivia Advertising plans to set-up an organisation TAMARI SEVA (Service for You) which will provide a variety of jobs at a prescribed fee. The proposed services include: Help Services: Bill payment, Courier, Banking, Entertainment i.e. ticket booking, Postal Services, Miscellaneous Services i.e. R.T.O Services, Gift/Flowers/Cake Delivery, Information on schools/college forms, Taxation Related Forms, Key Duplication, Traffic Offence Challan Payment, Camera Rolls Development, Prepaid Mobile Refill cards,
*Centre of Business Management 2009-11, Birla Institute of Management Technology Under the guidance of Prof. A. K. Dey, Centre of Business Management, Birla Institute of Management Technology
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Classified Ad Submissions, Passport related Forms, Pancard Forms etc. Referral Services: Car Hire/Maintenance, Handyman Services(Carpenter, E l e c t r i c i a n , M a s o n ) , I n s u ra n c e , C o m p u te r Maintenance, Taxation, Passport Renewal, Furniture Disposal, Printing and designing. Relocation Services: Real Estate Brokers, Interior Decorators, Architects, Home Tutors, Movers and Packers, Paying Guest Accommodations, Utilities (Gas, Electricity, Telephone related). In addition, the offers would be customized to suit corporate and household needs. Tamari Seva has to compete with the in-house Concierge Desk service offered by many corporate organisations and the unorganised Personal Care Taker service used by households.
services). The key issues to be addressed were: Who are the prospective clients? Do the clients possess certain differentiated characteristics? How do respondents perceive the utility of various attributes of a service offering? Which combination of service attributes give them above average satisfaction? Which set of services are being demanded together? Do preferences differ on the basis of gender, income and working/nonworking status of spouse?
Materials and Methods

To capture the information, an exploratory research was conducted and based on data collected, questionnaires were prepared. The questionnaire prepared for households, corporate administration officials and company employees were tested with five respondents in each category and errors were removed. The survey was conducted in organisations belonging to various sectors i.e., BPO, Banking, Manufacturing, Consultancy, Education, and Engineering. Households were selected randomly based on convenience sampling. Responses of households were also captured online (with a 15 day window period) where Google Docs was used. It was posted on various websites, blogs, communities where Vadodara respondents could be reached. The total responses collected for questionnaire were 31 for corporates spread over 10 companies and 44 for households. Table 1 gives a list of parameters and alternatives, suggested by the firm, to which the responses were captured. The services chosen for analyses, to see which services are being preferred together, are mentioned in table 2.
Need for The Study

Trivia Advertising wanted to understand how a tier two city would respond to such a service. Mr Panchal, the head of Trivia Advertising, approached a friend Mr Borse, research consultant for help. Mr. Borse was made to accept a steep target knowing fully well that his field investigators are all tied up. Mr Panchal needed the result at the earliest as he was in talks to acquire a franchisee set up for the same. Many organizations were providing personalised services at a small scale in Vadodara. However, there were no big well known players in the field of concierge services yet. Apart from understanding whether such services were preferred or not, Mr Panchal wanted to know how prospective clients could be targeted and what kind of packages could be attractive.
Problems and Issues

Mr Borse started working on the survey. The scope of this study included people working across all sectors (for corporates) and housewives (for household
Data Analysis
Reliability Test (T-Test) of each question: This test helps in determining whether a question is well understood and it is able to distinguish between two
38
classes of respondents: one who wish to Rate High and the other who wish to Rate Low. For such questions the null hypothesis of a two tailed t-test should get rejected when applied to test if there is any significant difference between the mean responses of top quartile and the bottom quartile of respondents in an ordered list. The null hypothesis for each question in the questionnaire was rejected at 0.05 level of significance. Hence analyses were carried out with all questions. Reliability of data captured: Summated scales are often used in survey instruments to probe underlying constructs that the researcher wants to measure. These may consist of indexed responses to dichotomous or multi-point questions, which are later summed to arrive at a resultant score associated with a particular question. The question of reliability arises as the function of scales is stretched to encompass the realm of prediction. One of the most popular reliability statistics in use today is Cronbachs alpha. It determines the internal consistency or average correlation of items in a survey instrument to gauge its reliability. All scale reliability for corporate is 0.789 and household is 0.843, both are fairly high (more than 0.7). Table 3 displays the number of respondents obtained for both corporate and households as well as other results. For the corporate sector, services of cake/card delivery, utilities and courier were removed step by step as their value was found to be the lowest each time on examining the anti-image correlation matrix. After this, the value for KMO improved and the null hypothesis of Bartlett test was rejected. Both the sectors (household and corporate) had KMO values above 0.589, which allows us to proceed with factor analysis. Factor analysis to determine perception about services: The findings of Factor analysis were validated with Discriminant analysis. Difference among natural classes: Discriminant function analysis is used to determine which variables discriminate between two or more naturally occurring
groups. The difference in preference for services on the basis of natural groups i.e. income, Gender and Working/Nonworking Spouse is displayed in table 4. Conjoint Test to determine utilities: Conjoint analysis is a statistical technique used in market research to determine how people value different features that make up an individual product or service. The objective of conjoint analysis is to determine which combination of a limited number of attributes is most influential on respondents choice or decision making. This test applied for households determined the preferred set of combinations of various attributes (Cost, Time, Satisfaction and Service type) of service offering. It revealed the utilities as shown in table 5. Since the utilities are all expressed in a common unit, they can be added together to give the total utility of any combination. Analytic Hierarchy Process (AHP) used to measure satisfaction: AHP is one of multi criteria decision making method used to measure subjective opinions i.e. satisfaction, feelings and preference. For purpose of knowing which combination of attributes and alternatives were preferred, respondents were asked to rate four alternatives namely outside agency, managed himself/herself, managed by servant and internet help on attributes namely cost effectiveness, time saving, availability and quality of service. The figure 1 shows the relative weights that are derived after interviewing respondents. For purpose of comparison, all respondent results were divided into three categories Strongly favour, Mildly Favour and Do not Favour. Any value above the average of that category was considered to be strongly favoured (Figure 2).
Results
KMO and Bartletts test of sphericity: In both the cases, KMO were found to be more than 0.589 and the null hypothesis for Bartletts test were rejected. This implies that the observed correlation matrix in each case is significantly (at 0.05 level of significance) different than an identity matrix. Hence data reduction can be carried out.
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Factor analysis and total variance explained: Table 6 shows elaborate results of factor analysis. The main purpose of factor analysis was to identify which services are being preferred together. The results revealed an identical preference on the basis of frequency of usage of services. The first dimension mentions administrative services i.e., courier, passport renewal and pan card forms are being preferred together. The second dimension emphasized on usage which was less frequent and of household nature i.e., furniture disposal, carpenter/electrician, newspaper disposal and car maintenance. The next dimension includes services which may or may not be required at a given point of time. These include relocation services i.e., architect, real estate brokers and interior decorators. Again the next dimension includes services which will be required by only a few respondents and therefore can be offered as a customized set not included in basic set of services offer able to all clients. They are movers & packers, designing & printing and home tutors. The last dimension shows entertainment services being preferred together i.e., Gift/cake delivery and ticket booking. Conjoint Analysis: Customers are keener on getting personal services at monthly subscription rather than annual subscription. Customers are willing to pay for relocation services on a per transaction basis and not on a monthly basis because they feel the need for such service may or may not arise. Also, they prefer approaching specialized firms providing services of legal consultancy, interior decorators etc on their own and will prefer Tamari Seva only when they do not have any knowledge regarding the same. The least utility derived is from a combination for relocation services with Rs 4000 yearly subscription. On simulating cases with other costs, it was found that while all other combinations more or less have a value of 7 or above, the combination with yearly subscription has the value of only 5 i.e. under no circumstances are respondents willing to pay yearly for relocation even if the execution is within 3-4 hours. On an average, combinations with timely execution of service was preferred more than additional perks
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which in turn was preferred more than after service perks. This reveals that people are more conscious about getting their work done on time rather than risking the possibility of delaying it in exchange of some perks. Perks in unrelated services were preferred more than discount on same services Analytical Hierarchy Process: Respondents had allotted highest preference to internet usage on all parameters. However, servants help and outside agencys help is rated as second best i.e. both involve someone else apart from himself/herself completing the work. Thus, external help in any form is being preferred in cases where internet cannot help. It was found that almost 68% (17 out of 25) strongly favoured internet whereas 24% mildly favoured it. Averages for servant help and outside agency help were found to be same. Further analysis revealed that 60% of respondents found both the options strongly favourable. Percentages of those not favouring outside agency and servant help were found to be 24% and 12% respectively. Hence the people not favouring outside agency was almost twice and compared to those not favouring servant help. This reflects that there might be a serious problem in how outside agencies are perceived as less trustworthy than own servant. From Fig. 1 it appears that Internet help delivers highest value. But Fig. 2 shows that the combined percentage (of people who strongly favour and mildly favour an alternative) is the same for Managed by own self (22 out of 25) and Internet help (23 out of 25) categories. Thus, respondents found their servant to be a good combination of external help as well as customization as per own needs and convenience.
Conclusion
The study has brought out following observations: Apart, from basic set of services offered, the company should be open to some more services customized for a particular household at an extra fee on an a la carte basis. The company should concentrate on putting as many services online as possible. Moreover, order and checking of status of service through mobile
phones and SMS be encouraged. Positioning itself as a personal assistant will be favorable for the company and a single point of contact should be allotted to each client for rendering services. Offers should be made on the basis of initial perception survey being carried out in companies and households. The respondents of Vadodara are keen on getting personal services i.e. bill payment, courier, cake delivery etc. at different combination of costs. However, talking about relocation and referral services, they do not want to pay monthly or annually for them. Therefore, for these services, a charge per transaction is advised. Respondents are keen to derive satisfaction out of timely execution of services and are ready to bear a suitable increase in cost. Therefore, the firms marketing communication efforts should stress completion of services within promised time. The respondents are more worried to get their work done on time than getting additional perks.
crept in. The sample on the basis of gender was also not equal leading to a possible bias. A bigger sample size with equality in gender and income group would be highly recommended. A similar study in metropolitan cities of Gujarat would assist in knowing if preferences amongst respondents differ on the basis of city status i.e. tier 1, tier 2 and metropolitans. An office employee is also a householder. Therefore his opinion as corporate respondent may be influenced.
Decision
Mr Panchal was sure that demand for such a concierge service did exist in Vadodara. However, he was unsure if these pockets were huge enough to be catered to. He did realize the results might be biased on account of less sample size. But he was determined to make a choice. He would like you to suggest if these services be introduced or not and out of twenty three services which should be selected during entry phase for corporate and household segments. He would also like you to suggest how to identify prospective clients.
Table 2: List of services offered Table 1: Parameter-Alternative List

Parameters Cost Alternatives Rs 500 monthly for unlimited transactions Rs 175 for 5 monthly transactions Rs 50 per transaction with no initial fee Rs 4000 annually for unlimited transactions Within 3-4 hours Within 2 days Within a week Before deadlines (irrespective of time taken) Personal Referral Relocation Quality of service After Service perks Timely Execution of service Additional perks i.e. free tickets, discount on shopping
Time
Service
Satisfaction
Limitations
The respondents were residents of Vadodara region only. This study needs to be replicated in other areas to increase external validity. The sample for each income group was not the same and therefore bias may have
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Bill Payment Ticket Booking (Movie, Air, Rail) Taxation Related forms Information on schools/colleges Key Duplication Traffic Offence Related payment Prepaid Mobile refill cards Passport related forms PAN CARD Forms Classified AD Submissions Car Hire/maintenance Carpenter / Electrician / Mason Computer Maintenance Passport renewal Furniture Disposal Newspaper Disposal Printing & Designing Real estate Services Interior Decorators Architects Home tutors Movers and Packers Paying Guest Accomodation Utilities i.e. Gas, Telephone, Electricity related Courier Gift/Cake Delivery
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Table 3: Cronbachs Alpha, KMO and Bartletts Test

No. of respondents 31 44 75 Cronbachs alpha 0.789 0.843 0.818 KMO of sampling adequacy 0.589 0.751 0.616 Bartletts test of sphericity Reject H0 Reject H0 Reject H0
Model type Corporate Household Combined
Table 4: Discriminant Analysis

Natural Group INCOME GENDER WORKING/ NONWORKING SPOUSE Correctly Reclassified Households 87% 89% 87% Corporate 97% 97% 94%
Table 5: Utilities after running Conjoint Analysis

Utilities
Parameters
Alternatives Quality of service After service perks Timely execution of service (deadline) Additional perks i.e. discount on shopping Rs 500 monthly for unlimited transactions Rs 175 monthly for 5 transactions, Rs 50 per transaction with no initial fee Annual Rs 4000 for unlimited transactions Within 3-4 hours Within 2 days Within a week Before deadlines Personal services Referral services Relocation services
Satisfaction
Utility Estimate -0.363 -0.888 1.363 -0.113 -0.710 -1.419 -2.129 -2.839 0.204 0.408 0.612 0.816 -1.140 -2.281 -3.421 11.773
Importance Values
28.89
Cost
24.59
Time
19.96
Service
(Constant)
26.53
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Figure 1: Attribute-Alternative Preferences

Attribute-Alternative Preferences
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0
ffe ct ive ne ss Tim e lab ilit y Sa ve s fs er vic e
Values
Outside Agency Managed by you Managed by your servant Internet help
Av ai
Attributes-Alternatives
Figure 2: Difference in Preference
Table 6: Factor Analysis and Identification of Dimensions

No of Factors Extracted 5 Total Variations Explained 65% Dimension 1 Administrative 8,9,14,25,10,1 Alignment of factors Dimension Dimension 2 3 Household 12,16,13,15,11,24 Relocation 20,19,18 Dimension 4 Niche 22,21,17, 5 Dimension 5 Entertainment 26,2,7
Qu ali ty o
Co st E
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44
Evaluating Potential Market for Exporting Gasoline in Perspective with Nigeria

Upasana Singh*
Abstract
Purpose: Exploring new potential market worldwide for the domestic gasoline producers. In order to earn better margins India looks at the foreign markets. Thus, ESSAR Oil Ltd, a fully integrated oil and gas company of international scale which is one of the major players in oil industry of India is exploring new opportunities for exporting gasoline to Nigeria due to attractiveness of the market. Nigeria is one of the largest exporters of crude oil. In spite of this it is a very attractive market for gasoline. The cost benefit of exporting to Nigeria over other countries is high but it also involves risk. Design/methodology/approach: This paper is an analytical study which provides the data and results based on which one can make decision for exporting gasoline to Nigeria. First the trend is determined and forecasted so as to look upon whether there is a sustained demand or not. Then the technical feasibility has to be worked out whether the required gasoline quality is makeable at the concerned refinery or not. Then work out the profitability of exporting to Nigeria. Findings: ESSAR should export to Nigeria as the returns are higher than exporting to other countries. In spite of risk involved Nigeria is attractive market. Research limitations/implications: The research is based on secondary data. This only gives an insight about the Nigerian market. The duration of the research is only 6 months. The gasoline market is a volatile market so it changes every time. Practical implications: Oil companies who are looking for capturing new markets might benefit from the methodology for their initial research with additional country specific requirements. Originality/value: All the calculations and analysis are done on the original data. Keywords: Gasoline export, Nigeria gasoline market, Gasoline profitability. Paper type: Analytical Research paper
Introduction
The domestic gasoline market is the most attractive for oil refiners in India. Exporting gasoline to different country involves additional costs like freight, tariffs and additional charges, all these reduce the profit margins (EIA U.S 2010). But gasoline is still exported from India as the domestic market is saturated (S.K Sarangi General Manager IOL). Oil companies export in order to utilize their production. They look for the best market to obtain optimum refining margins. For cashing upon this one has to search for markets which are inherently short of gasoline, where the increase in gasoline demand is
gasoline at a good rate and which pays high prices for the material. ESSAR is looking at Nigeria as a potential market for exporting gasoline as Indian government has notified an additional incentive of 2% on the export of certain products to Nigeria, Algeria and Mexico (as information received by ESSARs taxation department). This will contribute to the profit margins while exporting to Nigeria. Nigeria lies to the Northwest of Africa. It is the most populous country of Africa. Nigeria is a member of OPEC (Organization of the Petroleum Exporting Countries)
*Centre of International Business & Policy 2009-11, Birla Institute of Management Technology Under the guidance of Prof. Anupam Varma, Centre of International Business & Policy, Birla Institute of Management Technology
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since 1991 as it has a high reserve of crude oil 37.2 billion barrels of proven oil reserves as of January 2010 (Nigeria Energy Data 2010). In spite of the high reserves it is deficient in refined oil products. There are four working refineries there but they all are working under capacity. This is due to poor corporate relations with indigenous communities, vandalism of oil infrastructure, severe ecological damage, and personal security problems throughout the Niger Delta oil producing region. These problems continue to plague Nigeria's oil sector. Thus, the actual capacity is 445,000 bbl/d but it is refining at a capacity of 214,000 bbl/d (Mbedi Information Services 2010). High demand is due to low production which makes it a potential market to look at. Forecasting the consumption for year 2010 is done based on the historic data after determining the trend of consumption in the last 8 year. This gave a better insight about the market demand conditions. After studying the demand the next step is to look at the feasibility of the project. We need to look at the technical and economic feasibility of exporting gasoline. This includes both deciding on whether the quality of gasoline required can be produced or not and the profit margin of gasoline. Risks are also to be determined before starting export so that we do not face any difficulties or failure later. Like it was recently in news that few more refineries are to be set up in Nigeria with the collaboration of China for reducing its dependence on refined oil products import but that will take some time. So for now we can still target the Nigerian market. The domestic production of gasoline is on a decline due to low capacity utilization of the refineries which leads to an increasing import of gasoline (BBC News Nigeria Friday, May 14).
To work out the Technical and Economic feasibility of exporting gasoline from ESSAR to Nigeria.
Considering all the important factors affecting the export the analysis should be done. On the basis of the results obtained analysis through the decision of exporting to Nigeria has to take place.
Review of Literature
Although Nigeria is the fifth-largest supplier of crude oil to the U.S. and the 12th largest world-wide, Nigeria is saddled with a decrepit infrastructure and little economic development outside the oil sector. Its four refineries, with a total capacity of 438,750 barrels a day, are all more than 30 years old. Because of their age and poor maintenance, they operate at around 100,000 barrels a day. That covers less than half of Nigeria's gasoline requirement of around 250,000 barrels a day -- meaning it has to rely on imports. The government says the solution to the refining-capacity crunch lies in privatization and the construction of new facilities by private investors; it wants to sell 51% equity in the four refineries. But analysts say the investment won't come until the government completes the deregulation of the downstream sector, which began in 2003. (Vincent Nwanma and Norval Scott. Wall Street Journal) Inaccurate assessment of business and economic development is possible if one refuses to assume that seasonable patterns are not affected by other known influences, such as price. Thus, another forecasting alternative to seasonality is possible in addition to the conventional alternatives of a fixed seasonal pattern or a seasonal pattern that shifts but is not related to other observable data. Motor gasoline, which showed a real price increase of 50% in the last 10 years, is an illustration. Regression analysis indicates that demand for gasoline at the peak periods of the year have been more responsive to higher prices than the demand has been during other times in the year. These seasonal price elasticities illustrate the worth of studying the causes of seasonality in economic time series. (Planting Ron, Business Economics)
Statement of Objectives
The objective is to study both the technical and economic feasibility for exporting gasoline to Nigeria. Forecast the future demand 2010 for gasoline in Nigerian domestic market for gasoline.
46
Managers are always trying to make estimates of what will happen in the future in the face of uncertainty. But good forecasts are an essential part of efficient and effective management; they are a crucial modeling tool both in strategic and tactical decision making. Quantitative methods rely on mathematical models and assume that past data and other relevant factors can be combined into reliable predictions of the future. Two methods are in use; Auto projection (time series) or causal. Each method is suited to different circumstances. (Dianne Waddell and Amrik S. Sohal ) The problem of the Niger Delta is not unconnected with the impact of the oil exploration activities of the oil companies and the state of affairs in the region, in terms of the living conditions or standard of living of the people, environmental wholesomeness and the availability of the basic and essential social amenities. The paper will however dwell on the relationship between oil, environment and the Nigerias NigerDelta and this was subjected to empirical analysis.( Felix Olanrewaju Awosika 2008) Since the early 1970s, there has been a worldwide upsurge in the price of energy and in particular of gasoline. Therefore, demand functions for energy and its components like gasoline have received much attention. However, since confidence in the estimated demand functions is important for use in policy and forecasting. The demand for gasoline is estimated with five alternative time series techniques with data from Fiji. Estimates with these alternative techniques are very close, and thus increase our confidence in them. We found that gasoline demand is both price and income inelastic. (B Bhaskara Rao, Gyaneshwar Rao Kidlington: Oct 2009) The time-series model is preferred in this case because it weighs recent years more heavily than years past. To predict New York as a percentage of the Middle Atlantic using regression analysis, the SYSTAT program fits an equation into to a set of data in order to best describe the relationship between the variables. In this case, the relationship established between the ratio of New York data to Middle Atlantic for a given fuel and over a specified period of time, was linear.
The SYSTAT program ran a time-series projection using an Auto Regressive Integrated Moving Average (ARIMA) model3 to determine New Yorks growth trend in relation to that of the Middle Atlantic region (New York State Energy Plan - June 2002). Ample supplies have provided refiners with plenty of alternatives to Nigerian fare, which suffers from a reputation for unreliability due to frequent disruptions caused by militant attacks during the past year or so. This week is no exception: Shell has declared force majeure on Bonny Light exports for both April and May, due to a fire on the Bomu manifold on the Trans-Niger Pipeline in its Eastern Operations area. (Anonymous. Energy Intelligence Briefing, 2009)
Methodology
In order to work out the attractiveness of Nigerian gasoline market series of methods was followed. Initially secondary data analysis was done using help of the online resources providing relevant information. Here the overview of the Nigerian gasoline market was done. Then based on the previous years consumption data the demand for 2010 is forecasted by using the Time Series moving average method and Regression tool in Microsoft Excel. The required specification of the Nigerian gasoline as per the specifications provided by the buyer-Nigerian National Petroleum Corporation (NNPC) was matched with the refinery specifications. This comparison was done considering all the important parameters critical in determining the quality of gasoline. This comparison was made in order to know whether the refinery can produce the required quality or not. Then calculation of the profitability margins was carried out. Then a comparative analysis was done between the benchmarked countries and Nigeria. After the economic and technical feasibility research the potential risk factors were analyzed as to they should not be neglected while evaluating the attractiveness of Nigerian Gasoline market. The recommendations are designed around this analysis.
47
Consumption of Gasoline-Forecasting
Initially for determining the potential of a market there is a need of foreseeing the demand in that market. Gasoline demand is dynamic and is highly affected by various factors. It is majorly affected by the seasonal demand. Oil demand is forecasted using the past 8 year data and keeping other factors constant like-number of refineries, war situation and political imbalances. The data for gasoline consumption is of historical nature which counteracts the seasonal effect. Thus, forecasting will be done using moving average method. The trend was determined using this data in order to predict the future demand. The trend was determined using the Regression in Excel to do a demand forecasting for the year-2010. The gasoline consumption data of past 8 years for Nigeria is extracted from the Nigerian National Petroleum council (NNPC) reports (NNPC Annual Statistical 2002-2008) these are published on their website. The consumption figures can be seen in the Table I of Annexure B at the end. The method involves the following variables (Frederick S Hillier Third Edition) Q - Quarter MA-Moving Average
is a positive consumption trend and it support that Nigeria is a potential market for exporting gasoline to as the demand exists. Oil import and export is generally quarterly basis. Based on the previous years data the quarter with the highest consumption level was determined giving an idea as to which time of the year is the best to export Gasoline to Nigeria. The result of this is depicted with the help of a Graph 1 in the Analysis and conclusion section. Based on the data of Table I in Annexure B demand forecasting was done. Given in the Table A of Analysis and conclusion section are the forecasted figures for 2010.
Technical Feasibility
The refineries are designed and built with certain refining parameters, range and capacities i.e. the equipment is made for refining a specific range of crude oil and then getting the specific quality range of refined oil products. Due to this constraint we have to check whether the refinery could produce this quality of product required by the buyer. Initially the specifications from the buyers (NNPC) from Nigeria were asked for. Both the Nigerian specifications and the refinery specifications were matched. This was to determine the technical feasibility whether or not the required quality of gasoline can be produced as required by the Nigerian buyer. Those parameters should be marked where there was a mismatch in the specifications. The mismatch parameter needs to be discussed with the refinery that whether the quality can be produced by scaling up the specifications. The cost should be kept in mind while the scale up process. The matching is done and is illustrated in tabular form in the Table II of Appendix B. The important quality determining parameters for gasoline are discussed in Appendix A. The quality parameters should be matched
4QMA = Average of 4 values (Next time taking average of 4 values eliminating 1st one and adding one next value) Centered MA = Average of 2 subsequent values of 4QMA Seasonality Index for particular quarters = Average of respective quarters/Average of all quarters De-seasonalized data = (Actual Value / Seasonality Index)*100 After we got the trend and the trend coefficient, they are used for forecasting. The results are discussed in the analysis section. The trend obtained could be seen in the Graph II in Analysis and conclusion section. There
48
simultaneously. The parameter are matched in following methodNigerias required maximum should be > the refinerys maximum limit Nigerias required minimum should be < the refinerys minimum limit
government in order to measure quantity of crude oil used in the specific amount of gasoline called standard input output norms (SION). This calculation is done to get an approximate net profit for export to Nigeria. The margin calculated is based on the 2009 prices as the premium price which was available is obtained from a tender document from Reuters from Aug-Nov 2009 tender. The actual margins may largely differ from this depending on the market condition at that time. The calculations are done in Microsoft excel and the tables are under Annexure B at the end. The Calculation Procedure Followed The imported product (Crude Oil) less 15% was done to calculate the value of the raw material price less for the discounted duty calculation (Indias foreign trade policy 2009-2014). The discounted duty calculation was done on the basis of SION (Standard Input Output Norms) method by dividing the Free on Board (FOB) by SION value. The minimum of the two values is considered for the application of the 5% discounted duty calculation. The additional 2% benefit was calculated on the FOB value of the gasoline. Further adding up the discounted duty to the FOB value we are earning will give us the Export Price Parity (EPP). This means that on exporting something it is always better off selling it in the domestic market. We calculated the EPP for other countries in order to study that whether it is profitable to export to Nigeria or to export to any other country. The margins can get changed due to any of the above mentioned price but the most crucial prices are Premium Demurrage Benefit %age Any major change in these will affect the profit margins.
Economic Feasibility
Major Costs Involved Gasoline benchmark prices (g) were taken for that particular period. Premium (p) offered by the Nigerian buyers on basis of $/MT was found from the listings news services like Reuters. The information of the last tenders signed is listed. The premium offered by Nigerian buyers is very high-$82 a tonne over average cash prices of premium unleaded gasoline in Europe(EOL,2010). Freight (f) for exporting gasoline to that country is calculated by obtaining costs from online portal like world scale which provides with the freight charges. Demurrage charges (d) taken in the case of Nigeria due to congestion at the ports. FOB value of the product (V) is calculated by the following formula V=g+p-f-d Duty exemption on the crude imported in India is 5% on custom duty paid. Additional benefit for exporting to Nigeria is 2% on FOB value of the product as mentioned above. Duty calculation is done on the basis of two schemes: 1) Duty drawback: 5% discount on the crude oil which is used in the production of gasoline. 2) Advanced authorization scheme: Standard conversion values are determined by the
49
The similar steps were repeated to calculate the profit for the Benchmarked countries- Singapore, Arab Gulf, Europe and US who sets the prices of gasoline for the nearby markets. For these countries no premium and demurrage is considered as the premium prices are paid only by the nearby countries who quote their price +/- the benchmarked prices. Demurrage is only paid when the ports are not efficient in working and are congested. Calculations of margins are done in Table III provided in Appendix B. The effective profitability for Nigeria was now calculated by finding out the difference between the EPP of Nigeria and other countrys EPP in $/MT.
In the Graph II below the straight line shows the consumption trend without the seasonal effect of gasoline in Nigeria and the spiked line shows the real consumption with the seasonal effect. Graph II. Trend of gasoline consumption in Nigeria
1000000 900000 800000 700000 600000 500000
400000 Consumption Q3-02Q1-04Q3-04Q1-05Q3-05Q1-06Q3-06Q1-07Q3-07Q1-08Q3-08Q1-09 in '000 lts Quarters for 2002-2009
Quarterly Consumption
Consumption Trend
Analysis and Conclusions

The analysis of the results obtained from the above observations and tools application. This analysis gives a clear picture of what and how to proceed for exporting gasoline to Nigeria. Forecasting Garph I shows that the major demand is in the 2nd quarter then it is in the 3rd quarter. Altough not much of difference is there in the demand figures. This means that the market has almost the same demand throughout the year. From the regression result we can see that the relation between the months and the consumption is very low it is about- 0.1% i.e. in Nigeria the monthly demand is not affected by the seasons as it is a temperate climate country.
Table A. The forecasted demand for 2010

2010 Average Consumption in million lts* 738.533 739.509 740.485 741.461 Average Consumption in million MT* 6.277 6.286 6.294 6.302
Q1 Q2 Q3 Q4
The forecasting was done on the basis of trend obtained. Based on the figures obtained are stated in Table A .This is inferred that there is a demand in Nigerian market for gasoline. Technical Feasibility It is technically feasible to produce Nigerian gasoline in the ESSARs refinery. All of the required parameters of Gasoline matched with the refinerys specification. Economic Feasibility The profitability of supplying gasoline to Nigeria is as follows. Considering premium to be around 82 $/MT (according to the latest tender information) the profitability of supplying gasoline to Nigeria very high as can be seen in the graphs. The Graph III- a,b,c,d were plotted from the results obtained in Table III of Annexure B.
Graph I. Depicting the quarterly consumption
Quarterly Avg Consumption

Consumption in Million lts
0.75 0.74 0.73 0.72
0.71 0.7
0.744492417 Quarterly Avg Consumption 0.70668646
0.717302732 0.708267916
0.69 0.68 Q1 Q2 Q3 Q4
Quarters of an year
50
Graph III Nigerian Benefit Graph a. Nigerian Benefit over Singapore in $/bbl
100.00 95.00 90.00 85.00 80.00 75.00 70.00 65.00 Aug-09 Sept-09 Oct-09 Nov-09 81.77 75.21
77.51 93.51 94.44
Graph b. Nigerian Benefit over Arab Gulf in $/bbl

100.00 95.00 90.00
93.51 90.65 83.01 84.98

75.81
94.44
90.65 84.98 81.51

Nigeria EPP Singapore EPP
85.00 80.00 75.00 70.00 65.00
82.54 77.89
Nigeria EPP
Arab Gulf EPP
Aug-09
Sept-09
Oct-09
Nov-09
Graph c. Nigerian Benefit over US in $/bbl

100.00 95.00 90.00
85.00 82.43 84.98
Graph d. Nigerian Benefit over Europe in $/bbl

100.00
93.51 90.65
94.44
95.00 90.00 85.00
93.51 90.65 84.98 81.82 79.02 73.46
94.44
80.00 75.00 70.00 65.00
80.98 77.81
71.48
Nigeria EPP
82.73
Nigeria EPP Europe EPP
US EPP
80.00
75.00 70.00 65.00
Aug-09
Sept-09
Oct-09
Nov-09
Aug-09
Sept-09
Oct-09
Nov-09
The major risks involved in this export are the demurrage charges we have to pay in case of late unloading of the cargoes. Then the term of payment is on 45 days Open account credit in the case of Nigeria and it may be 30 days Open credit for other countries which is the normal term. For Nigeria the duration may increase to 70-90 days. This information is taken from the tender from the Nigerian authority NNPC. The open account credit is a risky mode of payment for the supplier. Here due to the unrest the government is highly volatile. Apart from these risks the physical damage to the cargoes is also high in the Niger delta. The 2008 figures are stated in Table B (Bergen Risk Solutions Report-2008)
Recommendations
After working out all the possibilities the most important recommendations to make are Essar Oil Limited should look towards Exporting Gasoline to Nigeria. As we can see in the quarterly consumption demand of gasoline in Nigeria one should focus at selling more gasoline in the 2nd quarter of the year as it has the maximum demand at that time of year. Although many a times the shipment terms depend on the buyer sellers agreement but from the study of the attack reports (Bergen Risk Solutions Report-2008) which occurred at the ports the safest and the best option is the port of Calabar.
Kidnap 3
Serious crime 29
Attempts 8
Total 40
51
Annexure A
Definitions Parameters which are highly important in determining the quality Specific Gravity: Know the volume at different temperatures when gauging the liquid content. Distillation: The distillation shows the volatility and ease of vaporization of a fuel. If the maximum point is specified then you have to provide the point not exceeding maximum limit, this determines the temperature at which the Gasoline will get ignited. Sulfur content: Sulfur in fuel oils is also undesirable because of the corrosiveness of sulfur compounds in the flue gas. Thus, the sulfur content specified by them is considered maximum it is better if we are providing lesser sulfur to what is mentioned by them as it is unwanted but providing higher concentration of sulfur would be a problem. Copper corrosion: Determines the corrosiveness of a sample to copper. A polished copper strip is immersed in the sample at a specific temperature and time length. RON (Research Octane Number): The higher the RON the better the quality of the oil. Lead Content: This is an impurity which is avoided in the oil products as it leads to environment pollution and has to be in a regulated quantity according to the government laws and regulations of that country. Oxidation Stability: The oxidation stability should be within range as it only determines the stability of the oil within the ignition engine. Flash Point: It is the lowest temperature to which oil must be heated for its vapors to ignite in a flame. Minimum permissible flash point is usually prescribed by state and municipal laws. Water and sediment content: Should be low to prevent fouling the facilities. Sediment accumulates on filter screens and burner parts. Water in distillate fuels can cause tanks to corrode and emulsions to form in residual oil. Ash Content: Ash is the noncombustible material in oil. An excessive amount indicates the presence of materials that cause high wear on burner pumps. Thus it is avoided in the oil so if the buyers required quantity is lower than refinerys specification then it is needed to be checked. Kinematic viscosity: Viscosity is oils resistance to flow. It is significant because it indicates the ease at which oil flows or can be pumped and the ease of atomization. Carbon residue: This has to be low as it states that the amount of carbon getting deposited after the combustion. Thus whatever minimum they ask we have to be less or equal to that or if maximum is stated then it should not be more than that.
Annexure B
Table I. Annual Consumption of gasoline in Nigeria (NNPC Annual Statistical 2002-2008)
Year 2009 2008 2007 2006 2005 2004 2002 Consumption in million Lts 8,145 9,500 8,859 8,005 8,644 8,676 8,580
52
Table II. Comparison of Nigerian gasoline typical with ESSARs typical

NIGERIA Parameters Appearance Odour Color Specific Gravity @ 15 C Distillation Distillation Rec. up to 70 C (E-70) Distillation Rec. up to 100 C(E-100) Distillation Rec. up to 180 C(E-180) FBP Total Sulphur Copper Corrosion RON Oxidation Stability Existent Gum Vapour/liquid ratio:T 36C Free water Suspended matter Residue %(viv) Lead Benzene RVP %m/m kPa D 323 Nil Nil 2 5 ppm 2 62 Not in range Not in range D 5191 Equal >5 ppm >2 >62 % vol % vol % vol C wt ppm ~ ~ gm/m3 D 86 D 5453 D 130 D 2699 D 525 D 381 Class 1b 91 360 4 68 D 381 Unit Test method ASTM Min Max ESSAR Test Method Min Max
Visual Visual D 1298
Clear and bright Merchantable Ox blood red 0.72 0.78 10 50 90 210 1000, No. 1 Strip max D 4052 D 86 D 86 D 86 D 86 D 5453 D 130 D 2699
To be stated To be stated To be stated >0.72 10 40 90 <210 <1000 Equal <91 Not in range >4 <0.78 45 75
Table III. a. All the prices used in the calculation stated in the following table.
Crude Price in $/bbl 71.34 67.64 73.15 77.71 Crude Price in $/MT 515.93 489.19 529.03 562.03
Charges Premium Benefit Extra Benefit 82 5% 2%
Demurrage calculation Rate (PDPR) Days Quantity (MT) $/MT $/b 18000 10 35000 5.14 0.61
Month Aug-09 Sep-09 Oct-09 Nov-09
53
b. Nigerias cost calculation

Crude SION basis=b
@
Freight WCI-WAF
Product less 15%
With 2% benefit
Aug Sep Oct Nov
516 489 529 562
699 630 676 706
82 82 82 82
781 712 758 788
28 28 28 28
5.14 5.14 5.14 5.14
747 679 725 755
650 591 630 656
1.27 1.27 1.27 1.27
655 621 672 714
650 591 630 656
32 30 32 33
15 14 14 15
795 722 771 803
(*) FOB-free on board (@) WCI-Vadinar port (+) MT-metric tonne WAF-Nigeria port (**) EPP-Export price parity
(#) SION-Standard Input Output Norms (!) DBK-Duty Drawback
c. Cost of exporting gasoline to Singapore

Benefit for Nigeria in $/MT 99.73 83.09 111.69 109.83 101.09
89.19 77.98 108.45 101.07 94.17 Benefit for Nigeria in $/MT
Aug Sep Oct Nov
71.34 67.64 73.15 77.71
80.13 73.84 76.05 79.88
1.76 1.76 1.76 1.76
0 0 0 0
0 0 0 0
78.37 72.07 74.28 78.12
666 613 631 664
579 533 549 577
1.27 1.27 1.27 1.27
655 621 672 714
579 533 549 577
28.96 26.64 27.45 28.87
695 639 659 693
81.77 75.21 77.51 81.51
11.73 9.78 13.14 12.92 11.89
d. Cost of Exporting Gasoline to ARAB GULF

Benefit for Nigeria in $/bbl 10.49 9.17 12.76 11.89 11.08
FOB Vadinar in $/MT
FOB Vadinar in $/bbl
Crude SION basis=b
DBK in $/MT=5%
Product less 15%
Freight WAF-AG
EPP in $/MT
Aug Sep Oct Nov
71.34 67.64 73.15 77.71
80.73 73.83 75.83 80.29
1.18 1.18 1.18 1.18
0 0 0 0
0 0 0 0
79.55 72.65 74.65 79.11
676 618 635 672
588 537 552 585
1.27 1.27 1.27 1.27
655 621 672 714
588 537 552 585
Min a Vs b
Premium
FOB Sing
29.40 26.85 27.59 29.23
706 644 662 702
83.01 75.81 77.89 82.54
54
EPP in $/bbl
Crude price
Months 09
Demurrage
SION=a
Benefit for Nigeria in $/bbl
FOB Vadinar in $/MT
Crude SION basis=b
DBK in $/MT=5%
Product less 15%
Freight WAF-SG
EPP in $/MT
EPP in $/bbl
Crude Price
Months 09
Demurrage
Min a Vs b
Premium
FOB Sing
SION=a
EPP in $/bbl 94 85 91 94
FOB* Vadinar
Market price
EPP in $/MT
Crude Price
Months 09
Demurrage
Min a Vs b
Paid price
Premium
SION =a
DBK
**
e. Cost of Exporting Gasoline to US

FOB Vadinar in $/MT
DBK in $/MT=5%
Product less 15%
Freight WAF -US
EPP in $/MT
Aug Sep Oct Nov
71.34 67.64 73.15 77.71
84.41 73.91 79.98 83.01
5.41 5.41 5.41 5.41
0 0 0 0
0 0 0 0
79.00 68.50 74.56 77.60
671 582 634 660
584 506 551 574
1.27 1.27 1.27 1.27
655 621 672 714
584 506 551 574
29.19 25.32 27.56 28.68
701 608 661 688
82.43 71.48 77.81 80.98
EPP in $/bbl
Months 09
Demurrage
Min a Vs b
Premium
FOB Sing
94.14 114.74 109.19 114.39 108.12
f. Cost of Exporting Gasoline to Europe
FOB Vadinar in $/MT
Freight WAF-EUR
DBK in $/MT=5%
Product less 15%
EPP in $/MT
Aug Sep Oct Nov
71.34 67.64 73.15 77.71
82.18 74.16 79.49 83.05
3.76 3.76 3.76 3.76
0 0 0 0
0 0 0 0
78.41 70.40 75.73 79.29
667 598 644 674
580 520 560 586
1.27 1.27 1.27 1.27
655 621 672 714
580 520 560 586
28.98 26.02 27.99 29.30
695 624 672 703
81.82 73.46 79.02 82.73
EPP in $/bbl
Months 09
Demurrage
Min a Vs b
Premium
FOB Sing
99.32 97.96 98.86 99.47 98.90
Benefit for Nigeria in $/MT
Crude SION basis=b
Crude price
SION=a
Benefit for Nigeria in $/MT
Crude SION basis=b
Crude price
SION=a
55
References
Annual Statistical 2002-2008 NNPC, Bulletin Manager GMISCORPORATE PLANNING & DEVELOPMENT DIVISION CPDD), retrieved from<http://www.nnpcgroup.com/PublicRelations/ OilandGasStatistics/AnnualStatisticsBulletin/MonthlyPerforma nce.aspx>,<http://www.nnpcgroup.com/PublicRelations/Oilan dGasStatistics/MPIFigures/MonthlyPetroleum/tabid/130/Fold erID/54/Default.aspx> Anonymous. Energy Intelligence Briefing. New York: Apr 15, 2009. West African Loadings Suffering From Global Malaise retrieved from<http://proquest.umi.com/pqdweb?index=0&did=168373 9001&SrchMode=3&sid=4&Fmt=3&VInst=PROD&VType=PQD &RQT=309&VName=PQD&TS=1285244147&clientId=109000> B Bhaskara Rao, Gyaneshwar Rao. Energy Policy. Kidlington: Oct 2009. Vol. 37, Iss. 10; pg. 3978, Cointegration and the demand for gasoline BBC News Nigeria Friday, May 14, 2010 as viewed on 23 Sep. 10 on <http://www.bbc.co.uk/news/10116945> Bergen Risk Solutions-Nigeria Maritime Security Review No. 5, July 2008 as viewed on 23 September 2010 on <http:// www.bergenrisksolutions.com/index.php?dokument=154> Dianne Waddell and Amrik S. Sohal, Forecasting the key to managerial decision Making, Vol. 32 No. 1, 1994,pp.41-49 EIA U.S Energy Information Administration Independent statistics and a n a l y s i s ( v i ew e d o n 2 3 S e p . 1 0 ) r et r i ev e d f r o m : <http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_pu blications/oil_market_basics/trade_text.htm> EOL product trading desk H.O Mumbai 2010 Felix Olanrewaju Awosika University of Lagos, Department of Political
Science-Ecocity World Summit 2008 Proceedings. Frederick S Hillier Third Edition, Introduction to management science Ch 10 Pg 384 Indias foreign trade policy 2009-2014 as retrieved on 23 Sep. 10 from http://dgftcom.nic.in/exim/2000/dn/ftpdnl/high0910-eng.pdf New york State Energy Plan-June 2002 as viewed on 23 Sep. 10 on <www.nyserda.org/sep/sepappendix.pdf> Nigeria Energy Data 2010, Statistics and Analysis - Oil, Gas, Electricity, Coal updated July 2010 (retrieved on 23 Sep. 10) from <http://www.eia.doe.gov/cabs/Nigeria/pdf.pdf> Mbedi Information Services retrieved on 23 Sep. 10 from <http://www.mbendi.com/indy/oilg/ogrf/af/ng/p0005.htm> Planting Ron, Business Economics. Prices and Seasonality-the Case of Motor Gasoline Washington: Jan 1982. Vol. 17, Iss. 1; pg. 56, 3 pgs as retrieved from <http://proquest.umi.com/pqdweb? index=8&did=963176&SrchMode=3&sid=1&Fmt=2&VInst=PRO D&VType=PQD&RQT=309&VName=PQD&TS=1285243309&cli entId=109000> S.K Sarangi General Manager ,Corporate Planning & Economic Studies Indian Oil Corporation (downloaded on 23 Sep. 10) retrieved from <http://webcache.googleusercontent.com/search? q=cache:AWnqtWOqF7gJ:www.assocham.org/12energy/Energ y_Summit_Presentations/SK_sarangi.ppt+SK+sarangi.ppt&cd= 1&hl=en&ct=clnk&gl=in> Vincent Nwanma and Norval Scott. Wall Street Journal- Nigeria Has Oil, but It's Low on Gas. (Eastern edition). New York, N.Y.: May 26, 2004. pg. A.13 retrieved from <http://proquest.umi.com/ pqdweb? index=50&did=642320311&SrchMode= 3&sid=2&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VNam e=PQD&TS=1285248103&clientId=109000> Worldscale portal <www.worldscale.com>
56
Factors Influencing the Purchase of Private Labels: A Case Study on Roma**

Mahima Gupta*
Abstract
Purpose The purpose is to identify the factors which are considered by Customers while deciding between opting for a national brand and a private label and how can a company increase the sales of its private labels by working upon these factors. Design/ Methodology/ Approach The study is descriptive in nature. A case study is conducted on Romas private labels for this purpose. The data is collected using a structured questionnaire. Findings The research came out with three parameters of judgment from a customer point of view. These are Merchandise Mix, Brand Equity and Brand Knowledge. The research shows how a customer makes a purchase decision when private labels come into picture. The parameters change to some extent due to a completely different value proposition provided by the private labels as compared to national brands. Research limitations/ Implications A key limitation of this study is the sampling frame. The sampling frame is limited to a certain age group in a restricted geographical area. The responses are collected in a limited time frame for a particular industry Consumer durables and electronics. Future research is required in order to test the generalization of the proposed parameters. Practical Implications - To boost the sales of private labels and enhance their image in minds of the customers, it is important for the company to focus on few key areas identified in the findings. The merchandising mix of the store should reflect a proper mix of store brands and national brands. The brand equity of the retailer helps in increasing the private labels sale as the retailer becomes a brand in itself emphasizing the private labels also to be treated as a brand in the mind of the customer. Knowledge about brand can increase the reliability factor for customers by reducing their perceived risks about a product. .If worked out properly these parameters can bring out substantial improvements in the sales of private labels. Key words Private labels, consumer durables and electronics, merchandising mix, brand equity. Paper type Research Paper
Introduction
We grew in the world dominated by manufacturer brands, well known as national brands. However, with time we saw change in the retail landscape. More and more retail stores were carrying products with their own label. These products which were manufactured or provided by the retailers themselves came to be known as private labels or in house brands or store brands. Private Labels are often positioned as the low cost alternatives to the regional, national or international brands, although some brands have also been positioned as premium brands due to the strong
image of the retailer. Private labels help retailers to enhance category profitability, increase negotiation power of the retailer and create consumer loyalty. Private labels are growing faster than manufacturer brands. They are ubiquitous across categories and they now compete on quality in fact, they are now brands! (Nirmalya Kumar and Jan-Benedict E. M. Steenkamp, 2007). In developed markets they are eating into a large chunk of the organized retail sales. They account for 40 per cent of Wal-Mart sales ($126 billion or Rs 5, 16,600 crore), 50 per cent for Tesco ($36 billion or Rs 1, 47,600). Now a category of private label only retailers has also
*Centre for Retail Management 2009-11, Birla Institute of Management Technology Under the guidance of Prof. Pankaj Priya, Centre for Retail Management, Birla Institute of Management Technology **A Fictitious Firm
57
been created - IKEA, Toys R Us, Zara who sell only private label brands. In India, however the contribution of private labels is just 10 12% of the total organized retail (Images Retail Report 2009). Positively the growth of private labels in recent years is phenomenal, giving retailers a lot of scope to increase their profitability. Many retailers are making efforts to increase the share of private labels in their offerings, Roma being one of them. For example Spencers in India has private labels in 60% of its 650 product categories, and the sales of private labels are increasing at the rate of 40% annually. In Lifestyle International private labels contribute to 25% of its sale etc. The study thus tries to identify some parameters used by customers to judge a brand and take its final purchase decision. The study with the help of those parameters tries to identify factors which when worked upon can increase the sales of private labels.
taste, quality etc. which can be judged only by experiencing. These two types of cues are also considered responsible for building brand image. For national brands it is comparatively easier to develop the brand image, as they spend more on marketing, packaging etc. and are always positioned as high quality offerings. In case of Private labels its more complex. Here customers do not have a strong brand association. However, authors observed that the store image acts as an important indicator of store brand quality (Semeijn and al., 2004). Researchers have studied a multitude of retailer attributes that influence overall store image, e.g., the variety and quality of products, services, and brands sold; the physical store appearance; behavior and service quality of employees; the price levels, depth and frequency of promotions; and so on (Burt and Carralero-Encinas, 2000; Ailawadi and Keller, 2004; Sorrenberg and Erasmus, 2008). In case of private labels customers tends to go more on the extrinsic cues. Therefore, factors like packaging, display etc. have to be taken care of. Although this will increase the cost for the retailer but he can keep saving margins by squeezing the supply chain and then play on volumes. Also for private labels the efficiency of a salesman to convince the customer plays a major role. Although there is a causal relationship between the store image and the salesmans reliability as considered by the customer. But then the overall strategy defined by the company will depend on other factors also. The overall strategy and positioning of retailer will also define what a consumer expects and what factors he/she consider for coming to a conclusion, while selecting a brand. Here comes the role of the brand architecture. Esbjerg et al. (2004) adapted Aaker and Joachimsthaler (2000) brand architecture concept to the retail setting by defining retailer brand architecture as a retailers assortment of manufacturer brands, retailer brands and generic products. The brand architecture can differ based on two dimensions: the quality of retailer brands and visibility of retailer brands (Esbjerg et al. 2004).
Literature Review
For conducting this research it was important to get an insight about the concepts of the development of private labels, their importance, and consumer perception for brands and store image etc. There are various factors which can influence a customers purchase decision. Some of them are discussed below: A brand-image is defined as the total sum of brand associations held in consumer memory that lead to perceptions about the brand (Keller, 1993). These associations of brand image are multidimensional and consist of the affective dimension or the attitudes towards the brand and the perceived quality dimension (Keller, 1993). Consumer uses different cues, benefits, symbolic meanings etc. to relate to a brand. The cues used by the customers can be intrinsic or extrinsic cues. Extrinsic cues refer to cues which are extrinsic to a product and do not have to be experienced in order to make judgments, like the packaging, brand name, price and advertising. Intrinsic cues refers to the factors like
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Factors Influencing the Purchase of Private Labels: A Case Study on Roma
As we saw customer while deciding among the National Brands and the Store brands consider various factors. Relying on various literatures discussed above some of these factors can be identified as are store image (the trust factor), variety and quality of products, options available in national brands i.e. The kind of brand architecture, promotional offers going on, prices, service, salesmans explanation and features. So, this research has narrowed down on these factors.
Demographic Profile Table 1 : Demographic profile of Customers

Gender Age (In years) 15 25 25 35 35 -45 >= 45 Percentage of Total Male Percentage within Age group 57 62 53 72 62.5 Female Percentage within Age group 43 38 47 28 37.5 Total percentage Percentage of Total
100 100 100 100
37 54 37 26 100
The objectives of this research is to identify factors which a customer considers for selecting a brand, the consumer perception for store brands, reasons for low contribution of private labels in a retail outlet and in the end coming up with a set of parameters which can be worked upon to enhance store brands image and increase their contribution in the total sales. For this purpose Roma Specialty retailer for consumer durables and electronics is considered. Primary data is collected for which Survey method is used for obtaining information which is based on questioning the respondents. Structured questionnaire is used to ask prearranged questions from the respondents. Most of the questions are close ended with multiple choices to assist customers in answering. Most of the questions are framed on 5 point Likert Scale. The personal detail of respondents is limited to Age, Qualification and Area of Residence. Sampling Design Sampling Technique: Convenience Sampling The selection of sampling units is based on convenience of the interviewer. In this research the interviews are taken from the customers on the shop floor at the time when a sale is closed. Sample Size: 152 Number of Respondents for National brands: 124 Number of respondents for Romas private label: 28 Assumption: Sample Size of 152 respondents is true representative of the population.
Results and Analysis

As shown in Table 2, cross tabulation was done to identify the level of awareness about Romas private labels among the male and female respondents. It can be seen that male customers are comparatively more aware about Romas private labels, but the difference is not significant enough. This can be interpreted by the data that number of male respondents was more than number of female respondents (refer to Table 1). Table 2: Private label awareness * Gender Cross tabulation
Gender Male Private label awareness Yes Count % within Private label awareness % within Gender % of Total Count % within Private label awareness % within Gender % of Total Count % within Private label awareness % within Gender % of Total 48 64.9% 50.5% 31.6% 47 60.3% 49.5% 30.9% 95 62.5% 100.0% 62.5% Female 26 35.1% 45.6% 17.1% 31 39.7% 54.4% 20.4% 57 37.5% 100.0% 37.5% 74 100.0% 48.7% 48.7% 78 100.0% 51.3% 51.3% 152 100.0% 100.0% 100.0% Total
No
Total
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Table 3: Customers Responses on Factors considered for preference of National Brand (Percentage)
S. No. 1. 2. Factors for preference to National Brand It has high credibility This brands products are of high quality The features available in this brand were not available in any other brand Prices were affordable and less than other brands The brand provides excellent after sales services Strongly Disagree 0 0.80 Disagree Neither agree nor disagree 12.90 33.06 Agree Strongly Agree 47.58 15.32
after sales support and positive inclination towards store as a brand. This clearly shows the key areas on which a retailer should focus on. Table 5: Customer responses on Factors responsible for rejecting Romas Private Labels (percentage)
S. No. 1. 2. Factors for rejecting Romas Private Label No other option was available I was less aware about Romas Pvt. Label CS!s didnt explained me about it Didnt found it value for money Did not liked its quality Had bad experience with it earlier I am brand loyal towards the other brand I do not trust Romas Pvt. Labels ( lack of credibility) Strongly Disagree 29.83 2.41 Disagree Neither Agree nor Disagree 12.90 24.19 Agree Strongly Agree 21.77 37.09
16.93 6.45
22.58 44.35
3.
8.06
9.67
9.67
20.16
51.61
20.96 9.67
14.51 26.61
4.
17.74
16.93
12.09
35.48
17.74
3.
21.77
20.16
29.03
16.93
12.09
5.
4.
22.58 26.61 88.70
10.48 8.87 3.22
48.38 56.45 4.83
16.93 5.64 3.22
1.61 3.22 0
20.16
29.03
21.77
12.90
16.12
5. 6.
As shown in Table 3, customers prefer National Brands as these are more credible and customers can rely on its quality. Feature play a major role in deciding about a brand, main reason being the category we are dealing with. Consumer durables and electronic industry survive on innovation; where in new technological changes are very frequent. Customers who are more national brand prone do not consider prices to be a determining factor. Table 4: Customer Responses for factors considered for preference of Romas Private labels (percentage)
S. No. Factors for preference to Romas Private Labels I found it value for money It is a high quality product The offer provided was better than offers on other brands The prices were affordable I liked the features provided in the private label I trust the brand Roma Strongly Disagree Disagree Neither agree nor disagree 14.28 60.71 25 Agree Strongly Agree
7.
6.45
25.80
15.32
26.61
25.80
8.
17.74
25.80
10.48
16.93
29.83
1. 2.
0 3.57 7.14
3.57 17.85 39.28
60.71 14.28 21.42
21.42 3.57 7.14
3.
4. 5. 6.
0 3.57
7.14 10.71
3.57 21.42
17.85 28.57
71.42 32.14
3.57
21.42
35.71
39.28
As shown in Table 5, 63% respondents didnt purchase Romas private labels as they didnt found it in that particular category. This shows that there are many potential customers for private labels which can be captured through better product availability. The statistics also highlights the importance of proving satisfactory information regarding the product by the sales executive. 18% customers didnt purchased Romas private labels because they were not given satisfactory information regarding them by the Customer Sales executives. This communicates a lack of effort by the sales side. As mentioned above the sales executives assistance plays an important role in aiding the decision making of the customers, all possible efforts should be made to minimize this percentage. Further to identify the relevance of the factors, Factor analysis has been conducted considering these set of parameters as mentioned in Table 5. Factor Analysis: Factor analysis has been conducted to categorize these factors in relevant components based on consumer perception about the store brands and expectations
As mentioned in Table 4, there are certain factors which play significant role in generating positive inclination towards the store brand. Customers preferring store brand give more importance to factors like price, good features differentiating them from the national brands,
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with them. It can be identified that customers consider these factors for eliminating an option as well as for considering one. Therefore, it is to be understood that these components when applied to the private labels strategy of a company, can prove beneficial in obtaining the overall companys objective in the long run. KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. ChiSquare Df Sig. .624 280.570 28 .000
Variables having value >.3 are grouped in to one component. Following are the three components extracted. Component 1 - No Of Options (.772) + Value for money (.933) + Quality (.891) Component 2 - Awareness (.776) + Brand loyalty towards other brand (.670) + Lack of trust (.776) Component 3 - CSAs Explanation (.373) + Experience with the brand (.902) Above inferred component can be interpreted as following constructs Components 1 refer to Merchandising Mix, Components 2 refers to Brand Equity and component 3 refers to Brand Knowledge. Merchandising Mix here refers to the options available for the customer in a particular category that comes under his/her consideration set. It means private labels to be available across the category and in a wider price range. Another important component is the Brand Equity, which refers to the brand image in case of national brands and more prominent store image in case of private labels. Usually the low level of store brand equity reduces the sales of private labels in a store. The third component is knowledge about the brand. For high involvement products with more technical specifications like electronics, customers decision is aided by the knowledge about the product. For customers source of knowledge is either their own past experience or the reviews coming from the public and aids given by the sales executives. Therefore, it also becomes an important consideration. The above parameters are considered by the customers for deciding which brand to consider, either being a national brand or a store brand. The final choice depends on the best option customer finds after evaluating the options on the above parameters.
Feasibility of the test - KMO test is used to check the feasibility of the factor analysis. As in given table KMO is 0.624 which is greater than .5 and Approx chi square value is 280.70 which is too high, Therefore Factor analysis can be done on the findings. Communalities
Initial No of Option Awareness CSA's explanation Value for money Quality Experience with the brand brand loyalty towards other brand Lack of Trust 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extraction .644 .628 .537 .871 .798 .829 .542 .626
Extraction Method: Principal Component Analysis. Rotated Component Matrix

Component 1 No of Option Awareness CSA's explanation Value for money Quality Experience with the brand Brand loyalty towards other brand Lack of Trust .772 -.071 .30 .933 .891 .114 -.209 .121 2 -.249 .776 .012 .005 .061 .043 .670 .766 3 .094 .146 .373 .008 -.021 .902 .224 -.154
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. A Rotation converged in 4 iterations.
Conclusion
In this fast growing consumer durables industry, if retailers want to survive and perform well, the only way is to seek assistance of store brands to create
61
differentiation. The current work provides an insight about the customers decision making process by coming up with the consolidated factors responsible for brand selection by a customer. The study tries to evaluate factors for both national brands and store brands, keeping in mind the objective of enhancing the performance of store brands in a store. The results give us few parameters for the customers making a purchase decision for consumer durables and electronics. Following are the key findings of the study: High level of credibility which brands develop through years of marketing and promotional activities, excellent services and word of mouth, is an important factor for customers. Therefore, to attract customers to purchase private labels, it is important for the store to be strong brand in itself to pursue them for the first purchase. In consumer durables and electronics industry features are one of the most important drivers of sales. Private labels have a better chance to differentiate themselves from the store brands by coming up with new features frequently. Salesmen play a major role in influencing the customers, by giving them proper cues to aid the purchase of customer. They can justify a private label to a customer and induce him/her to make the purchase. Earlier prices used to be the only Unique Selling Proposition for the store brands, but now other things like efficient after sales support by the retailer for its in-house brands, etc. are also becoming an important parameter to consider by the customers. The merchandising mix, brand equity and brand knowledge are identified as the key components for consideration of a brand, especially store brands.
chain. Thus focusing on the consumer decision making parameters, while purchasing products like consumer durables and electronics. Although some inferences can be generalized, some cannot be. This also limits the application of the study to the Consumer durables and electronics market only.
Managerial Implications
Consumer durables and electronics are usually low margin high value products. In such a competitive environment, it becomes indispensable for companies to develop strategies and methods to sustain their position in the market and to generate higher profit margins. Retailers can achieve it with the help of private labels. Therefore, private labels form an integral part of companys overall strategy and objectives. The paper discusses few parameters considered by the customers for evaluating the store brands. How a retailer can use those parameters to enhance the overall contribution of private labels in the sales and to increase its acceptance for the customers is discussed below: The merchandising mix at any store should be complete and satisfying for the customer. The merchandising mix should have a right mix of national and store brands i.e. there should be a harmony between the two offerings and they should be available in a price range, capable of fulfilling the requirements of the target market. In addition, the retailer has to focus on developing the store image as we find there is a positive correlation between the store brand equity and sales of private labels. Another important aspect which was identified in this study was the importance of knowledge about the brand. For private labels brand is the retailer itself and functional aspects of a particular product labeled in - house. For this the most important role particularly played for store brands, is by the Customer Sales Executives (CSAs).Other being the past experience of the customer with the brand, which can be positive only by providing a good quality
Limitations of the Study

Sample Size: The sample size was limited to 152 respondents. Geographic limitations: The sample is collected in Rohini store of Roma in Delhi. Specific Industry: The study is done on Roma which is electronics and consumer durables retail
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product. Thus, retailer has to understand and train salespeople to focus on effective influencers, and deliver high quality products. This is because the quality has a positive correlation with the store image, and providing a poor quality product would also prove detrimental for the store image.
References
Aaker, D. A. and Joachimsthaler. E. 2000, Brand Leadership, London, Free Press. Esbjerg, Lars ; Grunert, Klaus G. ; Juhl, Hans Jrn. 2004. Retailer brand architectures: Consumer perceptions of five Danish food retailers, Konferencen: 8th International Conference on Corporate Reputation, Image, Identity & Competitiveness, Fort Lauderdale, USA, , 20 - 23 May 2004. Keller, K.L. 1993, "Conceptualising, measuring and managing customer-based brand equity", Journal of Marketing, Vol. 57 No.1, pp.1-22. Kusum Ailawadi and Kevin Keller 2004, Understanding Retail Branding: Conceptual Insights and Research Priorities, Journal of Retailing, Vol. 80, Issue 4 (Winter), 331-342. Semeijn, J.; Ambrosini, A.B. 2004. Consumer Evaluations of Store Brands: Effects of Store Image and Product Attributes, Journal of Retailing and Consumer Services, 11 (4), 247-258. Sonnenberg, N.C. and Erasmus, A.C. 2008, Exploring the role of retailer image and store brands as extrinsic cues in young urban consumers choice of interior textile products, Latin American Advances in Consumer Research, 2. Steve Burt, Jose Carralero-Encinas, 2000 "The role of store image in retail internationalisation", International Marketing Review, Vol. 17 Iss: 4/5, pp.433 453
Scope for Further Research

The paper discusses the factors influencing the purchase of private labels in a store. The study is of continuous importance for the retailers who intend to increase their store brands acceptance in the market. As in the present competitive market store brands act as a differentiator, giving companies a competitive edge, most of the retailers would come under this category. However, as the research is at present restricted to the consumer durables and electronics industry, need arises for further research covering other sectors. This will be able to generalize the proposed parameters across industries as well as different formats. Further research can also be conducted to correlate the consideration of these parameters based on customers socio demographic profiles.
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64
Competitive Analysis of New Holland Tractors in Western U.P and Haryana .

Vijay Gaur*
Abstract
Problem Statement: Competitive Analysis of New Holland Tractors was done among six domestic competitors. For this customer and dealer perception was taken in the area of Western U.P. and Haryana. Eight different variables were identified and position of each competitor was analyzed on the basis of that. These variables are: Price, Finance (Loans), Availability of spare parts, after sale service, Brand Name, Design/Style, Power (Lifting capacity) and Sales Promotion. Approach: A questionnaire was designed with above set of variables and responses from 164 customer and 20 dealers was recorded. Results: Using Analytical Hierarchy Process (AHP) market share was determined on the basis of above variables among six competitors in western U.P. and Haryana. Using one way ANOVA it was checked whether there is a significant difference between six competitors with respect to each variable. Perceptual maps with combination of up to two variables (attributes) were drawn to infer about the positioning of six competitors. Conclusion: This study will help manufacturer of tractors to improve on the variables on the basis of which they are lagging their respective market share with respect to competitors. Key words: Analytical Hierarchy Process (AHP), Customer and Dealer perception, One way Anova
Introduction
India is mainly an agricultural country. Agriculture in India accounts for approximately 15.7 percent of Indias GDP in 2009 and employs about 52 percent of the population (Refer website of Agricultural and Processed Food Products Export Development Authority - APEDA). The agri-biotech sector in India has been growing at a whopping 30 per cent since the last five years, and it is likely to sustain the growth in the future as well. Agricultural biotech in India has immense potential and India can become a major grower of transgenic rice and several genetically engineered vegetables by 2010. According to the Centre for Monitoring Indian Economy (CMIE), crop production is expected to rise by 1.7 per cent during FY 10 and food grain production is expected to increase by 1.1 per cent and wheat production is projected to remain at the same level of 80 million tonnes as estimated for FY 09 while rice production is
projected to increase by 1.1 per cent to 98.8 million tonnes. Production of coarse cereals and pulses is also expected to rise in FY 10.
Overview of Tractor Industry in India

The Indian tractor industry has around 13 national players and a few regional players. The industry is dominated by Mahindra and Mahindra (M&M) with a market share of around 42.04%, followed by Tractors and Farm Equipments TAFE, which holds around 22.32% of the market. The other major players include Escorts (13.03%), L&T-John Deere (7.02%), and International Tractors Limited (8.71%) and New Holland Fiat India Pvt. Ltd. (5.0%). During the last few years, the industry has seen some consolidation with M&M acquiring Punjab Tractors (PTL) and TAFE acquiring Eicher Tractors. Most of the tractors sold in India are in the 21-50 HP range,
*Centre for Business Management 2009-11, Birla Institute of Management Technology Under the guidance of Prof. R.J. Masilamani, Centre for Business Management, Birla Institute of Management Technology
65
with the 31-40 HP category alone accounting for around 50% of this. Market Share of various competitors in Indian Tractor Industry Total domestic tractors sold in 2009 from January to December was 361,141 with a growth of 17.2 % over what sold in 2008 i.e. 308173. Table 1: Maket Share of Tractor Industry: Jan Dec 2009
JAN-December Manufacturer M&M GROUP TAFE GROUP ESCORTS ITL NHFI JOHN-DEERE HMT FML SAME TIV Calendarised- Only Domestic Jan-December M.S.% 2009 2008 GR% 2009 2008 151807 125795 20.7% 42.1% 40.8% 80609 70178 14.9% 22.3% 22.8% 47046 42876 9.7% 13.0% 13.9% 31462 27426 14.7% 8.7% 8.9% 18030 16342 10.4% 4.9% 5.3% 25342 15783 60.6% 7.0% 5.1% 4694 4114 14.1% 1.3% 1.3% 614 1471 -58.3% 0.2% 0.5% 1537 4188 -63.3% 0.4% 1.7% 361141 308173 17.2% 100.0% 100.0%
5) 6) 7) 8)
different alternatives. Formation of normalised matrix. Consistency check. Check for consistency criteria, if any of the matrixes found inconsistent. Evaluating final ranks.
Perceptual mapping has been used as a strategic management tool for about thirty years (Green and Wind, 1975). Perceptual mapping has been used to satisfy marketing and advertising information needs related to product positioning (DeSarbo and Rao, 1984; Wind, 1982), competitive market structure Srivastava, Alpert and Shocker, 1984), consumer preferences and brand perceptions (Cooper, 1983; Pegels and Sekar, 1989; Dowling, 1988; Day, Shocker and Srivastava, 1979). It offers a unique ability to communicate market structure analysis-i.e., the complex relationships among marketplace competitors and the criteria used by buyers in making purchase decisions and recommendations. Its powerful graphic simplicity appeals to senior management and can stimulate discussion and strategic thinking at all levels of all types of organizations. Perceptual mapping has been used to satisfy marketing and advertising information needs related to product positioning, competitive market structure, consumer preferences and brand perceptions. Perceptual maps satisfy these types of information needs by analyzing and then translating consumers' numeric ratings, brand similarity data and brand preference data into a visual representation of how those consumers view the set of brands and products. The most common use of perceptual mapping in advertising and marketing research relates to brand perceptions. However, perceptual mapping is appropriate for exploring perceptions of any set of objects, for example, types of television programs or political candidates. Perceptual maps can also be used to determine similarities and differences across groups of consumers. There are two approaches to perceptual mapping: attribute based and non-attribute based. Attribute based approaches, used in this study, require
Literature Review
Analytical Hierarchy Process (AHP) is an approach to decision making that involves structuring multiple choice criteria into a hierarchy, assessing the relative importance of these criteria, comparing alternatives for each criterion, and determining an overall ranking of the alternatives as defined by DSS Resources. The AHP is a structured technique for dealing with complex decisions. Rather than prescribing a "correct decision, the AHP helps the decision makers find the one that best suits their needs and their understanding of the problem.
Procedure
The procedure for using the AHP can be summarized as: 1) Finding factors affecting the decision. 2) Assigning them weights. 3) Pair wise comparison. 4) Forming matrix with respect to various factors for
66
Competitive Analysis of New Holland Tractors in Western U.P. and Haryana
a respondent to evaluate a set of brands on a large number of specific attributes, typically those attributes felt to influence how consumers perceive, evaluate and distinguish among brands and products. All mapping techniques attempt to show the comparative differences in how products or services are rated on a given set of attributes. The validity of a map depends on both the overall set of attributes and brands in the study as well as the subset of attributes and brands evaluated by each respondent.
Project analyses the condition of dealers with respect to infrastructure and view point of dealers about the company with respect to support on promotion and service. It further analyses dealers view point on sale of different horse-power (HP) segment. Surveys, panels and various quantitative methods were used to describe, record, analyze and interpret the data. Data Collection from secondary Resources Data have been collected through various secondary resources like articles published in different newspaper about tractor industry, books, Tractors Manufacturer Association (TMA) report, and ICRA report May 2010 on Indian tractor Industry. Data Collection from Primary Resources Survey through questionnaires As mentioned earlier, in total two surveys were conducted: Questionnaire 1: for Customer (Both of New Holland and Competitors) Data Collection: In total 164 customers, selected on the basis of convenience sample, were interviewed from different places in Western U.P. and Haryana. Questionnaire 2: For the Dealers Data Collection: In total 20 dealers (convenience sample) were interviewed from various parts of western U.P. and Haryana. For further reference, Questionnaire for the Dealers is attached as Appendix 2 The respondents were asked to evaluate the position of New Holland Fiat India Pvt. Ltd. and its product range with respect to its competitors on the basis of six different attributes. Perceived quality of each variable was measured through questions designed on 5-point Likert type scale ranging from Excellent to Poor. For example, Availability of spare parts was measured through the question, How do you rate availability of spare parts in comparison to five other competitors with Excellent as the best positive response and Poor as the worst negative response, any other response can be recorded between Excellent and Poor on the scale. Similarly, other attributes like After sale service and Price of Product were measured with the same
67
Research Objectives and Focus Issues

The main objective of this case study is to determine the position of each tractor manufacturer with respect to its competitors according to customer perception on the basis of eight significant variables. This case attempts to seek answers to following questions: What is the Market Share of each player according to customer perception on the basis of eight different variables? On which factors New Holland Tractors are lagging behind the others? Do manufacturers have significant difference among them on the basis of each variable? How to carry out comparison between six different manufacturers?
Materials and Methods

Questionnaire design and pre-testing In this project the kind of research design used is Descriptive type. The Idea behind this type of research is to study frequencies, average and other statistical calculations. Although this research is highly accurate, it does not gather the causes behind a situation. Descriptive research design is a scientific method which involves observing and describing the behavior of a subject without influencing it in any way. The subject is being observed in a completely natural and unchanged environment. During the Project aim was to study position of New Holland Fiat India Pvt. Ltd. with respect to competitors and perception of customer about the company and product.
scale. Responses were also captured on a five point Likert scale, for the fuel efficiency and power of the product. Further, customers were asked to weigh New Holland Fiat India Pvt. Ltd. with respect to other competitors on a scale of 10 for six different attributes. On the basis of these weights and using Analytical Hierarchy Process, rankings were determined for all the six competitors in the region of Western UP and Haryana.
Results
The statistical analyses used are Analytical Hierarchy Process (AHP), Single Factor ANOVA, Tukey-Kramer Test and Perceptual Mapping. Where ever applicable, = 0.05 was used as the level of significance for the analysis.
Table 2: Evaluating Final Rank: (Normalized Weighted matrix b/w variables)

Brand Name 0.06122 0.16326 0.18367 0.14285 Spare Parts/After Sale service 0.06122 0.16326 0.18367 0.14285 Design/ Style 0.06122 0.16326 0.18367 0.14285 Sales promotion 0.06122 0.16326 0.18367 0.14285 Sales Force 0.06122 0.16326 0.18367 0.14285
Finance Finance Price Power Brand Name Spare parts/After Sale service Design/Style Sales promotion Sales Force 0.06122 0.16326 0.18367 0.14285
Price 0.06122 0.16326 0.18367 0.14285
Power 0.06122 0.16326 0.18367 0.14285
0.10204 0.02040 0.16326 0.16326
0.10204 0.02040 0.16326 0.16326
0.10204 0.02040 0.16326 0.16326
0.10204 0.02040 0.16326 0.16326
0.10204 0.02040 0.16326 0.16326
0.10204 0.02040 0.16326 0.16326
0.10204 0.02040 0.16326 0.16326
0.10204 0.02040 0.16326 0.16326
Evaluation of rank on the basis of eight factors When we do the sum product of average of every factor in above matrix with average weight of all companies for every individual factor we will get the actual rank on the basis of eight factors. ANOVA Single Factor Table 3: Sorted weight & Final Ranks
Sorted data 0.2063 M&M 0.1802 Escorts 0.1685 Tafe 0.1626 ITL 0.1482 JD 0.1343 NHFI Rank 1 2 3 4 5 6
significantly differ, Tukey Kramer test would be conducted to find out which Tractor company is significantly different from others. Ho1: Based on the respondents perception, there is no significant difference between six competitors as far as interest rate and eligibility criteria about availability of finance (Loans) is concerned. Similarly, five more hypotheses were formed for price, power, availability of spares, brand name and design/style. a) Finance (on the basis of interest rate and eligibility criteria for the loan):
Single factor ANOVA if applied for all the variables will help us in establishing if there is significant difference in perception of the respondents between brands or not. If it found that the perception about the brands
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Table 4: Single Factor ANOVA

SUMMARY Groups M&M Fin. Escorts Fin NHFI Fin JD Fin. Tafe Fin. ITL Fin. ANOVA Source of Variation Between Groups Within Groups Total SS 1275.325 1567.5 2842.825 df 5 978 983 MS 255.065 1.602761 F 159.1411 P-value 9.2E-124 F crit 2.223254 Count 164 164 164 164 164 164 Sum 1300 968 785 804 785 804 Average 7.926829 5.902439 4.786585 4.902439 4.786585 4.902439 Variance 0.816699 1.536436 1.751721 1.879994 1.751721 1.879994
Result: Since the F (Observed value is greater than the F critical value the null hypothesis is rejected. This implies that
there is a significant difference between six tractor companies as far as Finance is concerned.
Table 5: Tukey-Kramer minimum significant difference

M&M M&M Escorts NHFI JD Tafe ITL 2.0244* 3.1402* 3.0244* 3.1402* 3.0244* Escorts 0.3992 1.1159* 1* 1.1159* 1* NHFI 0.3992 0.3992 0.11585 0.11585 0.11585 JD 0.3992 0.3992 0.3992 0.11585 0.11585 Tafe 0.3992 0.3992 0.3992 0.3992 0.11585 ITL 0.3992 0.3992 0.3992 0.3992 0.3992 -
actual difference ('*' if significant)
Result: As far as Finance is concerned: M&M is significantly different from Escorts, New Holland Fiat India Pvt. Ltd., John Deere, TAFE, and ITL (Sonalika). Escorts is significantly different from New Holland Fiat India Pvt. Ltd., John Deere, TAFE, and ITL (Sonalika). This implies that M&M and Escorts are significantly different from the rest. Similarly, other five variables were analysed and conclusions drawn. Perceptual Mapping for various Tractor Companies This has been done by taking two attributes (Variables)
at a time and plotting the mean values on the graph. Taking two values would give us better results which can be easily analyzed on the perceptual space. For combining variables meaningful combinations have been considered which would be simultaneously considered by any tractor customer. They are: a) Finance Vs Price b) Brand Name Vs Price c) After sale service/Availability of Spare Parts Vs Price d) Design/Style Vs Price e) Power Vs Price f) Sales Promotion Vs Price g) Sales Force Vs Price
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a) Finance Vs Price Result: From the perceptual map obtained (Figure 1) we can see that Fig: 1. Perceptual Mapping with respect to Finance and Price
interviewed in Western U.P. and Haryana and the analysis and NHFI position was based on that only. Some of the dealers in this area were satellite dealers like a sales point, so we were not able to get the perceptions of the main dealers and was also not able to cover other part of India in terms of Dealers.
Conclusion
New Holland Fiat (India) Pvt. Ltd. 100% subsidiary of CNH Global is operating in India since 1998 in the business of tractors and Agri-machinery. The Plant is situated at Greater Noida, Uttar Pradesh, producing a range of tractor from 32 HP to 75 HP in over 90 variants and marketing other Agriculture Equipments. JD and NHFI lie very close to each other or we can say that they are perceived to be similar by the tractor customer. M&M and Escorts are perceived to be different ITL and TAFE are perceived to be different The present study has been conducted on Competitive Analyses of New Holland Tractors in western U.P. and Haryana markets in which both Customers and Dealers were interviewed. The primary survey of customers done on 164 customers clearly shows that 47 were having New Holland Tractor while rests were having other manufacturer tractors. In case of competitors out of 117 customers surveyed, the most popular & salable model is Mahindra & Mahindra; around 42% of customers were having it. Mahindra & Mahindra is having an edge over others because of its large Dealer network, Sales Force and Mahindra Finance. TAFE is the second largest salable model in this area with its brand Messey Ferguson, around 23% of customers having it. When 117 competitors customers were asked about brand awareness, it was found that there is a lack of awareness among the customers about brand New Holland. Only 39% of total 117 customers were aware of it and those who have heard, they have heard it from their relatives/friends/existing users. When asked to 47 New Holland tractor customers about different model they own, it was determined that the most popular and salable model in this region is 55 HP NH 3630. Around 49% of total 47 NHFI customers were having it. Regarding the effectiveness of various sources of information in purchase decision, it was determined that customers purchase a tractor
Similar plots showed proximity of companies for different pairs of variables.
Limitations and Caveats

The research done under this Project is limited to Tractor Industry of India and under the study we were able to cover only six of the major competitors. We have mainly concentrated on marketing strategies of all the six competitors and their dealers. We were not able to cover the details of production of all the companies except New Holland Fiat India Pvt. Ltd. The survey was conducted in Western U.P. and Haryana and on the basis of that we have tried to analyzed the Customer perception about all the major six competitors. We were able to cover only 164 customers on random basis and the complete analysis was based on that. The analysis was representing the tractor industry trend in Western UP and Haryana. Another survey was done with respect to dealers where Dealers, (a Sample size of 20) was also
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either by testing it in person or though a demonstration/ Road show/van campaign by which they can see a live performance and awareness of the product. It was found that mostly people use the tractor in both Agriculture as well as Commercial use. When asked about importance of factors in purchase decision it was found that mainly customer are concerned about Power. Through Analytical Hierarchy Process on the basis of eight factors we determined that Mahindra & Mahindra was ranked at the top while NHFI at the sixth position. When 20 NHFI Dealers were interviewed it was determined that the dealerships are easily accessible, but there is a lack of infrastructure. Also eight dealers out of twenty were not having point of purchase material like leaflet, brochure, poster, price board etc. When dealers were asked about popularity of brands, Mahindra & Mahindra was found to be at the top position When comparison was done between different competitors from dealers point of view and on the basis of their perception it has been found that New Holland tractor is most dominating, in Power, Running speed, Design/style and operator comfort while lacking in areas like, Engine noise, differential performance problem (Customer find problem in application like haulage). Also the company is lacking in areas like availability of spare parts, after sale service and availability to develop strong consumer promotion.
References
Cooper, L.G., 1983. A review of multidimensional scaling in marketing research. Applied Psycholog. Measure., 7: 427-450. DOI: 10.1177/014662168 300700404 Day, G.S., A.D. Shocker and R.K. Srivastava, 1979. Customer-oriented approaches to identifying product markets. J. Market., 43: 8-20. http://search. ebscohost.com/login.aspx?direct=true &db=bth&AN= 5004693&site=ehost-live DeSarbo, W.S. and V.R. Rao, 1984. GENFOLD2: A set of models and algorithms for the general unfolding analysis of preference/dominance data. J. Classif., 1: 147-186. DOI: 10.1007/BF01890122 Dowling, G.R., 1988. Measuring corporate images: A review of alternative approaches. J. Bus. Res., 17: 27-34. DOI: 10.1016/0148-2963(88)90019-7 Green, P.E. and Y. Wind, 1975. New way to measure consumers judgments. Harvard Bus. Rev., 53: 107-117.http://search. ebscohost.com/login.aspx? direct=true &db=bth&AN= 3867280&site=ehost-live http://search.ebscohost.com/ login.aspx?direct=true &db=bth&AN=9084110&site=ehost-live New Holland MIS Report Pegels, C.C. and C. Sekar, 1989. Determining strategic groups using multidimensional scaling. Interfaces, 19: 47-57. DOI: 10.1287/inte.19.3.47 Srivastava, R.K., M.I. Alpert and A.D. Shocker, 1984. A consumer oriented approach for determining market structures. J. Market., 48: 32-45. http://search.ebscohost.com/login.aspx?direct=true &db=bth&AN=5004394&site=ehost-live Wind, Y., 1982. Product Policy: Concepts, Methods and Strategy. Addison-Wesley Publishing, Reading, MA., ISBN: 10: 0201083434.
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Underwriting of Female Lives vis--vis Underwriting Practices in General

(A Case Study of underwriting practices in Orissa the LIC of India, Sambalpur Divisional Office)
Sweta Behera*
Abstract
In todays world women are given equal status as men. But when it comes to life insurance, the criteria used to provide insurance coverage to women is different from that of others. The underwriting of female lives is not the same as the general underwriting practices in a life insurance company. This is because the risks associated with female lives are not similar to their male counter parts. This study was undertaken in Life Insurance Corporation (LIC) of India, which is the largest life insurance company in India. It was aimed to understand the underwriting practices of LIC of India and compare the underwriting of male and female lives. It gives an idea about how the underwriting of female lives is based on different parameters. This paper also focuses on different classifications used by LIC of India for underwriting female lives and the variation of risk in each class. An attempt has been made to find insurability of female lives with respect to underwriting guideline of LIC of India. Keywords: Life insurance, Underwriting, Female Lives, Category I, Category II, Category III, Category IV
Introduction
Life insurance is not a new term. It has been present in the Indian market since 1818. Privatization has promoted it more. So, today most of us can nod their heads when asked if they have heard the name life insurance. A life insurance policy provides protection against financial loss caused by death. Insurance underwriting is the process of classification, rating, and selection of risks. This consists of evaluating information and resources to determine how an individual will be classified (standard or substandard risk). While underwriting, a persons health (morbidity) or how long they may live (mortality), or both are scrutinized. It depends on the cover wanted. The goal of life insurance underwriting is to accurately assess an individuals risk level for the purposes of assigning the correct rate for life insurance. Some of the factors affecting life insurance underwriting include age, sex, health status, physical features, family history, built, occupation, past history of insurance, personal medical history, hobbies and personal habits. An underwriter is
the person authorized to accept, reject or fix terms for accepting a risk. The life insurance agent also plays a significant role in the process of underwriting. He is in a position to actually see and talk to the proposed insured, ask the questions contained in the application and record the clients information on the application form for insurance (proposal form) accurately and completely. There are two aspects of life insurance underwriting. The first one is Financial Underwriting where the underwriter ensures that the amount of coverage applied for is not in excess of the amount of the potential economic loss else poor persistency or adverse selection may occur. The second aspect of life insurance underwriting is Medical Underwriting where the medical reports of the proposer and questionnaire filled in by the attending medical practitioner are examined. Based upon medical factors extra mortality rating for each condition, other than normal is determined. Insurance coverage can also be provided under nonmedical schemes for certain cases up to a specific limit.
*Centre for International Business & Policy 2009-11, Birla Institute of Management Technology Under the guidance of Prof. K.K. Krishnan, Centre for Corporate Relations, Birla Institute of Management Technology
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In India, in the early years of the insurance industry, the trend was to insure only male lives. The logic was that the female of the species was home-bound anyway, wasn't exposed to any risk and didn't earn an income. Therefore her death didnt pose any economic loss to the family which is the rationale behind life insurance. The bread winner was the male and it was against his lost income that cover was required. An additional disincentive was the extra risk to female lives that was an inevitable part of the childbirth process. All that has changed with women rivalling men at the workplace. In addition, better education for the female child, increased economic contribution by women, better medical facilities for safer childbirth and post-natal care have all contributed to more and more insurance products that are women-specific. All basic covers such as life, personal accident, mediclaim, critical illness etc. form a part of women's life insurance policies too. There are also some special covers offered in women's life insurance policies that include: Cover for certain female critical illnesses (ovarian cancer, etc.) Occurrence of certain congenital disabilities in new-borns (Down's Syndrome, Spina Bifida, Cleft Palate, Club Feet, etc.) Cradle care - covers the newly born child's defects, deformity, malformation, congenital abnormality of any kind at time of delivery.
the economic aspects of underwriting; examines the impact of rapid social and business changes on individual life insurance principles; and speculates about future effects on market competition and underwriting. Balay (1981) has brought the reader into the decisionmaking process used by the underwriter to select and classify an individual applicant for life insurance. The importance of judgment, honed by a framework of knowledge about medicine and some basics of accounting, actuarial science, marketing, and economics, is individually and collectively essential in developing an under-writer who can serve autonomously and creatively. Fiederlein (1991) has discussed about life insurance companies granting premium discounts to individuals who are in exceptional good health and do not participate in activities or exhibit lifestyle factors that increase the risk of violent death. Subramanian et al (1999) have conducted simulations of the cost of adverse selection in life insurance if the results from genetic tests for breast and ovarian cancer could not be used in setting premiums. They found that an important determinant of the cost of adverse selection is the extent to which those who test positive for a genetic defect purchase additional cover. Many insurers would say that their very soundness depends on "the right to underwrite", and thereby to protect their existing policyholders from adverse selection (Leigh, 1996)
Review of Literature
Black and Skipper (1994) have explained the purpose of underwriting in modern life and health insurance; discusses underwriting philosophy, including the distinctions between standard and substandard classes and smoker/non-smoker differentials in standard classes; analyzes factors that affect life and health risk classification; and explains substandard classification methods. In USA, there is not much of a difference in the underwriting of male and female lives are followed unisex mortality tables. Morton (1977) has discussed the relevancy of risk factors and mortality data to underwriting; analyzes
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Objectives
The study was undertaken with the following objectives: Understand the life insurance underwriting of LIC of India with respect to female lives. Compare underwriting of male and female lives. Comprehend the necessity of classifying female lives for underwriting. Find out the insurance dynamics of life insurance underwriting and death claims and to examine death claim ratio of male and female lives.
Methodology
Although this is a piece of descriptive research, the study was dependent on primary as well as secondary data. Secondary data was collected from the records of Divisional Office, LIC of India, Sambalpur, Orissa (where this study was undertaken) regarding business underwritten during past five years. The death claim records of past three years were procured to find out the dynamics of life insurance underwriting and death claims. The death claim ratio of male and female lives was also examined. Secondary data was also collected through desk research from literature and statistics in the internet, books, reports and journals dealing with underwriting and its related concepts. Primary data was collected from sample of sixty-seven women drawn from SRIT colony, located in the centre of Sambalpur city (Total population-935613, Male475112, Female-460491: Source- Official website of Sambalpur-www.sambalpur.nic.in) in order to find out the incidence of insurance among these people and their insurability with respect to the underwriting guidelines of LIC of India. SRIT colony was selected as the sample area. This was due to some of the reasons like, it was the only planned housing colony under Sambalpur Municipal Corporation housed by people from different income brackets. The inhabitants of the colony are from varied educational and occupational background and one would find here all categories of women such as working women, housewives and students. Over here Lastly, this area is adjacent to LIC of India, Divisional Office, Sambalpur thereby it was likely to have many actual and prospective customers. A semi-structured questionnaire was administered for the purpose of collecting primary data. The names of all the female land telephone subscribers living in that area were identified from the telephone directory of the current year for collecting primary data. Numbers were selected randomly and calls were made to these people. Appointment for a formal house visit was fixed over phone. All the female members of the sample household who were above 18 years of age and agreed to be interviewed were included as sample respondents. The reason for not including females
below 18 years of age was that they might not be able to understand and answer all the questions correctly. A total number of 67 respondents were covered for the purpose of data collection. Of the 70 selected respondents, though a random sampling method; the researcher couldnt contact 3 respondents despite repetitive visit to their homes. More than one female respondent was covered from a single household in certain cases. The collected primary and secondary data were analysed with the help of Microsoft Office-Excel software. The tabulated data were presented through computation of percentage in graphs, charts and tables for easy comprehension of our analysis by the readers.
Research Findings
LIC of India has 4 different categories for classifying female lives while underwriting. The first three categories contain single, married or widow women. These categories are: Category I- employed or self-employed women filing Income Tax Returns Category II- Women having unearned income filing Income Tax Returns Category III- Housewives with or without income Female students from 18 years to 25 years (This category is not addressed as Category IV by LIC of India but has been named so for its convenient use in this present study) Primary Data Sample respondents were divided into 4 classes depending upon their age viz. up to 25, 26-40, 41-55, 55 and above. A majority of the sample respondents fell under the age groups 26-40 years (37.31%) and 4155 years (40.31%). It was evident within these two age groups 17 (25.38%) respondents belong to Category I and 32 (47.76%) respondents belong to Category III. And Category IV (7.46%) was applicable only in case of respondents upto 25 years of age because this category of LIC (for females) has only female students upto 25 years of age. Although a big percentage of respondents belong to these two age-groups but it can be seen that respondents are spread across all age-groups because random sampling was done for the study.
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The study showed that in terms of different categories (for financial underwriting) as per LIC guidelines that highest percentage of sample respondents (i.e. 61%), belong to Category III followed by sample respondents from Category I (28%) where Category I represents women having some permanent source of income and filing Income Tax returns. Category III represents women with or without income who do not file Income Tax returns. Incidence of Life Insurance Incidence of life insurance among female lives is not very high in the Sambalpur district. Still there is a perception among women that Life Insurance falls in the domain of males. The sample revealed that 36 (54%) of the sample respondents had life insurance cover by one or the other company. The remaining 31 (46%) of the sample respondents did not have any life insurance cover. There were only 5 respondents in category IV (i.e. female students upto 25 years of age) did not have any life insurance cover. The existence of very high percentage of uninsured population close to LIC Divisional Office seems to provide a wonderful prospect to target this population for covering their lives in LIC. This finding can be extrapolated to similar categories of population elsewhere. Among the 67 sample respondents, 16 (44.44%) females had a life insurance coverage upto Rs. 1 lakh and 14 (28.89%) women had total life insurance on their lives in between Rs.1-5 lakhs. On the other hand, very few of them bought policies of Rs. 5 lakhs and above. This can be attributed to the fact that majority of the sample respondents drawn from the sample area belonged to middle class families. It is also interesting to note that respondents belonging to Category IV did not have life insurance coverage of more than Rs.1 lakh. This can be seen as an opportunity by LIC of India to provide more coverage to this category of lives. Health Profile It was found that 33 (49.25%) of the sample respondents had standard build followed by 27 (40.30%) overweight respondents. Only 7 (10.45%) respondents were found to be underweight. It may be
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mentioned here that as per the LIC guidelines, an overweight person will attract some debits according to the range of overweight. The case of an underweight person below a particular level has to be referred by the branch to the division for underwriting. The total percentage of underweight and overweight sample respondents was approximately 50%. In case they are insured at standard rates it will be an adverse selection for the company. About one-fourth of the sample respondents and half of their parents suffered from high blood pressure. It was observed that many of the overweight sample respondents had high blood pressure. Similarly those respondents, whose either of the parents had got high blood pressure were also having the same problem. A high percentage of women from Category I (approx. 65%) suffered from high blood pressure. This may be attributed to the lifestyle and multiple obligations at home and workplace. Only 6 out of 67 sample respondents were diabetic. All these 6 respondents had a family history of diabetes. The actual cases of diabetes may be more as majority of the sample respondents confessed that they had never gone for a diabetes check-up. It may be mentioned here that a person suffering from diabetes or having a family history of diabetes is charged with some debit during numerical rating. As more and more people including women are prone to have diabetes due to changing lifestyle and increasing anxieties, this parameter should me more carefully examined by the underwriter. The prevalence rate of high cholesterol was insignificant in the sample respondents and their parents. Only 7.46% of the respondents and 11.94% of their parents had high cholesterol. Like the previous case, here also majority of the sample respondents reported that they had never gone for any cholesterol testing. As many of our sample respondents fall under overweight category, there is a possibility of high cholesterol in this group. So this under-reporting also provides a clue for the underwriter to take up this matter more seriously and ask the agents to furnish correct information in the Moral Hazard Report to prevent adverse selection.
A good number of sample respondents and their parent(s) had other health problem(s). Some of the other health problems reported by our sample respondents were Arthritis, Cancer, Tuberculosis, Kidney stone etc. A comparative analysis of all diseases showed that, the highest percentage of respondents (26.87%) and their parents (49.25%) suffered from high blood pressure. So the study points out the fact that any life insurer should give heavy emphasis on the present health status and family history of the potential customer failing which it would lead to adverse selection and increase in claims. Many of the insured sample respondents revealed that the concerned agent did not take up this matter seriously while proposing for their life insurance cover. Therefore the concerned agents should be given proper training and orientation to understand the implication of providing erroneous information. The nature of death (early or non-early) occurred in the family (parents or siblings) of the person to be insured has a bearing in the process of medical underwriting. However the agents of a life insurer do not give much emphasis to this and thereby do not mention these facts correctly. It is important to note here that the in case there is no death in the family of the person to be insured, he is allowed some credits in the Numerical Rating. Contrary to this, in case of early death of parents or siblings, the concerned person is charged with some debits. Against this backdrop, our analysis on the nature of death in the family of the sample respondents revealed some interesting facts. In case of 8 respondents there were early deaths in their families. In case of 1 respondent, there were 2 cases of early death in the family. Similarly, in case of 11 respondents there were non-early deaths in their families. It may be added here that in case of 1 sample respondent, there was one early and one non-early death in her family. In case of 47 respondents (70.15%) there were no deaths in their families. So in the event of taking a policy from LIC, 10 respondents (13.43%) would be charged be charged with debits under the Numerical Rating System. Saving Profile The two important means of saving in our present day society are life insurance policy and bank deposit.
Though many of the sample respondents had both life insurance policy and bank deposit, 38 (57%) of the sample respondents still preferred saving in the form of bank deposit to life insurance policy. Only 29 (43%) preperred life insurance policy as a better means of saving to bank deposit. Those who opined in favour of bank deposit felt that it is easier to draw and deposit money in a saving account compared to LIC policy. Further they were of the opinion that the minimum term of life insurance is of longer duration compared to that of bank deposit. Many of the sample respondents said they had no idea as to whether it was possible to close a policy in between the term and get back the deposited within a short span of time. Those respondents who preferred life insurance policy said that though bank transactions were easier yet banks did not provide life insurance cover. It is generally noticed that a person planning to take a life insurance policy doesnt pay much attention to provide authentic material information required for a policy. Further, it was noticed that the concerned agent furnished the required information in a casual manner without any verification. In case of furnishing of wrong/false information in the proposal form, any death claim is likely to be repudiated by the life insurer. Keeping this trend in view, an analysis was made to see the sample respondents knowledge about providing authentic information in the proposal form. It was found that only 25 (35%) sample respondents had adequate knowledge about providing authentic information in the proposal form. On the other hand, as many as 42 (63%) sample respondents did not know about the importance of providing authentic information in the proposal form. The low knowledge level about this critical aspect of life insurance may be attributed to the higher percentage of Category III housewives (approx. 70%). Most of these women remain housebound and keep themselves engaged in household activities. As a result, they do not pay much attention to understand the implication of furnishing erroneous information in the proposal form. Secondary Data The trend of policies underwritten for males and female lives in the past three years starting from 200708 and ending with 2009-10 showed that policies
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underwritten for female lives were significantly lesser compared to male lives. In this male dominated society life insurance is generally regarded as the domain of man and therefore a substantial variation is noticed in the number of male policy holders and female policyholders of life insurance. Accepting their subservient position, women in general do not express their desire to get their lives insured. Lack of awareness about the benefits of life insurance among women is another reason for the lower number of female policyholders. There was an increase of 11.97% policies of male lives in the year 2008-09 than the previous year. And the corresponding percentage for female was 13.23%. However, there has been a decline of 3.33% polices of male lives in the year 2009-10 as compared to the previous year. More or less in a similar manner there was a negative growth of 0.33% of female lives in 2009-10. The initial increase in the number of the policies of male lives in 2008-09 and subsequent decrease in the number of policies in the number of policies in 2009-10 may be attributed to the period of recession. The difference in number of policies of male and female lives was 119522 in 2007-08 went up to 132367 in the year 2008-09. It gradually came down to 126422 in the year 2009-10. The high increase and relatively lower decrease in the difference is due to substantial difference in the absolute number of policies of males and females in all the three years. The high increase in the difference was primarily because of the phenomenal rise in the absolute number of policies of male lives in 2008-09 compared to the preceding year; however the increase in the number of policies for female lives was not at a matching pace. The records of two branches under LIC Divisional Office, Sambalpur i.e. Branch office I and II showed that number and percentage of death claims is always higher in men than women (Refer Tables 1 and 2). The obvious reason for this is that there is more number of male policy holders compared to women. Further it indicates that the mortality is higher in case of men than women. In Branch I, there has been a gradual decline in the ratio of death claims of men: women from 19.67 to 15.63. This is because of the increase in
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*Comparison of Death Claims of Men and Women assured in Branch Office I and Branch Office II. Table 1: Death Claims of Men and Women in Branch Office I
Year Men Number (%) 250 (93.99%) 241 (94.14%) 236 (95.16%) Death claims Women Total Number (%) 16 (6.02%) 266 15 (5.86%) 12 (4.84%) 256 248 Ratio 15.63:1 16.07:1 19.67:1
2009-10 2008-09 2007-08
Table 2: Death Claims of Men and Women in Branch Office II

Year Men Number (%) 135 (91.84%) 104 (87.40%) 110 (90.91%) Death claims Women Total Number (%) 12 (8.16%) 147 15 (12.61%) 11 (9.09%) 119 121 Ratio 11.25:1 6.93:1 10:1
2009-10 2008-09 2007-08
number of death claims in women. Whereas in case of Branch II the ratios of death claim of men: women has initially decreased from 10 to 6.93 and then increased to 11.25. It could be probably due to adverse selection of female lives and insuring standard male lives. Category- Wise Death Claims of Females There is variability in risk factor for different categories of female. The recorded death claims in the past 3 years in the two branches under LIC Divisional Office, Sambalpur were analysed (Refer Tables 3 and 4). Data showed that the number of death claims for Category III female lives was higher compared to other categories of female lives for both Branch I and II in the calender years 2007-08, 2008-09 and 2009-10. The rate of death claim differed from one category to other Table 3: Female Death Claims Paid in Branch I
Year Frequency of Death Claims for Each Category of Females (Percentage) I II III 5 (31.25%) 5 (33.33%) 3 (25.00%) 4 (25.00%) 4 (26.67%) 2 (16.67%) 7 (43.75%) 6 (40.00%) 7 (58.33%)
2009-10 2008-09 2007-08
Table 4: Female Death Claims Paid in Branch II

Year Frequency of Death Claims for Each Category of Females (Percentage) I II III 4 (33.33%) 4 (26.67%) 2 (18.18%) 3 (25%) 3 (20%) 3 (27.27%) 5 (41.67%) 8 (53.33%) 6 (54.55%)
2009-10 2008-09 2007-08
is much higher compared to other categories of females in case of LIC of India. Educational status plays a very important role while deciding the limit of insurance for Category III female lives. The limit of coverage for this category is increased if the female is a graduate and holds either a credit card, medi-claim policy or a driving license.
(categories of LIC). Thus it can be derived that there is variation in insurability of female lives in each category of LIC (with respect to financial and medical underwriting) which is primarily due to variation in risk factor of each category. Risk factor differs due variation in their income and social standing. It can also be inferred that the risk factor for Category III female lives
Conclusion
Female lives are divided into four distinct categories for the purpose of underwriting in LIC of India depending on the risk they bring to the pool of insurance. Risk factor differs from one category to other in case of female lives due variation in their income and social standing. Each category has different limit for
Table 5: Underwriting of Females vis--vis general Underwriting (LICs practices)

Item Categorisation Equivalence of underwriting Female Yes Category I and IV female lives equivalent to male lives Same Same Same(own/husbands income) Different for each category MHR Male No Major males ( and or students) equivalent to female category I and IV Same Same Same (own income) Same for all MHR Children No Different
Proposal Form Age Proof Income Proof Financial underwriting (Maximum coverage allowed) MHR Requirement
Different Same Parents income Same for all MHR on child if above 12 years else MHR on parent 12 yrs and above 18 yrs (age last birthday) ACR / Juvenile FMR/ school report Same Different
MHR limits Max. Age at entry Medical underwriting
MHR limits-same Up to 65 years (age nearer birthday) FMR
Same 60-70 years (age nearer birthday) FMR
EMR Special Reports Non-medical business limit Professionals Major students Major males and literate females Non Medical(Special) KYC/AML DGH PP Extra Imposition of Clauses
Same Same
Same Same
Same Same Same Same Same 1 month Same 4(b) on Married women Category III
Same Same Same Same Same 3 months Same N/A
Critical Illness Rider Premium Waiver Benefit Accident Benefit
Can be Applicable N/A Can be Applicable
Can be Applicable N/A Can be Applicable
N/A N/A N/A N/A Same N/A N/A 10(a) and 76 (76 is applicable where SA is Rs. 1 crore or less) N/A Applicable N/A
Abbreviations: MHR: Moral Hazard Report, FMR: Full Medical Report, ACR: Agents Confidential Report, EMR: Extra Mortality Rate, KYC: Know Your Customer, AML: Anti-Money Laundering, DGH: Declaration of Good Health, PP Extra: Previous Policy Extra and SA: Sum Assured
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insurance cover. Thus the insurability of each female differs as it is dependent on the risks related to her life and economic loss to others due to her death. The main difference between underwriting of male and female lives is categorisation of female lives which is nonexistent in male lives. Other differences are related to financial underwriting, underwriting of pregnant women, imposition of clause 4 (B) for Category III married women and the validation of DGH (Declaration of Good Health). Underwriting of Category I women and female major students are treated equivalent to their male counterparts. Many a times agents are not able to comprehend the importance of providing the correct information material to the life to be insured. Even at the branch level, underwriters of LIC many a times are not very careful while underwriting policies so they are not able to maintain a proper balance between conservativeness and aggressiveness.
References
Balay, Ken, "Mastering the Underwriting Decision," Reinsurance Reporter No. 96 (Summer, 1981): p.9. Black, Kenneth, Jr. and Harold Skipper, Jr., "Life and Health Insurance Underwriting: I," pp. 639663 and "Life and Health Insurance Underwriting: II," (pp.664691) In Life Insurance, 12th (ed.) Englewood Cliffs, N.J.: Prentice Hall, 1994. Fiederlein, W. Taylor, "Preferred Risk Underwriting, Reinsurance Section News No. 29 (December 1991): p. 8. Gopalakrishna, G. 2010. The Universe of Underwriting: Priorities in Life Insurance, IRDA Journal, VIII (5): 16-19. Knoppers Bartha M and Yann Joly. 2004. Physicians, Genetics and Life Insurance, Canadian Medical Association Journal, 170 (9): 1421-1423. Available: http://www.cmaj.ca/cgi/reprint/170/ 9/1421 Leigh, T.S. 1996. The Freedom to Underwrite, Presented to the Staple Inn Actuarial Society, London, 9 January 1996. Morton, Alton P., "Individual Life Insurance Underwriting Principles and Practices: A 1976 Review," Transactions of the Society of Actuaries Vol. XXIX (1977): p. 315. Subramanian, K., J. Lemaire, J. Hershey, M. Pauly, K. Armstrong and D. Asch 1999. Estimating Adverse Selection Costs from Genetic Testing for Breast and Ovarian Cancer: The Case of Life Insurance, Journal of Risk and Insurance, 66 (4): 531-550.
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Fast Fashion Retail Strategy Based on Consumer Perception: An Empirical Research in Delhi NCR
Rahul Goyal*
Abstract
This study analyzes the factors influencing fast fashion retail based on consumer perception for designing of brand strategies based on the research result. Focused on the apparel industry, the study examines factors of consumer preferences, marketing tools, accessibility, media richness and product attributes. The result of the study suggests the importance of brand attributes and various marketing and expansion strategy to be successful in fast fashion environment. The Study will benefit various upcoming brands and existing brands in India for designing their entry strategies, marketing activities and various bases for business planning. Keyword : Apparel industry, Fast fashion retail, Consumer perception & behavior, Marketing strategy, Media richness, store locations and expansion strategies.
Introduction
Fast fashion, which has been growing rapidly abroad, offers on-trend, in season apparel at lower prices. What's more, these retailers stock stores more frequently, but with limited quantities of merchandise, giving shoppers a reason to visit stores more often. Such a retail concept depends on the regular creation and rapid replenishment of small batches of new goods. Such a retailer creates a large number of designs; some of them may resemble the latest couture creations, but often beats the high-fashion houses to the market and offers almost the same products, made with less expensive fabric, at much lower prices. This "fast fashion" system depends on a constant exchange of information throughout every part of retailers supply chainfrom customers to store managers, from store managers to market specialists and designers, from designers to production staff, from buyers to subcontractors, from warehouse managers to distributors, and so on. Most companies insert layers of
bureaucracy that can bog down communication between departments, thus killing the concept of fast fashion. Two pillars of fast fashion are Small lot sizes and Lead time optimization. U.S. fast fashion retailers include Charlotte Russe CHIC.O, Bebe Stores Inc (BEBE.O), Mango, as well as H&M (HMb.ST), and Inditex (ITX.MC) unit Zara. These names cater mostly to young women, but it has an influence on all ages. In India fast fashion is in a nascent stage. Fast fashion could also be a beacon of hope for local textile mills and manufacturers, since these manufacturers can turn designs around for domestic market faster than an imported fashion items produced in distant foreign land. Fast fashion works for retailers who do it well, because it helps drive customer loyalty. It forces a retailer to make sure the entire machine is running smoothly.
*Centre for Retail Management 2009-11, Birla Institute of Management Technology Under the guidance of Prof. Pankaj Priya, Centre for Retail Management, Birla Institute of Management Technology
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Fast fashion brands convey different meaning to different people. Unique Consumer-Brand relationships are established by developing specific strategies for the rapidly changing environment. In such a scenario the meaning of products may ultimately depend more on the nature of consumers rather than the nature of products (Martin, 1998; Csikszentmihalyi and Rochberg-Halton 1981). Understanding how involved consumers become in their apparel - that is, their attachments to themprovides a deeper understanding of the dynamics of consumer behavior and the nature and role of the product category of fashion (Martin, 1998). Fast fashion also taps into a desire to have a unique look while staying current with trends. There is a trend toward individuality. People want to be unique. It shows up in how order your breakfast to how you dress to which accessories you carry. This trend has been around for a couple of years and it's taking off in fast fashion because of the scarcity element. According to fashion experts Consumers are often distributed across a wide range of fashion consciousness and behaviors. It is important to understand fashion customers to develop business strategies. Fast Fashion Apparel Retail Industry: The Indian retailing industry, which was traditionally dominated by small and family-run stores, has come of age. Fashion element and design content was minimal in the pre-1990s, owing mainly to the lack of national level brands. At the turn of the century some retailers would have a storefront where people could browse, and new pieces being sewn or customized in the back rooms. Among the few players who had been catering to the branded market are Park Avenue, Charagh Din, Liberty, Double Bull, Proline and Snowhite. It took a quite long time for brands such as Allen Solly and Van Heusen to create a respectable market share in the ready-to-wear market. Big players like Tata, Raheja, Biyani, etc have intensified the competition with their professional
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retail chains like Westside, Shoppers Stop and Pantaloons. Recently, India is increasingly being looked upon as a major supplier of high quality fashion apparels and Indian apparels have come to be appreciated in major markets internationally. Brands like Van Heusen, AllenSolly, Arrow, Parx, Park Avenue, Color Plus, Manzoni, Wills Lifestyle, Levis, Wrangler, United Colors of Benetton (UCB) etc are major players in the current fashion apparel industry. Zara is the retailer which just now entered in Indian market and brought a new revolution in Indian fast fashion industry. According to a retail analyst, Zara's entry will give a thrust to the concept of fast-fashion. Zara's unique service proposition is its ability to design, manufacture and ship new clothing designs to its shops within two weeks, compared to the industry average of eight-nine months. Three pillars of ZARAs success are variety, scarcity and quick response. The fashion retail market in India has a slew of multinational players including Debenhams, Marks and Spencer and Tommy Hilfiger among others operating in the same category. Hence existing brands are facing a big challenge in the present Indian apparel industry. Growth Patterns in the Industry Wave 1 represents the entrance of Readymade garment Industry in India and Wave 2 is representing the Fast Fashion Change in India.
Cumulative Apparel and Accessories Brands Wave 1 Wave 2
Y 1987
Y 1990
Y 1993
Y 1996
Y 1999
Y 2002
Y 2005
Y 2008
Fig 1.1: International fashion brands growth pattern
Opportunities and Potential for Future Growth Indian Fast fashion Industry facts: 1. Indian fashion is seeing exponential growth driven by established and new designers 2. The emergence of India as a source of inspiration for Indian & International designers - surge in popularity of Indo-western garments 3. Greatly increased awareness of fashion; birth of new groups influenced by cultural, social and economic factors. But Still Indian Fast Fashion retail Industry is lacking as: 1. The sector seems to lack an in-depth understanding of new domestic target-groups. 2. There is a visible inability to predict fashion adaptations across a diverse map. Brands still see great dependence on adaptations of western trends 3. Business houses are still following old methods of trend analysis. Brands believe the need is for a cohesive design and business strategy that is borne out of a combination of trend, consumer & shopper research.
age, geography or income, but looking into how and what they buy, based on their culture, mood, beliefs, occasion & geographic locations, it is also dependent on fashion cycle and plays a major role in introductory phase of recurring fashion cycles. Fashion trend forecast calculates as following: Season > Target Market > Consumer > Colors > Fabrics > Silhouette > Texture > Usage. Fashion consumer behavior can be determined asConsumer involvement Consumer involvement incorporates the consumer perspective into the process of planning and decision making. Creighton (1981) gave a helpful working definition of consumer involvement as: "a process, or processes by which interested and affected individuals are consulted and included in the decision making of an agency, planning group or collaborative entity". Consumer involvement Theory - CIT - is one way to understand the psychology and behavior of your target audience it is very simple and insightful. Involvement refers to how much time, thought, energy and other resources people devote to the purchase process. Consumer involvement is defined as the consumers perceived relevance of an object (e.g. product or brand, advertisement, or purchase situation) based on the inherent needs, values, and interests of the person. Fashion involvement The Concept of Fashion Involvement Given a number of empirically defined, distinct fashion behavioral dimensions, what is the joint and simultaneous interaction effect of that intersection? Baumgarten (1975) explored this question in part, by researching the intersection of the fashion innovator and the fashion opinion leader, the innovative communicator. The focus was on two dimensions of fashion related activity and behavior. It logically follows that there are several other additional dimensions which should also be included in this kind of analysis. The concept of "fashion involvement" is based essentially on three propositions:
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Literature Review
Clothing in general and fashionable clothing in particular, is a publicly consumed good that signals to other people information about the personality and status of its wearer (Dodd, Clarke, Baron, Houston, 2000). Consumer got the knowledge of fashion product from various media. Social influence, caused by word of mouth, plays a very important role in fashion buying. Some consumers become especially interested in and preoccupied with clothing and fashion so that their interest, experience, and knowledge lead them to become opinion leaders for others (Goldsmith and Hofacker 1991). Fashion always works on forecasting of future consumer trends. Fashion and trend forecasting is the prediction of mood, behavior and buying habits of the consumer at particular time of season. It is no longer a question of finding fashion markets or consumers by
1.
2.
3.
The population is distributed along a broad continuum in terms of fashion behavioral activities; The population is also distributed on a unidimensional continuum for each of these fashion behavioral activities; For several specific fashion behavioral activities, these continuums have been and can be researched and identified for specific geographic submarkets.
sustains itself on the image of the brand rather than aspects inherent to the product. Objectively Armani jeans are just another pair of jeans. Yet, as we all know this isnt the case because they carry a high fashion brand. With the label the fashion item takes on a role communicating style, preference, social status and discernment.(Auty and Elliot, 1998). Brand marketing is facing a power-shift in today's marketplace. Customers want to be part of a brand's direction and development. Listening to their expectations can determine your firm's level of success. To take full advantage of today's market share, companies will need to "lose" control of their marketing strategy to ultimately gain it, by embracing this powerful dynamic of understanding ad managing customer expectations. Competition mapping is the one way to get success in fashion market.
Theoretically, an overall fashion involvement continuum can be defined based on the aggregate effect of a variety of important fashion behavioral activities. OCass (2001) defined fashion involvement as a consumers perceived importance of fashion clothing. Success of a fast fashion brand depends on uniqueness of the brand, awareness in market, location & accessibility, front store attributes and product purchase & usage Experience. Fig 1.2 explains the brand success in fashion market drive through various factors.
Brand Success in Fast Fashion Retail
Research Objective
To draw the Competition Map in the existing Indian fast fashion retail market. To study consumer response to fast fashion concept and finding equilibrium between price, quality and style. To study the promotional and branding activities and their effectiveness. To identify the factors contributing to Purchase Decision.
Brand Uniqueness
Brand Awareness
Marketing & Media Richness
Accessibility & Location
Frontend Attributes
Merchandising Service Value
Advertising tools Effectiveness of Media Product Purchase & usage Experience Product Quality Store Ambience Price Selling Staff Purchase Experience After Sale Service
Sample A random sample of 150 fashion consumers. Table1.1 explains the demographics of respondents classified under three groups.
Fashion brands are the acme of brand management. More than any other type of brand, the fashion brand Gender Group 1 2 Age 15-25 Male 27 Female 17 <25000 31
Table 1.1 : Respondents demographics Monthly Income 25000-50000 8 23 4 50000-1 Lac 1 12 1 >1 Lac 0 3 3
25-35 29 17 8 35and 3 7 3 7 above Note Income is in Rupees and results are in %age
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Descriptive Research The complete study is based on two components of the market 1. Retailers Perspective - There are two ways to analyze other retailers presented in the catchments area i. Observation for exploration of product categories, price range and target group. ii. Interviewing store managers Consumers Perspective - To study purchase decision factors and the effect of promotional offers on consumer through market research. Respondents of survey are fashion customers as well as working people in the Delhi NCR region.
Analysis According to fig 1.3, it can be inferred that no brand is perfect in the market. Each brand is master in one or other area. Table 1.2 shows the highest Rateing brand among different factors. Table 1.2 Brand toppers
Factor Product Design Quality Price Service Experience Ambience Highest Rateing Brand Levis UCB UCB Wills Lifestyle Levis
2.
Fig 1.3 Competition map
Scope of the study Geographical scope Research covers the respondents from Delhi NCR region. Consumer Response Findings Table 1.3 Consumer research findings and inferences
Factor Most preferred brand Response Wills Lifestyle UCB Van Heusen Arrow Allen Solly Tommy Hilfiger Peter England Levis Louis philippe Others Lack of awareness Lack of availability You find it expensive You dont like the product Others Newspaper advertisements Radio T.V. advertisements Word of mouth Magazine Others 18% 20% 15% 6% 4% 8% 2% 8% 10% 9% 27% 13% 36% 7% 17% 30% 0% 14% 27% 22% 7% Inference USB and Wills Lifestyle are top choices of fashion consumers. Levis is mostly preferred in denim section and it is found to have best ambience by 26% of respondents.
Reason Behind not buying from a branded store.
Out of 28% respondents who do not buy from branded stores most of the respondents find branded products expensive or they are not aware.
Source of Awareness
Companies should focus on Print media as well as Customer service to influence WOM in favour of the brand.
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Do you remember TV advertisement of your favorite brand
Yes No
30% 70%
Tried new variants of after viewing the advertisements Promptness of purchase due to association with fashion shows Most influencing offer
Yes No
36% 64%
Out of 14% respondents who prefer TV advertisement, only 30% of the respondents were able to recall the TV advertisement of their favorite brand. Companies should look into TV advertisement strategy as it is one of the most expensive media. it is the ideal effect of advertisement. Brands should focus strategically for their media plan. Fashion shows always increase the brand equity and promote designer wear in the market. Discount offer more prompt the customers to walk in the store. So Brand should provide discount for its slow moving categories.
Yes No
42% 58%
Discounts offer during Sale High level offers Loyalty point redemption Micro Marketing Others Every week Every forth night Every month Occasionally Others Genuine need Depletion of old products Liking a product instantly Buying for an occasion. Brand name Offers/ Discounts Unique designs Highly Accessible Far off Accessible Stand alone outlet Multi brand outlet Outlet inside the mall
68% 11% 8% 9% 4% 0% 2% 12% 74% 12% 18% 5% 25% 18% 20% 13% 13% 17% 70% 31% 30% 39%
Purchase Frequency
Most of the consumer buy occasionally, so it is difficult to predict future demand of fashion merchandise. 1/4 of the respondents buy the product when instantly they like it. So Design is the topmost priority for a buyer in fast fashion market, hence Players should more focus on product design. Branded Fast fashion Stores accessibility is fair enough in India. Mall Outlets are most preferred Location of purchase, So Brands should focus more on Mall Stores.
th
Reason behind your purchase of fast fashion product
Accessibility of branded stores in India Preferred location of purchase
Cross tabulation between store accessibility and outlet type From the Fig 1.4 following inferences can be taken out 17.4% Standalone outlet are highly accessible and 82.6% standalone outlet are accessible. There is no standalone outlet which is far off. It shows the strategic nature of brands in opening of flagship stores. 32% MBOs are found to be far off, because MBO location is not analyzed by brands. MBOs are the main profit center for companies because companies are not responsible for the operation part or non selling product. As we have already analyzed that outlet within the mall are mostly preferred by the respondents and
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Fig 1.4 Store accessibility versus Outlet type

Bar Chart
40
Rate the accessibility
Highly Accessible
30
Count
Far off
20
Accessible
10
Stand alone outlet
Multi brand outlet
Outlet inside the mall
To purchase the lifestyle products what do you usually prefer
still 16% outlet are far off. So companies should think about the location of mall for further expansion.
Table 1.4 shows the importance of various purchase factors on likert scale.
Factor Extremely important Quality of the product Price of the product Reputation of the company Purchase experience first use experience Usage experience After purchase service 66% 37% 18% 27% 27% 23% 34% Importance of factor Very important 31% 40% 37% 27% 31% 41% 25% Somewhat important 2% 17% 34% 36% 27% 27% 23% Not very important 0% 4% 8% 8% 8% 5% 12% Rateing of Respondent preferred brand Not at all important 0% 0% 1% 0% 4% 2% 4% 5(very High) 35% 35% 22% 15% 17% 14% 15% 4 3 2 1(Very Low) 1% 0% 1% 5% 7% 7% 3%
42% 38% 52% 38% 34% 44% 33%
20% 22% 18% 28% 28% 28% 43%
0% 2% 5% 11% 11% 5% 4%
Factor analysis KMO and Bartlett's Test Table 1.5 Validity test of Factor analysis
Kaiser-Meyer Olkin Measure of Sampling Adequacy. Bartlett's Test Approx. Chiof Sphericity Square Df Sig. .847 405.905 21 .000
Feasibility of the TestBecause KMO value is .847 which is greater than 0.6 and Bartletts test is rejected, carrying out Factor analysis is appropriate tool for data reduction.
Total Variance Explained Table 1.6 Extraction of Principle components

Com pone nt Extraction Sums of Squared Loadings % of Cumulative Total Variance % 3.950 1.044 56.428 14.918 56.428 71.346 Rotation Sums of Squared Loadings % of Cumulative Total Variance % 3.408 1.586 48.692 22.654 48.692 71.346
Initial Eigenvalues % of Cumulative Total Variance % 3.950 1.044 .682 .498 .370 .256 .200 56.428 14.918 9.742 7.110 5.286 3.661 2.854 56.428 71.346 81.088 88.199 93.484 97.146 100.000
1 2 3 4 5 6 7
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In Table 1.6, there are two components whose Total Initial Eigenvalues are greater than one. So there are two principle components are extracted. Table 1.7 Rotated Components Matrix
Rotated Component Matrix Rate Your brand For Its Quality Rate Your brand For Its Price Rate Your brand For Its Reputa tion Rate Your brand For Its Purchase Experience Rate Your brand as per the first use experience Rate Your brand for its Usage Experience Rate Your brand for its After Purchase Experience Component 1 2 .520 .609 .028 .895 .299 .538 .868 .839 .856 .836 .227 .160 .084 .202
Inference Component 1 referred to as a new construct brand experience and Component2 referred to brand image. To get success in Fast Fashion Apparel It is very important to focus on both these aspects.
Component 1 include 1) Quality 2) Purchase Experience 3) First use experience 4) Usage Experience 5) After Purchase Experience Component 2 include 1) Quality 2) Price 3) Reputation
Method of variable division In table 1.7, Variable which holds the values >.3 in rotated component matrix will be covered in the respective component. Component Score Coefficient Matrix Table 1.8 Components Score of Extracted Factors
Component 1 2 .033 .361 -.256 .747 .044 .308 .271 -.050 .279 .306 .266 -.098 -.166 -.062
Brand Image = 0.361*Quality + 0.747*price + 0.308* Reputation Media Effectiveness Table 1.9 Media effectiveness
You came to know about your brand from : Positive(a) Negative Missing Valid N (listwise) 50 88 12
Quality Price Reputation Purchase Experience first use experience Usage Experience After Purchase Experience
From Table 1.8 following factors can be evaluated as Brand Experience = 0.033*Quality + 0.271*Purchase Experience + 0.279* First use Experience + 0.306* Usage Experience + 0.266*After Purchase Experience
ROC Curve - Case Processing Summary Larger values of the test result variable(s) indicate stronger evidence for a positive actual state. a. The positive actual state is Newspaper Advertisements. The test result variable(s): Do You remember any of the T.V. advertisements of your brand Does Association with fashion shows prompt you to purchase
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Fig 1.5 Coverage of various media tools and their effectiveness

ROC Curve
1.0
Recall of TV Advertisement
0.8
Fashion show effect Media Effectiveness
Sensitivity
0.6
0.4
0.2
0.0 0.0 0.2 0.4 0.6 0.8 1.0
1 - Specificity Diagonal segments are produced by ties.
Area under the curve shown in Fig 1.5 can be explained in table 1.10. Table 1.10 Coverage of various media tools and their effectiveness
Test Result Variable(s) Do You remember any of the T. V. advertisements of your brand Does Association with fashion shows prompt you to purchase from Your brand Have you tried new variants after viewing the advertisements? Area .425 .539 .490
Have you tried new variants after viewing the advertisements? has at least one tie between the positive actual state group and the negative actual state group. In the explained result it can be easily seen that news paper advertisement and fashion shows are the major marketing tools used for branding and promotion. Comparatively customers are very less affected by TV advertisement.
Conclusion
The purpose of the study was to analyze fast fashion apparel market in India for a successful business planning. Following are the conclusion that can be drawn from the findings Brand Experience and Brand Image are the major factors which influence the consumer buying behavior. So, a company should look into these
aspects while forming any business policy or strategy. As Discount sale is the most preferred offer for customer, but Discounts should be planned in a strategic way otherwise it may dilute brand image in the market. Companies should analyze the location not only for their flagship stores or company owned outlet but also for MBO before expansion. Otherwise it will lead to negative perception in the mind of consumers. Company should design their marketing strategy as per target customers and should use print media & online communication for promotional strategies. Company should design their TV advertisement as per mission objective to enhance the brand image. While designing their product planning, company should go for competition analysis and consumer
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behavior analysis in the catchment area. Media usage is a predictor of fashion involvement. If product involvement is high, research has shown that the consumer may be more interested in purchasing the product.
investigate relationships between business outcomes with consumer perception using structural equation modeling technique. Such an analysis might also include a behavioral dimension, i.e. Fashion product purchased, as the final outcome variable.
Managerial Implication
Fast fashion is a dynamic industry, which change with time very frequently. To be successful in the market, It is very important for a player to sustain its position and to develop their business strategies which enhance the brand image. Companies should look after the expansion strategy or new market entry by analyzing the current market scenario and changing consumer behavior.
References
Auty, S. and Elliot, R. (1998). Fashion involvement, self-monitoring and the meaning of brands. Journal of Product and Brand Management 7 (2), 109-123. Baumgarten, Steven A. "The Innovative Communicator in the Diffusion Process." Journal of Marketing Research, 12 (February 1975), 1218. Creighton, James. 1981. The Public Involvement Manual, Cambridge: Abt Books. Csikszentmihalyi, M. and Rochberg-Halton, E. (1981). The Meaning of Things. Cambridge University Press: Cambridge. Dodd, C.A., Clarke, I., Baron, S., Houston, V. (2000), "Looking the part: identity, meaning and culture in clothing purchasing theoretical considerations", Journal of Fashion Marketing and Management, Vol. 4 No.1, pp.41-8. Goldsmith, R. E. and Hofacker, C. F. 1991. Measuring Consumer Innovativeness Journal of the Academy of Marketing Science June 19: 209-221, doi:10.1177/009207039101900306 Martin, C. (1998). Relationship marketing: A high-involvement product attribute approach. Journal of Product and Brand Management, 7 (1), 6-26. OCass, A. (2000). An assessment of consumers product, purchase decision, advertising and consumption involvement in fashion clothing. Journal of Economic Psychology, 21, 545-576. OCass, A. (2001). Consumer self-monitoring, materialism and involvement in fashion clothing. Australian Marketing Journal 9 (1), 46-60.
Limitation and Future Scope

A key limitation of this study is the sampling frame. The sampling frame is limited to a certain age group in a restricted geographical area. The responses are collected in a limited time frame. Future research is required in order to test the generalization of the proposed parameters. Fashion behavior is influenced by social pressure hence there is a future scope to extend this research to test the hypothesis on the basis of consumer perception. Future studies should
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Vol.

I Issue 1 October 2010

A RESEARCH JOURNAL OF BIMTECH STUDENTS

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Model Formulation and Application:

Figure 1: AHP Model

Internal Business Process

Learning and Growth

Human Expertise Infrastructure Availability of Technology Inhouse Availablity of material resources

Intellectual Proper ty Income Projections:

Tabula Rasa method:

TATTVA - Vol. 1 Issue 1 October 2010

Project life cycle analyses:

Which model to apply?

Application of Income Method/DCF Method:

Application of Monte Carlo simulation:

Figure 2: DCF Calculation

TATTVA - Vol. 1 Issue 1 October 2010

Free cash Flow

Discounted Cash Flow

=> u = 1.329 => d = 0.752 4 => p = 0.518

Application of Real Options Method:

TATTVA - Vol. 1 Issue 1 October 2010

Conclusion and Scope for further research

Figure 4: Lattice Evolution of the Underlying

Lattice Evolution of the Underlying

Present Value of the project

Volatility of free cash flow

Risk Free Rate

Risk Neutral Probablity

Highlighted Upper Node

Highlighted Lower Node

Figure 5: Option valuation Lattice

Option valuation Lattice

TATTVA - Vol. 1 Issue 1 October 2010

1.3 10L additional cost

TATTVA - Vol. 1 Issue 1 October 2010

MMTC : A Case of Knowledge Management and Learning Organization

TATTVA - Vol. 1 Issue 1 October 2010

MMTC : A Case of Knowledge Management and Learning Organization

Rationale for The Study

TATTVA - Vol. 1 Issue 1 October 2010

Data Analysis and Results

MMTC : A Case of Knowledge Management and Learning Organization

Validity of The Factors Included

TATTVA - Vol. 1 Issue 1 October 2010

Learning Organisation Analysis

Factor and Discriminant Analysis

Discussions and Recommendations

MMTC : A Case of Knowledge Management and Learning Organization

TATTVA - Vol. 1 Issue 1 October 2010

Time For Reflection

SECOND QUARTILE (76) SECOND QUARTILE (61)

MMTC : A Case of Knowledge Management and Learning Organization

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TATTVA - Vol. 1 Issue 1 October 2010

MIRC Electronics Ltd. (Onida) Company Background

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TATTVA - Vol. 1 Issue 1 October 2010

Statement and Importance of Problem

Fig.1 : Proposed Theoretical Framework

Company Controlled Factors Installation (C1) Warranty (C1)