METHODOLOGY - Shodhgangashodhganga.inflibnet.ac.in/bitstream/10603/65866/7/07_chapter 3.pdf ·...

Chapter 3

METHODOLOGY

Sl. No. CHAPTER CONTENTS PAGE

3.1 An Introductory note on the Research Problem 115 Identified

3.2 Methodological details for Major Research 116 Objectives

3.3 Operational Definitions and basic Research 123 assumptions

3.4 Choice of Territory and Identification of Population 134

3.5 Research Hypothesis for the Major Research 141 Objectives

3.6 Sources of Data and Sample planning for the Major 162 Research Objectives

3.7 Research Analysis Tools in use 173

REFERENCES 179

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Chapter 3- Methodology

§ 3.1 Introductory Note on the Research Problem Identified

The surveys of various literatures in the previous section have already established the

relevance of Customer Relationship Management concept and Retail Financing of

Commercial Automobiles. It is quite evident from the literature study that CRM Strategies

of a financing institution do spell out the success and give a competitive edge of its venture

especially in the Retail Financing of Commercial Automobiles. The study further, has

given way to the identification of the Research Problem depicted as below:

Developing comprehensive and effective CRM (Customer Relationship Management)

strategies for the Banking and non-Banking Institutions in the Retail Financing of

Commercial Automobiles in the Burdwan - Asansol Region (West Bengal) & the

Dhanbad- Bokaro Region (Jharkhand).

The research problem thus identified, on close investigation reveals six distinct dimensions.

They are as follows:

i) Understanding the present market scenario in terms of the key players (the

various Financing Institutions) and market share pattern (market leadership etc.)

in the Retail Financing of Commercial Automobiles in the aforesaid regions.

ii) Identification of the prevalent prototype of CRM and the derived CRM practices

and strategies right now in vogue in the Retail Financing of Commercial

Automobiles by the various Financing Institutions in the aforesaid regions.

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iii) Identification of the key factors and issues governing the CRM practices of the

Financing Institutions, in the aforesaid regions in the Retail Financing of

Commercial Automobiles.

iv) Determination of the present consumer perception of the image of the various

Financing Institutions in the aforesaid regions in the Retail Financing of

Commercial Automobiles in terms of their CRM practices and strategies.

v) Matching customer expectations with the perception of service delivery and

thus, benchmarking the best practices and identification of the "gaps" if any, for

the various Financing Institutions in the aforesaid regions in the Retail

Financing of Commercial Automobiles in terms of their CRM practices and

strategies.

vi) Understanding the consumer demographic and psychographic profiles and

identifying the key variables responsible for the consumer purchase behavior

(availing the loans) so as to aid in the development of comprehensive and

effective CRM strategies to ensure a competitive edge to the existing and

incumbent players in the segment.

§ 3.2 Methodological details for the Major Research Objectives

The research problem defined in the above section thus calls for both a Qualitative and

a Quantitative Approach.

The Qualitative approach has been used for the exploratory studies in identifying the

major issues and the Quantitative approach has been used for the descriptive and

conclusive studies aiding drawing of conclusions and validation of reasons, thus

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developing vital insights facilitating the identification of causes and suggesting

solutions.

Thus, the detailed objectives of the Research can be summed up as:

i) Understanding the present market scenario in terms of the Market share holding

pattern, and identifying the Market leaders (both Banking and Non- Banking

Financing Institutions engaged in the Retail Financing of Commercial

Automobiles in the aforesaid regions.)

To fulfill this objective a two-stage research design has been set up wherein the first

stage was purely a 'qualitative approach' and the second step was a 'quantitative

approach'.

Qualitative Approach has been used to explore into the situation for identifying

the sources of information which helped the present research work to come to a

definite description; and conclusion regarding the market situation; and the market

share holding pattern. Here, the researcher relied on the tools like In-depth

Interviews of the Marketing Executives of the leading Banking and non-banking

financing institutions of the locality engaged in the Retail Financing of Commercial

Automobiles.

Quantitative Approach has been used for data collection and analysis to come to a

definite description and conclusion regarding the present market situation and the

market share holding pattern. Here, the researcher relied on the secondary sources

of data like the past sales records over a period of two financial years FY 2006-

2007 and FY 2007-2008, of the major dealer points. These dealer points were

identified through the exploratory studies, engaged in the Retail Financing of

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Commercial Automobiles in the aforesaid regions. Analytical tools like Markov

Chain Analysis and statistical non parametric test 'Chi square test' for homogeneity

of populations was implemented to compare the share holding pattern over the two

afore said regions.

ii) Tlte research sltall attempt to identify the present marketing and CRM strategies

and tlte underlying key factors and issues governing these CRM practices,

adopted by tlte major players in the aforesaid sector - State Bank of India

(Nationalized) and a leading nationalized bank, JCICI Bank Ltd., & HDFC Bank

Ltd. (Private Sector), and among tlte NBFCs Tata Finance Ltd., Magma Leasing

Ltd., in tlte Burdwan - Asansol & Bokaro - Dhanbad regions.

To fulfill this objective a two-stage research design was set up wherein the first

stage was purely a qualitative approach and the second step was a quantitative

approach.

Qualitative Approach was used to explore into the situation for understanding and

drawing up a list of the CRM tools and the current CRM practices and strategies

deployed by the aforesaid financing institutions in the Burdwan - Asansol & Bokaro -

Dhanbad regions.

Effort was made further to identify the ETR (Excellent Track Record) and GTR (Good

Track Record) customers who could act as the source of information for identifying the

major issues and factors guiding the current CRM practices. Here the researcher relied

on the tools like in-depth interviews of the Marketing Executives of the leading

Banking and non-banking financing institutions and the channel partners (dealer point

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officials, outsourced direct sales agents and brokers) of the locality engaged in the

Retail Financing of Commercial Automobiles and observation technique.

Quantitative Approach was used for data collection and analysis. Here a sample panel

survey of a specific number of ETR (excellent Track Record) and GTR (Good Track

Record) customers of each of the Financing institutions (namely State Bank of India

(Nationalized) and a leading nationalized bank, ICICI Bank Ltd., & HDFC Bank Ltd.

(Private Sector), and among the NBFCs Tata Finance Ltd., Magma Leasing Ltd., in the

Burdwan - Asansol & Bokaro - Dhanbad regions) was ear marked, who could act as

the source of information for identifying the major issues and factors guiding the

current CRM practices. The statistical analysis tool Factor Analysis along with KMO

Bartlett's test and Scree plots have been used to make definitive conclusions

iii) The research makes an endeavor to determine the present consumer perception of

the image of the various Financing Institutions in the aforesaid regions in the

Retail Financing of Commercial Automobiles in terms of their CRM practices

and strategies.

To fulfill this objective, once again a two-stage research design was set up wherein the

first stage was purely a qualitative approach and the second step was a quantitative

approach.

Qualitative Approach has been used to explore into the situation for understanding

and drawing up a list ofETR (Excellent Track Record) and GTR (Good Track Record)

customers who could act as the source of information for the CRM practices currently

being deployed by each of the aforesaid financing institutions in the Burdwan - Asansol

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& Bokaro - Dhanbad regions. Here the researcher relied on the tools like in-depth

interviews of the Marketing Executives of the aforesaid Financing Institutions.

Quantitative Approach was used for data collection and analysis. Here a sample panel

survey of a specific number of ETR (excellent Track Record) and GTR (Good Track

Record) customers of each of the Financing institutions were approached to respond on

the relative importance of the factors identified in the previous section. And the

weighted scores were computed and compared over the two regions using analysis tools

like AHP (Analytical Hierarchy Process) and statistical tools like ANOV A for drawing

up definite conclusions.

iv) The research tries to discover the problems and hindrances faced by the

Financial Institutions in implementing their CRM strategies and attempts to

benchmark the best practices in the industry for future growth in this sector.

In this endeavor of matching customer expectations with the perception of service

delivery and thus, benchmarking the best practices and identification of the "gaps", if

any, for the various Financing Institutions in terms of their CRM practices and

strategies, a two-stage research design was set up. Wherein the first stage was purely a

qualitative approach and the second step was a quantitative approach.


and identifying service gaps as per the 'Gap Model' of service or SERVQUAL that

was developed by Parasuraman et al (1985). SERVQUAL assumes that service quality

is crucially determined by inconsistency between expectations and perceptions of

Customers (Gupta et al., 2005). Here the researcher relied on the tools like in-depth

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interviews of the Marketing Executives of the leading Banking and non-banking

financing institutions , the ETR I GTR customers and the channel partners (dealer point

officials, outsourced direct sales agents and brokers) of the locality engaged in the

Retail Financing of Commercial Automobiles and observation techniques.

Quantitative Approach was used for data collection and analysis. The responses to the

structured questionnaire were thoroughly analyzed and the weighted scores were

computed and compared over the two regions using statistical analysis tools like

ANOV A and Mann Whitney -U test for drawing up definite conclusions.

v) The research has made an endeavor to record the demographic & psychographic

profiles of the customer base and also make a comparative analysis between the 2

regions under focus.

To fulfill this objective a two-stage research design was set up wherein the first

stage was purely a qualitative approach and the second step was a quantitative

approach.


and identifying the key demographic variables considered by the Financing Institutions

for adjudging the credit profile judgment. Further these demographic variables are

considered to be the key indicator as to the consumer preference pattern in purchasing

(where to procure the loan from).

This approach was further used to identify the key psychographic variables as per the

AIO (Activities, Interests and Opinions) inventory, of the customer base in the

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aforesaid regions, which do fonn the guiding force in the consumers' making the

"BIG" choice of the loan and the service provider (where to procure the loan from).

A qualitative approach was further used to draw up the database of the customers from

the sales records over a period of two financial years FY 2006-2007 and FY 2007-2008,

of the major dealer points, who were identified through the exploratory studies,

engaged in the Retail Financing of Commercial Automobiles in the aforesaid regions.

Here, the researcher relied on tools like in-depth interviews of the Marketing

Executives of the leading Banking and non-banking financing institutions and the

channel partners of the Financing institutions (dealer point officials, outsourced direct

sales agents and brokers) of the locality engaged in the Retail Financing of Commercial

Automobiles and observation technique.

Quantitative Approach was used for data collection and analysis. Samples of 180

customers were chosen using systematic random sampling method from each of the two

regions and were asked to respond to a structured questionnaire. The responses to the

structured questionnaire were recorded and thoroughly analyzed using statistical tools

chi square test for homogeneity of populations was implemented to compare the

populations in the two aforesaid regions.

(vi) The research work has put its best endeavors towards fonnulating programmatic

and feasible CRM strategies for these institutions to give them a competitive advantage.

To fulfill this objective purely a qualitative approach was employed

Qualitative Approach This endeavor has roped in the opinion and perception of the

customers; channel partners of the financing institutions and the marketing executives

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of the selected above mentioned financing institutions, the insights from the reviewed

literature, and the conclusions of the above studies and a triangulation approach has

been used to draw up the strategies.

§ 3.3 Operational Definitions and basic Research assumptions:

Before proceeding further into the thesis defining a few key terms like Commercial

Automobiles, Financing Institutions , Retail Commercial Automobile Loan, Retail

Customer, Customer Credit profile, ETRIGTR customers, Channel partners, etc.

becomes very essential., as these terms are frequently confronted upon throughout the

thesis .

./ 3.3.1 Commercial Automobiles

For the purpose of research we consider Commercial Automobiles as synonymous with

Commercial Vehicles used as Goods and Passenger Carrier which are colloquially

termed as trucks, buses and Multi-Utility Vehicles.

The commercial vehicle sector can be broadly categorized as : Light Commercial

Vehicles (LCV) and Medium & Heavy Commercialvehicles (M&HCV) based on the

Gross Vehicle Weight (GVW) of the vehicle.

Gross vehicle weight is defined as vehicle weight plus rated payload.

Rated payload is the maximum weight permitted to be loaded on the vehicle under

Motor Vehicle Act. The payload determines the earning capacity of the vehicle, since

freight rates are charged on the basis of ton/ km transported. The payloads in the Indian

market range from 0.675 ton to 40 ton.

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./ A (M& HCV) is defined as vehicle with GVW of more than 6 ton. The M&HCV

segment can be further classified into three segments based on gross vehicle weight as

follows

ICY: Intermediate commercial vehicle with GVW of 8 to 10 ton.

MCV: Medium commercial vehicles with GVW of 10 to 15 ton.

HCV: GVW of 16 ton and above

M&HCVs can also be classified into two categories depending on their usage as trucks

and buses. Buses are passenger carriers. Trucks include goods carriers along with

specialized vehicles like dumpers, tractor-trailers etc. The ICVs fall in the load category

of 8 to 10 ton GVW and are often substituted for medium or heavy commercial vehicles

in trunk routes and cities. M&HCVs are used for transport of heavy commodities such

as steel, cement, fertilizers etc

./ An LCV is defined in the Motor Vehicles Act as a vehicle with GVW of not more

than 6 ton. In India, these tend to be used mostly for intra-state movement. LCV s are

preferred for high volume low bulk cargo such as consumer goods, textiles, for short

distance haulage .

./ Small commercial vehicles (SCVs) also known as MUVs (Multi Utility Vehicles),

which include the three wheeler goods vehicles and the less than 3.5 tonnes category

vehicles (pick-ups).

On the basis of fuel used, vehicles can be further classified as diesel or petrol driven

vehicles. Diesel vehicles are economical and more popular in India. Petrol vehicles

have strong niche in hilly/ cold areas where vehicles require a cold start.

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Assumptions: For the purpose of the present research we assume the Commercial

Automobiles to be all the three categories of the above mentioned Commercial

Vehicles as approved by the Motor Vehicles Act.

./ 3.3.2 Financing Institutions

The thesis features the terms 'Financing Institution' and ~Financial Institutions'

or in short ~Fl' have been synonymously used time and again while referring to the

Banking and Non-Banking financial institutions who offer commercial automobile

loans. For the purpose of a detailed study. In the present research study, they have

been categorized into Public Sector banks, Private Sector Banks and Non Banking

Financial Company.

• Banking means accepting for the purpose of lending or investment of deposits of

money from public repayable on demand or otherwise and withdraw able by

cheque, drafts order or otherwise (5 (i) (b)). (Banking Regulations Act , India

, 1949). A Bank is defined as a financial intermediary that accepts deposits and

channels those deposits into lending activities, either directly or through capital

markets A bank connects customers with capital deficits to customers with capital

surpluses. A "Banking business", thus means, the business of receiving money on

current or deposit account, paying and collecting cheques drawn by or paid in by

customers, the making of advances to customers, and includes such other business

as the Authority may prescribe for the purposes of this Act; (Banking Act

(Singapore), Section 2, Interpretation). For the purpose of a detailed study, we have

categorized them into Public Sector banks, Private Sector Banks.

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./ The Public sector hanks are those where government holdings are more than

50% while nationalised banks are those Public sector banks which were

nationalised in 1969 and 1980. Thus all nationalised banks are public sector

banks. So one can say Public Sector banks= Nationalised Banks+ SBI + SBI

Associates + IDBI. The ones that are operative in the territories under

consideration are :

i) State Bank oflndia

ii) AndhraBank

iii) Allahabad Bank

iv) Bank of Baroda

v) Bank of India

vi) Bank of Maharashtra

vii) Central Bank of India

viii) Canara Bank

ix) Corporation Bank

x) Dena Bank

xi) Indian Overseas Bank

xii) Indian Bank

xiii) Oriental Bank of Commerce

xiv) Punjab National Bank

xv) Syndicate Bank

xvi) Union Bank of India

xvii) United Bank oflndia

xviii) UCOBank

./ The Private Sector Banks have no government share holding, only private

parties hold the 100 % of the shares. The following are the ones operative in

segment under consideration.

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i) Axis Bank Ltd

ii) Indus Ind Bank Ltd

iii) ICICI Banking Corporation Bank Ltd

iv)

v)

HDFC Bank Ltd

IDBI Bank Ltd

../ Non-Banking Financial Company (NBFC) is defined as a financial intermediary

that is engaged in certain financing activities other than banking. These activities are

specified in the Non-Banking Financial Companies (Reserve Bank) Directions, 1977

and amendments thereto. They include equipment leasing, HIRE-PURCHASE of

assets like automobiles, housing finance and investments in financial securities;

however, insurance companies and stock broking enterprises and excluded. Many of

these intermediaries offer other FUND-BASED products too, as for instance bill

DISCOUNTING and FACTORING; also offered are fee-based services such as

security issues management and advice on MERGERS and ACQUISITIONS, capital

restructuring etc. The activities ofNBFCs are both complementary and competitive to

banks. The NBFCs operative in the aforesaid sector are :

• Magma Fincorp Ltd.

• Tata Motor Finance Ltd.

• SREI International Finance Ltd.

• Sundaram Finance Ltd.

• Shriram Transport Finance Ltd.

Assumptions : For the purpose of a further intensive study in the current research,

two of the market leaders of each of the type of Financing Institutions were selected.

They are:

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Public Sector Bank Private Sector Bank NBFC

State Bank Of India, ICICI Bank Ltd. Tata Motor Finance Ltd.

Allahabad Bank HDFC Bank Ltd. Magma Fincorp Ltd.

A brief profile:

Retail Commercial

Business Volume Business Volume Automobile

per year in the per year in the Type Loan

Name of the FI ofFI Operations

Region 1 Region 2

started in the (Burdwan- (Dbanbad-

given Region on Asansol) Bokaro)

and from

State Bank Of India Public Reg I -1970's Sector 20bn 22bn Bank Reg II-1970's

Public Reg I -1980's Allahabad Bank Sector 18bn 25bn

Bank Reg II-1980's

Private Reg I -2002 ICICI Bank Ltd. Sector 30bn 3Sbn

Bank Reg II-2003

Private Reg I -2005 HDFC Bank Ltd. Sector 3Sbn 32bn

Bank Reg 11-2005

Reg I -2000 Magma Fincorp Ltd. NBFC 40bn 40bn

Reg 11-2001

Reg I -1996 Tata Motor Finance Ltd. NBFC 40bn 40bn

Reg 11-1999

Source: In-depth interv1ew ofMarketmg Executives of respective FI

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./ 3.3.3 Retail Commercial Automobile Loan

A loan is defined as the money that an institution (banks and NBFCs in this case)

forwards to an individual or group of individuals or a company with the understanding

that it will be paid off at some (usually specified in advance) future date.

Most loans involve multiple payments, for example, monthly instalments. There is

interest to be paid on this money, at varying rates. Loans can be asset backed. In the

simplest meaning, asset-based lending is any kind of lending secured by an asset. This

means, if the loan is not repaid, the asset is taken. In this sense, a Commercial

Automobile Loan is an example of an asset-backed loan

Commercial Automobile Loans usually take two distinct forms : Hire Purchase and

Lease Purchase

Hire Purchase - When an item of large capital value (Commercial Automobile like

truck, bus, MUV etc. in this case) is bought over time by paying a deposit and fixing a

period over which the loan will run (usually between 12 and 60 months) and then

paying fixed and equal repayments over this period. This form is the most predominant

practice.

Lease Purchase - This is an agreement made on an item of high capital outlay (for

example, a car, truck etc. ) where the ownership is transferred to the person who is

leasing the item at the end of the contract, providing all the terms and conditions of the

purchase have been fulfilled.

Commercial Automobile Loans is usually classified into two distinct forms based on

the type of fleet size in the deal : Strategic loan and Retail loan. Different Financing

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Institutions have different definition of the customer base, but for the purpose of

Research we will assume the customer segments in our given territories as:

1. FTUs (First Time Users): FTU is a customer from the transport industry

who may or may not have a vehicle or Credit Reference.

2. Retail Captive : is one who is not a transporter and therefore his source of

income is not from transportation of goods > > CV for own consumption

3. Retail: who may or may not be from the transport industry (Bus operators,

Parcel operators, Contract Transporters, Schools, Gas Agencies, Tourist bus

operators) & so on who has a fleet size of less the respective prescribed

number.

4. Strategic: They may be transporters with 10 or more than 10 vehicles in

their fleet or Bus operators plying buses on contract basis with a fleet size of

more than 5 Buses.

5. Strategic Captive : Non transporters with fleet size of more than 9 vehicles

in their fleet but the vehicles are not used as his source of income from

transportation of goods > > CV for own consumption

Assumptions

A Strategic Commercial automobile loan is one where the fleet size is 6 or more, and

the party , who is into the transport business and has availed such a loan, will be called

a Strategic customer.

A Retail Commercial automobile loan is one where the fleet size is 5 or less in the deal,

and the party, who is into the transport business and has availed such a loan, is called a

'Retail Customer'.

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../ 3.3.4 Customers' Credit Profile- Repayment Track Record

A credit profile is a document which provides information about someone's credit

history. Credit profiles are used by lenders and other agencies which offer credit to

determine someone's creditworthiness. A good credit profile will make it easier for

someone to access credit, and a bad credit profile can become a major stumbling block.

The profile includes a complete history of the credit accounts someone has open or has

held in the past, along with information about their limits, the balances carried on them,

and the person's repayment history. The maximum ever carried on each account will be

listed, as will information about late or incomplete payments. Old accounts are

eventually dropped from a credit profile after a set number of years, classically seven.

The Repayment history of an account by a customer is referred to as the repayment

Track Record. The repayment Track Record is a behavioral correlate and is considered

to be a very authentic indicator to the future loan repayment behavior by the lenders.

The track record of a customer is usually based on the following parameters: amount

outstanding, Days past due (DPD), Average delay, and Peak delay.

i) Amount Outstanding refers to the amount of loan still outstanding and needs to be

repaid by the customer.

ii) Days past due (DPD)- refers to the number of days' delay made by the customer in

repayment from the due date.

iii) Average delay - is the average number of days of delay past the EMI due date

throughout the loan tenure. Its measure is total no of delay days divided by the tenure in

months.

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iv) Peak Delay- is the highest number of days of delay past the EMI due date

throughout the loan tenure

The customers are profiled into ETR and GTR customers based on these above

parameters.

• ETR (Excellent Track Record) Customer- is one who has crossed loan tenure

of at least 12 months and has maintained a O(zero) days Average delay and peak

delay. i.e he is the customer who is prone to make on time payment.

• GTR ( Good Track Record) Customer-- is one who has crossed loan tenure of

at least 12 months and has maintained an Average delay of 15 days or less and a

peak delay of maximum 60 days.

A credit profile also, often includes information about someone's employment history,

along with listings of any inquiries made about someone's credit. If, for example,

someone takes out a loan to buy a car, the inquiry from the lender will show up on his

or her credit profile, and another lender will be able to see that an inquiry was made.

The inquiry history may be used to determine whether or not credit was granted to

someone, or to alert the person reviewing the credit profile to the fact that a new credit

account may be in the process of being opened.

Assumptions

For the purpose of the current Research the researcher thus, abide by the definitions

of the Retail Customer and customer credit profile and ETR (Excellent Track

Record) and GTR (Good Track Record) customer as mentioned above.

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1.

2.

3.

4.

5.

./ Channel Partners:

The loan disbursal process calls for the involvement of several personnel. They may

take any of the following types:

o Dealer point officials (they are in the pay rolls of the 5 Dealer points under

consideration.

REGION I REGI<t'II ··~

Bhandari Automobiles 1. JMAMotors

French Motor Cars Co. Ltd 2. Enar Industrial Enterprises Ltd.

GNBMotors 3. GulfAshok

Jasper Automobiles 4. Bebco Motors

Lexus Motors 5. Himatsingka & Co.

Though they work for the dealers, they act as important influencing sources in

the loan decision making process of the consumers'; they usually work for

commission from the Financial Institution)

o ISDs- In-shop demonstrators hired by the FI and forming a vital part of the

marketing team of the FI

o DSAs ( outsourced Direct Sales Agents work as commissioned agencies

hired by the FI and forming a vital part of the marketing team of the FI)

o Brokers (they are freelancers who generate leads and contact the DSAs or

the marketing executives directly and help in closing deals. They work

purely on the commission basis. They serve as the advocates for the

Financing Institutions and sometimes they are even the existing customers

of the Financing Institution)

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Assumptions: These four categories of people mentioned above form the major

distribution network for generating leads for the product like retail commercial

automobile loan of the Financing Institutions and are considered as the channel

partners in this current research work. Since they are in direct contact with the

customers they form a vital source of information for the Financing Institutions.

Further they form a vital link between the FI and the customer and are therefore a

vital source of information for this current research work about the perception of the

consumers and their needs. They can even be considered as the internal customers of

the Financing Institutions For the purpose of the current research we club the two

categories : the dealer point officials and the ISDs and refer to them as the Dealers.

Thus in the research takes the reference of three categories of Channel partners ,

namely: the dealers, DSAs and the brokers.

§ 3.4. Choice of Territory and Identification of population

Burdwan- Asansol (West Bengal) & Dhanbad- Bokaro (Jharkhand)

Located beside NH 2 (G.T Road) and being an Industrial hub of Eastern India , this

region has immense potential for the Transport Industry. This region boasts of being a

mineral rich region in India. The rich mineral reserves of this part serve as a major

supply of coal and steel to the rest of the world. The NH 2 (Grand Trunk Road) is

considered to be the national corridor to the Eastern part of the country and the only

link by road from the Capital New Delhi.

Thus, Transportation Industry was and is always in vogue for the people in this region.

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These aforesaid facts have really proved to be a lucrative business proposition for the

Financial institutions dealing in commercial Automobile loans. Hence, the region

witnessed numerous players barging in with open swords making it a perfect

battleground. And getting competitive edge was the need of the hour. A brief study of

the transport industry in this region brought to light a few very interesting facts .

./ Firstly the transporters here are usually concentrated in clusters which can broadly

be classified into two geographical territories one as Asansol -Burdwan Region in the

state of West Bengal and the other being the Dhanbad-Bokaro Region in the state of

Jharkhand .

./ The entire process of getting a new entrant into the business is actually controlled

by a few opinion leaders in each of the clusters. These opinion leaders are highly

influential and established transporters in about their 2"d or 3rd generation of the

business and possess about 10-15 vehicles in their own name or in the name of their

family members .

./ The entire process of procuring a vehicle (truck, bus, MUV) , getting the loan from

a Financial Institution (since in most cases a guarantor is required), and finally getting a

road permit and getting the vehicle operational are all controlled by these opinion

leaders .

./ Thus the process of loan disbursal and receivables management is usually

maintained by the Financial Institutions through close personal networking and

efficient CRM.

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Region I- Burdwan- Asansol in West Bengal (Territory Profile)

Burdwan- Asansol Region , · - · ,

. - . ..... ' ,_ . · , _i

'. . - . - . - .

' · . -Asansol

---- NH 2 (G. T Road) ' ·

, '

_, N __ . ....

i .L. s

Kat:-wk' . ' .

' ' .. ,_

' .Kalna

· '

Road

Located beside NH 2 (G.T Road) and being an Industrial hub of West Bengal, this

region has immense potential for the Transport Industry. Raniganj, a cluster in this

region is said to be the focal point of all major transporting activities in Eastern and

North eastern parts of India. This region house several Heavy and Light Industries

mainly the steel plants (Alloy Steel Plant, Durgapur Steel Plant, Burnpur Steel Plant

etc) and their upstream and downstream units like Ferro Alloys (Shova !spat Alloys,

Karthick Ferro Alloys etc.) , Bar & Billet Manufacturing Units, (Shyam Steel, Balaji

Steel etc) Power units (like DVC and DPL etc), Cement manufacturing units (

Durgapur Cement, Ultratech Cement etc.) and so on. These units get their raw material

resources from the mineral deposits of Jharkhand , Bihar and Orissa that too via

roadways. Burdwan -Asansol in particular is an agro-rich region and is termed as the

'granary of Eastern India" . It serves as the major supplier of rice and potatoes to the rest

ofthe country.

NH 2 is considered to be the national corridor to the Eastern part of the country and the

only link by road from the Capital New Delhi. Further NH 2 in this region, near

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Panagarh, opens up as a gateway to the NH 34 the only road link to the north-eastern

part of the country. Thus Durgapur- Asansol Region has its importance for the tourism

industry as well and hence the Transport Industry.

From the beginning of this millennium this region has witnessed a tectonic shift

towards the services sector with more than schools and professional colleges being set

up and attracting thousands and thousands of students from neighboring regions and

states. It has become a very important Educational Hub for the country with a National

University (NIT Durgapur) . Thus Transportation Industry was and is always in vogue

for the people in this region.


Financial institutions namely :Nationalized Banks like State Bank of India, Allahabad

Bank, Bank of India, Punjab National Bank, Bank of Baroda etc, Private Banks like

HDFC Bank, ICICI Bank Ltd., Axis Bank, Indusind Bank etc and NBFCs like Magma

Sraachi Finanace Ltd., SREI International Finance Ltd, Tata Motors Finance Ltd.,

Sundaram Finance Sriram Transport Finance and so on. Thus the region witnessed

numerous players barging in with open swords making it a perfect battleground. And

getting competitive edge was the need of the hour. A brief study of the transport

industry in this region brought to light a few very interesting facts .

./ Firstly the transporters here are usually concentrated in clusters ( 5 could have been

identified . namely - Panagarh, Muchipara-Durgapur, Ukhra- Andal, Raniganj, &

Asansol)



- 137-

influential and established transporters in about their 2nd or 3rd generation of the

business and possess about 1 0-15 vehicles in their own name or in the name of their

family members .




leaders .


maintained by the Financial Institution through close personal networking and efficient

CRM.

Assumption

In the present Research study, the researcher has referred to this region as Region I and

rests the future study on the assumption that it is continuous Customer Relationship

Management that helps the Financing Institutions to thrive in the business of Retail

Commercial Automobile loan.

Region II: Dhanbad - Bokaro region in Jharkhand (Territory Profile)

Dhanbad- Bokaro ,~gion - . -.' . I

N

r .-·-·- .. fl

I I -.. I s • • I

I

BokaliO .. " Sindr.i ~ . ___ .....

Ran chi

-- NH 2 (G.T Road) ,-J)NH 23 (Ranchi Road)

- 138-

The Dhanbad district is situated in the state of Jharkhand and lies between 23°37'3" N

and 24°4' N latitude and between 86°6'30" E and 86°50' E longitude. The district covers

an area of 2509.5 sq. km. with total population of 19,49,526 (1991 ).

Administrative set-up of the district includes eight (8) development blocks, twelve (12)

police stations and 1370 villages. Dhanbad, Jharia, Katras, Sindri, Gomoh, Gobindpur,

Baliapur, Nirsa, Kumardubi, Chirkunda, Dumarkunda, Panchet and Mython are the

urban centre of the district. The Dhanbad district has 71127.88 ha of agriculture land.

Irrigated area is only 5156.28 ha. Major crop the district is Paddy and other crops are

wheat, Pulses and vegetables etc. Forest area is about 17728.29 ha.

The District Bokaro of the Jharkhand State was created in the year 1991 by carving out

one subdivision consisting of two blocks from Dhanbad District and six blocks from

Giridih District. The District Headquarter Bokaro Steel City is having latitude of 23.29

and longitude of 86.09. The District Bokaro has a Geographical area of 2861 sq Km

and 357663.36 Hectares of Land. The Average altitude of the Land is 210 mts from

mean sea level. Situated in the Chhotanagpur Plateau, the vast rolling topography of the

city is typical, strewn by graded valleys and winding streams. In this setting, within a

short period of two decades, a new city with a strong multi-dimensional economic base

has blossomed into a regional urban centre of around 8.0 lakh people drawn from

different parts of the country, giving the city the character of Mini India.

The region has extraordinary importance because of its mobilization of local resource

bases. The dominant industry of the district is based on coal which has attracted a

concentration of numerous other industries. The high grade metallurgical coal of the

- 139-

Jharia coalfield within the district feeds most of the existing steel plants of the country.

The rich varieties of by-products of coal from these coal plants have provided necessary

raw materials of for the developments of chemical industries in the country as well.

Next in importance among the industries are the fertilizer and chemical at Sindri.

Bokaro in particular is famous for the Bokaro Steel plant. Other industries are ceramic,

iron and steel, engineering and other ancillary industries. Agriculture and industries are

the main economic activities of the people.

Coal and allied industries are the important parameters for determining the economic

trends of the district and deserve special attention for planned growth of its resources.

Thus, Transportation Industry was and is always a necessity and practice for the people

in this region.


Financing institutions dealing in commercial Automobile loans. Hence, the region

witnessed numerous players barging in with open swords making it a perfect

battleground. And getting competitive edge was the need of the hour. A brief study of

the transport industry in this region brought to light a few very interesting facts .

./ Firstly the transporters here are usually concentrated in clusters which can broadly

be classified into Dhanbad, Jharia, Katras, Sindri, Nirsa, Kumardubi, Chas, and Bokaro .



influential and established transporters in about their 1st or 2nd generation of the

business and possess about 10-15 vehicles in their own name or in the name of their

family members.

- 140-




leaders .


maintained by the Financial Institutions through close personal networking and

efficient CRM.

Assumption

In the present Research study, the researcher has referred to this region as Region II and

rests the future study on the assumption that it is continuous Customer Relationship

Management that helps the Financing Institutions to thrive in the business of Retail

Commercial Automobile loan.

§ 3.5 Research Hypothesis for the Major Research Objectives

The current research has a six-pronged line of attack to the Research problem and

has been studied under the following six broad hypotheses:

The consumer preference for loan procurement is affected by the type of

Financial Institution and the CRM strategies implemented by the specific

Financial Institution.

The CRM Strategies employed by the players are similar in both the Regions

The CRM Strategies employed are similar among the classes of players broadly

classified as: Public Sector Banks, Private Sector Banks, and the NBFCs.

- 141 -

• The Psychographic and Demographic profiles of the two Customer bases in the

two regions are similar.

• The Private Players (Private Sector Banks & NBFCs) are more preferred than

the Public Sector Banks by the customers for taking the finance for CVs

• The Private Sector Banks are more preferred than the NBFCs by the customers

for taking the finance for CVs.

3.5.1 The first study is concentrated on the preference pattern of the consumer on

the type of Financial Institution and the concept is tested over the two regions, the

detailed hypotheses are as follows:

Null Hypotheses: There is no significant difference in the preference pattern of the

type of Financing Institution (organized vs. unorganized) and the CRM strategies

implemented by the specific Financial Institution as a choice for availing a Retail

CV loan over the two regions.

Alternative Hypotheses: There is significant difference in the preference pattern of

the type of Financing Institution (organized vs. unorganized) and the CRM

strategies implemented by the specific Financial Institution as a choice for availing

a Retail CV loan over the two regions.

Null Hypotheses: There is no significant difference in the preference pattern of the

type of Financing Institution in the organized sector (Public Sector Banks, Private

Banks, NBFCs) and the CRM strategies implemented by the specific Financial

Institution as a choice for availing a Retail CV loan over the two regions.

- 142-

Alternative Hypotheses: There is significant difference in the preference pattern of

the type of Financing Institution in the organized sector (Public Sector Banks,

Private Banks, NBFCs) and the CRM strategies implemented by the specific

Financial Institution as a choice for availing a Retail CV loan over the two regions .

./ 3.5.2 The second and third studies are centered on the CRM Strategies employed

by the players. The study makes an attempt to identify the major issues and factors

guiding the current CRM practices in vogue among the different Financing Institutions

(namely: Public Sector Banks, Private Banks and NBFCs). An effort was made to

compare and test whether the CRM strategies are similar over the two regions (Region I

and Region II) and the different Financing Institutions (namely: Public Sector Banks,

Private Banks and NBFCs) according to the Consumer perception (second study) and

the Channel Partners' perception (third study) as well. The detailed hypotheses are as

follows:

Premises ofCRM Strategies (CRM FACTORS & ISSUES)

CRM factors CRM Issues

Flexibility in INTEREST RATES AND DOWNP A YMENT Flexibility in Documentation

Flexibility Issues Flexibility in mode ofR~yment Flexibility in Credit Profile Judgment Transparency in Operations TAT in Service Transactional Issues Augmented services EMI Collection Default management Relational Issues Info dissemination &Relational incentives

- 143-

Null Hypothesis: There is no significant difference among the three different types of

Financial Institutions (namely Public Sector Banks, Private Banks, & NBFCs) in the

Flexibility they allow in negotiation of Interest Rates and down payments.

Alternative Hypothesis: There is significant difference among the three different types

of Financial Institutions (namely Public Sector Banks, Private Banks, & NBFCs) in the

Flexibility they allow in negotiation of Interest Rates and down payments.

Null Hypothesis: There is no significant difference of the various Financing

Institutions over the two Regions (Region I and Region II) in the Flexibility they allow

in negotiation of Interest Rates and down payments.

Alternative Hypothesis: There is significant difference of the vanous Financing


in negotiation of Interest Rates and down payments.



Flexibility they allow in Documentation



Flexibility they allow in Documentation

Null Hypothesis: There is no significant difference of the vanous Financing


in Documentation

- 144-



in Documentation.



Flexibility they allow in the choice of Mode of Repayment



Flexibility they allow in the choice of Mode of Repayment



in the choice of Mode of Repayment

Alternative Hypothesis: There is significant difference of the various Financing


in the choice of Mode ofRepayment.



Flexibility they allow in the Judgment of Credit Profile of loan applicants.



Flexibility they allow in the Judgment of Credit Profile of loan applicants.

- 145-



in the Judgment of Credit Profile of loan applicants.



in the Judgment of Credit Profile of loan applicants.



Transparency they maintain in their transactional operations.



Transparency they maintain in their transactional operations.


Institutions over the two Regions (Region I and Region II) in the Transparency they

maintain in their transactional operations.


Institutions over the two Regions (Region I and Region II) in the Transparency they

maintain in their transactional operations.



Tum Around Time (TAT) they maintain in their transactional operations.

- 146-



Tum Around Time (TAT) they maintain in their transactional operations.


Institutions over the two Regions (Region I and Region II) in the Tum Around Time

(TAT) they maintain in their transactional operations.


Institutions over the two Regions (Region I and Region II) in the Tum Around Time

(TAT) they maintain in their transactional operations.


Financial Institutions (namely Public Sector Banks, Private Banks, & NBFCs) with

respect to the volume of augmented services provided to their consumers apart from the

core service.


of Financial Institutions (namely Public Sector Banks, Private Banks, & NBFCs) with

respect to the volume of augmented services provided to their consumers apart from the

core service.


Institutions over the two Regions (Region I and Region II) with respect to the volume

of augmented services provided to their consumers apart from the core service.

Alternative Hypothesis: There is significant difference of the various Financing

Institutions over the two Regions (Region I and Region II) with respect to the volume

of augmented services provided to their consumers apart from the core service.

- 147-



respect to the efforts put forth in efficient, effective and hassle-free EMI collection



respect to the efforts put forth in efficient, effective and hassle-free EMI collection.


Institutions over the two Regions (Region I and Region II) with respect to the efforts

put forth in efficient, effective and hassle-free EMI collection



put forth in efficient, effective and hassle-free EMI collection



respect to the efforts put forth in efficient and effective Default Management



respect to the efforts put forth in efficient and effective Default Management.



put forth in efficient and effective Default Management.

- 148-



put forth in efficient and effective Default Management.



respect to the efforts put forth in efficient and effective Information dissemination and

deliverance of relational incentives to the customers.



respect to the efforts put forth in efficient and effective Information dissemination and

deliverance of relational incentives to the customers.



put forth in efficient and effective Information dissemination and deliverance of

relational incentives to the customers.



put forth in efficient and effective Information dissemination and deliverance of

relational incentives to the customers.

3.5.3 The fifth and sixth studies revolved around the concept of which category of

Financial Institutions (namely Public Sector Banks, Private Banks, & NBFCs) is most

preferred by the customers for the purpose of availing loans. The pilot study and in

depth interviews of marketing executives of the aforesaid Financing Institutions and the

- 149-

channel partners (dealer point officials, DSAs and brokers) got us to a perception as to

the private players and in particular the Private Banks are most preferred for availing a

CV loan by the existing customers in the next purchase cycle, irrespective of the

Regions.

Null Hypothesis: The Private Players (Private Sector Banks & NBFCs) are equally

preferred to the Public Sector Banks by the customers for taking the finance for CV s

Alternative Hypothesis: The Private Players (Private Sector Banks & NBFCs) are

more preferred than the Public Sector Banks by the customers for taking the finance for

CVs

Null Hypothesis: The Private Sector Banks are equally preferred than the NBFCs by

the customers for taking the finance for CV s.

Alternative Hypothesis: The Private Sector Banks are more preferred than the NBFCs

by the customers for taking the finance for CV s.

3.5.4 The fourth study is one of the most crucial part in the research work and it

makes an endeavor to compare and contrast the demographic and psychographic

profiles of the two regions (Region I and Region II). This in tum will take us

one step ahead in the process of formulating programmatic and feasible CRM

strategies for these financing institutions to give them a competitive advantage.

The premises of the Demographic and Psychographic Variables as identified by

the exploratory studies which were put to test as a comparison over the two

regions are as follows:

- 150-

Demographic Variables

1. Age

2. Education

3. Marital Status

4. Family Structure

5. No. of years in transport

business

6. Annual Turnover

7. Type of Firm

8. Fleet Size

9. No. generations in the transport

business

10. Free to finance ratio of the

vehicles in the fleet

Psychographic Variables

1. FI Choice injluencers (self decision, family member, opinion leaders, dealers)

2. Loan availing propensity

3. Risk taking propensity

4. Openness to new forms of financial transactions

5. Trust Quotient

6. Orientation towards Relations (Importance of personal relations, professional commitments, attitude towards networking)

7. Attitude towards politics

8. Food Habits (Veg or Non Veg)

9. Entertainment preferences (like regular partying, watching movies, watching TV for serials, watching TV for sports ,holidays/outings with family, holiday spot preference)

10. Family Orientation

11. Media Habits (preference of newspaper, TV, Internet as the medium, Preference of language of communication)

12. Social Conservativeness

13. Financial Conservativeness

14. Orientation towards Aesthetics

15. Orientation towards Education

Assumption: For the purpose of the current study it has been assumed that each of

above mentioned Demographic and Psychographic variable is independent of each

other.

- 151 -

The detailed research hypotheses for comparison of Demographic Profiles are as

follows:

Null Hypothesis: There is no significant difference among the consumer populations of

the two regions (Region I and Region II) in terms of their age distribution.

Alternative Hypothesis: There is significant difference among the consumer

populations of the two regions (Region I and Region II) in terms of their age

distribution


the two regions (Region I and Region II) in terms of their Educational levels.


populations of the two regions (Region I and Region II) in terms of their Educational

levels


the two regions (Region I and Region II) in terms of their Marital Status.


populations of the two regions (Region I and Region II) in terms of their Marital Status.


the two regions (Region I and Region II) in terms of their Family Structure.


populations of the two regions (Region I and Region II) in terms of their Family

Structure.

- 152-


the two regions (Region I and Region II) in terms of their number of years they are

associated with the transport business.


populations of the two regions (Region I and Region II) in terms of their number of

years they are associated with the transport business.


the two regions (Region I and Region II) in terms of their distribution of the Annual

Turnover in their transport business.


populations of the two regions (Region I and Region II) in terms their distribution of

the Annual Turnover in their transport business.


the two regions (Region I and Region II) in terms of the type of firm they maintain in

their transport business.


populations of the two regions (Region I and Region II) in terms of the type of firm

they maintain in their transport business.


the two regions (Region I and Region II) with respect to the distribution of the fleet

SIZe.

- 153-


populations of the two regions (Region I and Region II with respect to the distribution

of the fleet size.


the two regions (Region I and Region II) in terms of their number of generations they

are associated with the transport business.


populations of the two regions (Region I and Region II) in terms of their number of

generations they are associated with the transport business.


the two regions (Region I and Region II) with respect to the distribution of the free to

financed fleet size.


populations of the two regions (Region I and Region II with respect to the distribution

of the free to financed fleet size.

The detailed research hypotheses (or comparison of Psychographic Profiles are as

follows:


the two regions (Region I and Region II) with respect to their preference pattern of the

particular influencer in making the choice of FI for availing the CV loan.

- 154-


populations of the two regions (Region I and Region II with respect to their preference

pattern of the particular influencer in making the choice ofFI for availing the CV loan.

The study further delves into the details as to identify the most preferred choice

influencer.

Null Hypothesis: The consumer populations of the two regions (Region I and Region

II) equally prefer the decisions of all the influencers to the self decision and prior

experience in making the big choice of Financing Institution for availing the CV loan.

Alternative Hypothesis: The consumer populations of the two regions (Region I and

Region II) rely more on self decision and prior experience than the decisions of all the

other influencers in making the big choice of Financing Institution for availing the CV

loan.


II) equally prefer the decisions of all the influencers to the opinion leaders' advice in

making the big choice of Financing Institution for availing the CV loan.


Region II) rely more on the opinion leaders' advice than the decisions of all the other

influencers in making the big choice of Financing Institution for availing the CV loan.


II) equally prefer the decisions of all the influencers to the dealer's advice in making

the big choice of Financing Institution for availing the CV loan.

- 155-


Region II) rely more on the dealer's advice than the decisions of all the other

influencers in making the big choice of Financing Institution for availing the CV loan.


the two regions (Region I and Region II) in terms of their loan availing propensity


populations of the two regions (Region I and Region II) in terms of their loan availing

propensity


the two regions (Region I and Region II) in terms of their Risk taking propensity


populations of the two regions (Region I and Region II) in terms of Risk taking

propensity.


the two regions (Region I and Region II) in terms of their openness to adapt to new

forms of financial transactions like phone banking/ Net Banking.


populations of the two regions (Region I and Region II) in terms of their openness to

adapt to new forms of financial transactions like phone banking/ Net Banking.


the two regions (Region I and Region II) in terms of their trust quotient on the people

around while handling monetary transactions.

- 156-


populations of the two regions (Region I and Region II) in terms of trust quotient on the

people around while handling monetary transactions.


the two regions (Region I and Region II) in terms of their attitude of prioritization of

personal relations to professional commitments.


populations of the two regions (Region I and Region II) in terms of their attitude of

prioritization of personal relations to professional commitments.


the two regions (Region I and Region II) in terms of their attitude towards networking


populations of the two regions (Region I and Region II) in terms of their attitude

towards networking


the two regions (Region I and Region II) in terms of their attitude towards politics.



towards politics.


the two regions (Region I and Region II) in terms of their food habits (preference of

Vegetarian to Non-Veg.)

- 157-

Alternative Hypothesis: There is no significant difference among the consumer

populations of the two regions (Region I and Region II) in terms of their food habits

(preference of Vegetarian to Non-Veg.)


the two regions (Region I and Region II) in terms of their preference of newspaper as a

medium.


populations of the two regions (Region I and Region II) in terms of their preference of

m:wspaper as a medium.


the two regions (Region I and Region II) in terms of their preference of Television as a

medium.



Television as a medium.


the two regions (Region I and Region II) in terms of their preference of Internet as a

medium.



Internet as a medium.

- 158-


the two regions (Region I and Region II) in terms of their preference of English as a

language of communication.



English as a language of communication.


the two regions (Region I and Region II) in terms of their preference of Hindi as a

language of communication.



Hindi as a language of communication.


II) equally prefer all modes of entertainment.


Region II) prefer regular partying as the best mode of entertainment as compared to the

other forms.




Region II) prefer watching movies as the best mode of entertainment as compared to

the other forms.

- 159-




Region II) prefer watching television serials as the best mode of entertainment as

compared to the other forms.




Region II) prefer watching television for sports as the best mode of entertainment as





Region II) prefer holidays and family outings as the best mode of entertainment as





Region II) prefer holidaying in sea beaches as the best mode of entertainment as




- 160-


Region II) prefer holidaying in religious spots as the best mode of entertainment as





Region II) prefer holidaying in mountains as the best mode of entertainment as



the two regions (Region I and Region II) in terms of their attitude towards aesthetics



towards aesthetics.


the two regions (Region I and Region II) in terms of their attitude towards education.



towards education.


the two regions (Region I and Region II) in terms of their attitude towards social

conservativeness.

- 161-


populations of the two regions (Region I and Region II) in tenns of their attitude

towards social conservativeness.


the two regions (Region I and Region II) in terms of their attitude towards family

structure.



towards family structure.

§ 3.6 Sources of data and sample planning for the major Research Objectives

The current research has a partly qualitative and partly quantitative approach. The

data was collected from both the primary and secondary sources.

Qualitative tools: Data collection research tools like in depth interviews of

Customer Relations Managers & Marketing Personnel, Case study analysis and

observation techniques have been used for the exploratory studies.

Quantitative tools: Customer Perceptions and attitudes were adjudged by using a

structured questionnaire; the responses were statistically sorted, summarized,

analyzed and interpreted by the help of charts, diagrams & graphs and statistical

analysis tools to conclude on the Propensity Information - so as to effectively draw

up programmatic and feasible CRM strategies catering to the consumer base and

thus giving a competitive edge to the Financing Institutions

- 162-

Primary Data: sample survey and data collection from the customer base and

interviews of the personnel of the Financing Institutions and the dealer points and

brokers.

Secondary Data: Dealer point sales databases, Company customer databases,

Reports, company literature, Loan application forms of the various Financing

Institutions, journals and previous research works, magazines, Newspapers, and

Website publications.

3.6.1 Sample Planning for purpose of achieving the following objectives :

../ Understanding the market share holder pattern

../ Recording and analyzing the psychographic and demographic profiles of the

existing consumer base.

Qualitative tool used:

A list of customers was sourced from the dealer points in the two regions. The

dealer points were identified based on the in-depth interviews of the marketing

personnel of the Financing Institutions namely: State Bank of India, ICICI Bank

Ltd., HDFC Bank Ltd., Ashok Leyland Finance (presently the Indus Ind Bank),

Magma Fincorp Ltd., Tata Motor Finance Ltd., and SREI International Finance

Ltd.; and consulting the websites for the listed dealers of commercial vehicle

manufacturers like TATA motors, Ashok Leyland Ltd., Volvo, and Eicher in the

aforesaid regions (Region I and Region II).

- 163-

Five dealer points were identified in each region that sources the majority of the

commercial vehicles in the aforesaid regions. They are :

REGION I REGI~NII ,:;

'

6. Bhandari Automobiles 1. JMAMotors

7. French Motor Cars Co. Ltd 2. Enar Industrial Enterprises Ltd.

8. GNBMotors 3. Gu(fAshok

9. Jasper Automobiles 4. Bebco Motors

I 0. Lexus Motors 5. Himatsingka & Co.

Each of the above mentioned dealer points were approached for the list of

customers who purchased at the most 'two' vehicles at a time from their point in

between the time frame 1st April 2006 - 31st March, 2008 and belonged to the areas

Asansol, Raniganj, Ukhra, Andal, Durgapur, REGION I Panagarh Galsi and Burdwan

Dhanbad , Jharia, Katras, Sindri, Nirsa, Chirkunda, REGION II Panchet Mython,_ Bokaro, Chas, Ramgarh.

It was found that the population list when collated together amounted for 987 in

Region I and 764 in Region II. The area wise breakup are as follows :

REGION I

Asansol, Raniganj 392 Ukhra, Andal, Durgapur 337 Panagarh Galsi and Burdwan 258

TOTAL 987

REGION II

Dhanbad and suburbs (Jharia, Katras, Sindri, 426 Nirsa Chirkundl!, Panchet Mvtholl}_ Bokaro Steel City and Suburbs 338

TOTAL 764 l

- 164-

The total list of customers were tabulated separately into two different tables

(Region wise) and arranged in alphabetical order. Each of them was being given a

separate code:-

R/1/001 to R/1/987 RE~IONI

R/11/001 to R/111764 REGION II

Quantitative tool for drawing up the sample:

A sample survey based on a structured questionnaire was conducted centered on the

following sampling plan :

Sampling Unit: An individual residing in the aforesaid region, who has purchased a

commercial automobile by availing a Retail CV loan from the Financing Institutions in

the organized sector in between the time period 1st April 2006- 31st March, 2008.

Sampling frame: the customer list drawn up from the dealer point sales database as

mentioned above, comprising of987 in Region I and 764 in Region II.

Sample size: A total sample of 400 nos. is planned where (200 will be from Region I &

200 from Region II)

Sampling Technique: Systematic Random Sampling was used to draw up the sample

from the sampling frame wherein the

REGION I =(987 /200) :::: 5 Every 5th customer from the list was picked

REGION II = (764/200) :::: 4 Every 4th customer from the list was picked

In both cases the choice of the first customer was made at random.

However, as the research proceeded many non-responses were confronted upon so the

researchers settled with a sample of 360 (i.e 180 from each region).

- 165-

The results of the sample survey based on the structured questionnaire (see annexure

1.1, 1.2) from each of the region were further tabulated into 2 excel databases with each

coded as

S/1/001 to S/11180 REGION I S/11/001 to S/111180 REGION II

And the data was analyzed using several managerial and statistical tools and interpreted

and recorded in the chapter of findings and analysis.

3.6.2 Sample Planning for purpose of achieving the following objectives:

./ Identifying the key CRM factors and issues guiding the CRM strategies

./ Understanding the consumer perception of the CRM tools and their comparative

analysis.

The research includes a 3 phase study partly qualitative and partly quantitative in nature.

i) The first phase is a purely qualitative exploratory study to identify the CRM Strategies

currently in vogue, and identifying the key factors guiding them. The methodology

comprised of the in-depth interviews of the Marketing personnel of the respective

Financing Institutions namely

Nationalized Bank Private Sector Bank NBFC

State Bank Of India, ICICI Bank Ltd. Tata Motor Finance Ltd.

Syndicate Bank HDFC Bank Ltd. Magma Fincorp Ltd.

Allahabad Bank Axis Bank Ltd. Shriram Transport Finance Ltd.

- 166-

Bank of Baroda Indus Ind Bank Ltd. Sundaram Finance Ltd.

Corporation Bank Srei International Finance

Punjab National Bank GE TFS Ltd.

Bank oflndia Cholamandalam Finance Ltd

In this study the present CRM practices of the individual Financing Institutions ~or a

nonnalloan transaction process were jotted down and translated into 32 specific variables.

ii) The second phase was a quantitative study based on a sample survey of the ETR

(Excellent Track Record) consumers of Retail Commercial Auto loans. A sample of two

ETR customers were selected at random from each of the 18 Financing Institutions listed

above from each of the two regions : Region I (Asansol- Burdwan) and Region II (Bokaro

Dhanbad). This accounted for a total sample size of 72 precisely identified using the

following method.

The list of consumers was sourced by a method of 2 -stage sampling. The first stage

identified the key players 2 in each category of Financing Institutions.

Public Sector Bank Private Sector Bank NBFC

1. State Bank Of India, 1. ICICI Bank Ltd. 1. Tata Motor Finance Ltd.

2. Allahabad Bank 2. HDFC Bank Ltd. 2. Magma Fincorp Ltd.

Each of the Financing Institutions was approached for the database of their

ETRIGTR customers having a live account with the FI for at least 2 years. The

following were the numbers of customers in the list provided by each of the

Financial Institutions.

- 167-

Region (N) Sample to be drawn

Type ofFI FI name n) I II I II

SBI 57 69 6 6 Public Sector Banks

Allahabad Bank 34 38 6 6

ICICI Bank 67 73 6 6 Private Banks

HDFCBank 72 71 6 6

Tata Motor Finance 63 61 6 6

Ltd. NBFC

Magma Fincorp Ltd. 56 62 6 6

The ETR I GTR customer database thus drawn up from each of the Financing

Institutions gave a total of 349 customers in Region I and 374 from Region II. And a

closer look at the customer databases does reveal that there was many a customer who

has availed loans from different Financing Institutions.

For the purpose of the present study , a systematic Random Sampling was adhered to

for selecting 6 ETR/GTR customers from each of the Financing Institutions identified ,

based on the following sampling plan.

Sampling Unit: An individual residing in the aforesaid region, who has purchased a

commercial automobile by availing a Retail CV loan from the Financing Institutions

and is either an ETR/GTR customer having a live account with the FI for at least 2

years.

Sampling frame: The customer databases of the ETR/GTR customers, having a live

account with the FI, for at least 2 years, as mentioned above.

Sample size: 12 from each type of FI from each region (6 from each FI) in all 36 from

each region and in all 72.

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Sampling Technique: For the purpose of the present study a Systematic Random

sampling has been used as detailed in the table below:

FI name Region (n) Region (n)

I II

SBI (57/6) ~to Every 1oth customer

(69/6) ~ ll Every 11th customer

from the list was picked from the list was picked

Allahabad Bank (34/6) ~ 6 Every 6th customer

(38/6) ~ 6 Every 6th customer

from the list was picked from the list was picked

ICICI Bank (67/6) ~ 11 Every 11th customer

(73/6) ~ 12 Every 12'11 customer from the list was picked from the list was picked

HDFC Bank (72/6) ~ 12 Every 12th customer

(71/6) ~12 Every 12th customer

from the list was picked from the list was picked Tata Motor

(63/6) ~ 10 Every 1oth customer

(61/6)~10 Every 1oth customer

Finance Ltd. from the list was picked from the list was picked

Magma Fincorp (56/6) ~ 9 Every 9th customer

(62/6) ~ 10 Every I oth customer

Ltd. from the list was picked from the list was picked

Thus, we had a pool of 72 customers. 36 from each region (specifically 12 from each

type of FI in each region namely Public Sector Banks, Private Banks, and NBFCs ).

This set of respondents was presented with a structured questionnaire (annexure 1.3).


1.3) from each of the region were further tabulated into 2 excel databases with each

coded as

P/1/001 to P/1136 REGION I P/111001 to P/11136 REGION II



The 32 variables identified in the exploratory study was translated into 32 statements (Jisted

below) to which the respondents were asked to respond on a seven point scale: 1- Strongly

Disagree, 7- Strongly Agree.

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1 -,' Statements < i ' 1':: 1 I prefer an FI where I can negotiate on the interest rates to my benefit 2 I prefer an FI where I do not have to submit all the documents asked for 3 I prefer an FI which gives me ample time to submit the pre-disbursal documents 4 I prefer an FI where the credit profile judgment is not so rigorous

I prefer an FI where Officials do not hassle by visiting my place for investigation prior to loan 5 sanction 6 I prefer an FI where I can negotiate on the down payment to my benefit 7 I prefer an FI where Pre-disbursal docs are collected by the FI's executive from my place 8 I prefer an FI which gets the Agreement signed at my premises 9 I prefer an FI where I can negotiate on the moratorium 10 I prefer an FI where I can choose my mode of payment of EMI

I prefer an FI where The Post Disbursal Documents (like RC, Insurance etc.) are collected by the 11 FI's executive from my place 12 I prefer an FI which issues a welcome letter from the FIat the beginning of the tenure 13 I prefer an FI where I receive a copy of the Amortization schedule with the welcome kit 14 I prefer an FI which gives me a copy of the Agreement with the welcome kit 15 I prefer an FI where the releasing of the D.O was very very prompt 16 I prefer an FI where I can get a Statement of Accounts (S-0-A) every 6 months ofm_y_ tenure 17 I prefer an FI where I can get an S-0-A whenever I ask for 18 I prefer an FI where I am assisted to get my insurance renewed . 19 I prefer an FI where I get a courtesy call 2 days prior to due date of my EMI 20 I prefer an FI where I get a thank you call/ benefit for on time payment of EMI 21 I prefer an FI which gets my EMI collected every month by its executive 22 I prefer an FI which facilitates payment of EMI from any where across the country 23 I prefer an FI which do not give frequent hard calls for even defaulting by 60 days 24 I prefer an FI where I am not charged any delay payment charges ifl pay within 1 month of due date. 25 I prefer an FI where I get regular updates on the other product offers by the FI

I prefer an FI where there is always someone to help me out at the earliest when I have any problem 26 regarding the transactions 27 I prefer an FI where I get a family like treatment from its employees 28 I prefer an FI where the pre-termination I foreclosure is a fast & easy process 29 I prefer an FI where N.O.C release is a prompt & proactive practice by the FI 30 I prefer an FI where I get SJ:>ecial benefits in terms of rates & terms when I went in for repeat fundin_g. 31 I prefer an FI which do not give a soft call for defaulting by 30 days 32 I prefer an FI where I am invited for ideas to improve the services

The responses were analyzed using SPSS Factor analysis and the major factors were

identified.

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iii) The third phase comprised of an in-depth study of the identified factors to understand

the relative importance of the factors identified in Phase II among the target consumers,

while making the big choice of"where to avail the loan from". The factors were presented

in a paired comparison pattern to a sampled set of respondents and were asked to respond

based on the following scale:

The sample was drawn up by a two stage The Fundamental Scale for Pairwise Compar~ons

sampling method where the top 2 financing Intensity of Definition Exp~anation Importance

Institution (market leaders) in each category 1 Equal im~o~ance T::o e!eme nts cor•r.:;;te equi:y to the objecti1e

namely Nationalised Banks, NBFCs and 3 lbdera:e :mportance Experience and JUdgrr:e~t siighfr,' fa·.·or ore element c;er ad1er

Private Banks were identified in each of the 5 Strong im~ance Expenence and j~dgr.er:t strong~ I fa. or one element c:era~:il~

two regions. These institutions were then One element :s fa¥.:re; .ef)' stron¢1 7 'lery stror~ i~orta":e 0'/ff an0:her rts OO:r ~arce iS i

approached for their set of ETRIGTR demo~s!ra!ed ,n prattce

Th d f I .e e:1 erse :r;or-; m e:ement

customers having a live Account with them 9 Extreme i;r.portance 01er am:her is of lha ~ ;.~est posst!e

order of rrma:ol

in Commercial Vehicle loan for at least 2 lntensrties of 2 4 6. and 8 •:a1 be used to express in!errr:~jlate •al;as lntens~ies 11. 12. U etc. can be used for elements that m :ert close in l:r:;;:rta~r.e

years

From the list thus provided, by the respective Financing Institutions, 6 such customers

were chosen by a systematic Random Sampling Method. The total sample size was of 72

( 36 from each region and 12 from each type of Financing Institution ). These people were

then approached for the aforesaid responses.

The responses thus obtained were analyzed using the AHP software and compared over the

two regions and recorded.

- 171 -

3.6.3 Sample Planning for purpose of achieving the following objectives:

./ Identifying the key CRM factors and issues guiding the CRM strategies for the

Channel partners (dealer point officials, ISDs , brokers and DSAs ) .

./ Understanding the Channel Partner's (dealer point officials, brokers and DSAs)

perception of the CRM tools deployed by the Financing Institutions and their

comparative analysis.

For the purpose of drawing up the database the 5 dealer points in each region

identified in the previous section were considered. namely :

REGION I REGI.NII (t'/

~f3

1. Bhandari Automobiles 1. JMA Motors

2. French Motor Cars Co. Ltd 2. Enar Industrial Enterprises Ltd.

3. GNBMotors 3. Gulf Ashok

4. Jasper Automobiles 4. Bebco Motors

5. Lexus Motors 5. Himatsingka & Co.

Each of these dealer point outlets had a separate official ( In-store Demonstrator -lSD)

from each of the Financing Institution which we have chosen for research. A complete

enumeration of the population thus obtained was done. This gave us about 60 responses

(30 from each region) which were tabulated and sorted for further analysis.

Further the marketing executives of the aforesaid Financing Institutions were

approached for their databases of listed DSAs and brokers over the two regions. The

lists were collated to sum up to 186 in all listed over the two regions. 92 from Region I

and 94 from Region II. A Simple Random Sampling Without Replacement (SRSWR)

was used to draw up a total of 30 respondents (15 from each Region).

- 172-

These respondents thus identified were presented with a structured questionnaire (see

annexure 1.4) .


1.4) from each of the region were further tabulated into 2 excel databases with each

coded as

D/001 to D/045 REGION I D/046 to D/090 REGION II



§ 3.7 Research Analysis Tools in use

Several Research Tools , both qualitative and quantitative, have been used to record and

analyze the data.

§ 3.7.1 Qualitative tools :

The Qualitative tools are as follows:

• The AIO concept to adjudge the psychographic profiles of the

consumer bases of the two regions

• The GAP Analysis model to identify the service gaps (difference

between perceptions and expectations)

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§ 3.7.1.a AIO CONCEPT:

Effective CRM Strategies involve delivering of the "right" offer to the "right" audience at

the "right" time. Although simple to describe, effective CRM is difficult to accomplish

because executing advertising programs consists of some difficult tasks: (1) market

segmentation variables must be found that identify the "right" people; (2) a creative

strategy must be developed that will produce an offer and a message capable of eliciting the

desired response from the target segment; and (3) the appropriate media vehicles for

reaching the intended target markets must be selected. Identifying the right people and

targeting the right segment is thus the key to success in any marketing effort.

Consumer psychographies which involves an investigation of consumers' life-styles and

personality characteristics is a way of describing the psychological makeup or lifestyle of

consumers and is considered to be a vital tool for customer segmentation. It necessitates

assessing such dimensions as:

• attitudes • values • activities and interests • demographics • media patterns • usage rates

AIO inventory frame work suggested by Joseph T. Plummer in 1974 gives a readymade

guideline to adjudge the Consumer Psychographies. Here the respondents are presented

with a structured questionnaire pertaining to their Activities, Interests and opinions as

mentioned in the table below.

- 174-

AIO INVENTORY

Activities Interests Opinions

• work • family • themselves

• hobbies • home • social issues

• social events • job • politics

• vacation • community • business

• entertainment • recreation • economtcs

• community • fashion • education

• shopping • food • products

• sports • media • future

• club membership • achievement • culture

The above variables were translated into 30 distinct statements and were presented to the

consumers and were asked to respond with "never", "sometimes" or "always". The results

were collated and analyzed using the statistical tools to draw up a an idea about the

psychographic profile of the existing customer base over the two regions.

§ 3.7.1.b The GAP Analysis Model:

A gap analysis, as proposed by Zeithmal & Bitner (1990), attempts at matching the

consumer perceptions of service delivery with the consumer expectations and helps to

identify the causes of service quality shortfalls in each or all of the dimensions. Customers

build an expectation of the service to be received depending on four factors. These are:

• word of mouth communications obtained from friends and acquaintances,

• personal needs,

• past experience plays a part and,

• communications put out by the service company create their own expectations.

These individual factors are evaluated as follows:

- 175-

•!• Gap 1 (Knowledge Gap or Market Research Gap): results from a difference

between what customers expect and what management perceives these expectations

to be. This can occur, as a result of insufficient research or communication failures.

•!• Gap 2 (Design Gap): results from a difference between management perceptions

of what customers expect and the specifications that management draws up,

detailing the service quality delivery actions required.

This can result from :

./ inadequate management commitment and interest,

./ a perception that the company cannot actually meet customer requirements,

./ a failure to specify in detail what is required,

./ or a failure in the way in which the company sets its goals in relation to

customers.

•!• Gap 3 (Conformance Gap): results from a mismatch between the service delivery

specifications required by management and the actual service that is delivered by

front line staff. There are many possible causes such as inappropriate technology,

staff or training, poor teamwork, and inappropriate control measures.

•!• Gap 4 (communication gap): results from a difference between that actual service

that is delivered and messages that are put out to customers about what to expect.

Clearly a major reason for this is poor internal communication and lack of

familiarity with operations. There is also the often-found propensity to "over-

promise". Clearly it is more desirable to under-promise and over deliver.

•!• Gap 5 (Consumer Gap): may be identified as the overall difference between the

expected service and the perceived service experienced. Gap 5 results from the

combination of Gaps 1 to 4.

- 176-

The research attempted at identifying these gaps and the major impediments in the process

of implementation of the current CRM strategies. A questionnaire comprising of the 16

statements covering the 10 key factors and 3 key issues (namely: Flexibility issues,

Transactional issues and Relational issues) underlying the current CRM strategies of the

Financing institutions was structured and filled in by the researcher based on the In

depth interviews of the Customer Relationship Managers of the Financing Institutions

and day to day observations of transactions with the customers at the branch offices of

the Financing institutions.

The results thus collated were analysed and interpreted for the further study. The details of

the study may viewed in the corresponding section in findings and analysis.

§ 3.7.2 The Quantitative tools for analysis:

Several statistical and operations research tools have been used in the current Research

work for analysis. They are as follows:

-/ Chi-square tests for homogeneity of populations

-/ Markov Chain Analysis tools

-/ Factor Analysis

-/ Analytic Hierarchy Process

-/ ANOV A (one way and 2-way)

-/ Z-tests

-/ Non-parametric tests Mann-Whitney test and K.ruskaal Wallis test

In this research the comparison of the two populations over the two regions and the

different Financing Institutions were done using 'Chi-square tests for homogeneity

- 177-

of populations' and 'ANOV A (one way and 2-way)' wherever it was deemed

applicable.

The key underlying factors guiding the current CRM strategies of the Financing Institutions

were identified using the tool Factor Analysis from the SPSS 10.0 package.

The relative importance of the key underlying factors guiding the current CRM strategies

of the Financing Institutions was adjudged using the Analytic Hierarchy Process (AHP

software developed by the Canadian conservative society).

The market share holding pattern and the future share of the Financing Institutions using

the transitional probabilities have been analyzed using the Markov Chain Analysis Method.

Several parametric tests like Z tests have been further used for ensuring the generalizability

of the results. At situations where the populations were mostly quasi-normal even Non

parametric tests like Mann-Whitney test and Kruskaal Wallis test have been used.

- 178-

REFERENCES:

1. Colman A. and Pulford B., "A Crash Course in SPSS for Windows", 3rd

Edition, Blackwell Publishing, 2006.

2. Hooda R.P, "Statistics for Business and Economics",3rd Edition, Macmillan

India Ltd., 2006.

3. Nargundkar R., "Marketing Research Text and Cases" Tata Me Graw Hill

Publishing Company Ltd., New Delhi, 2004.

4. Saaty T.L and Vargas L.G, "Models, Methods, Concepts & Applications of the

Analytic Hierarchy Process", Kluwer Academic Publishers, USA, 2001.

5. Saravanavel P. and Sumathi S, "Marketing Research and Consumer

Behaviour", Vikas Publishing House Pvt. Ltd., 2006.

6. Viswanathan P.K, "Business Statistics- An Applied Orientation", Pearson

Education (Singapore) Pte Ltd., Delhi, 2005.

7. Zeithaml V.A, Bitner, Gremler Pandit A, "Services Marketing-Integrating

Customer Focus Across the Firm"- Fourth Edition, Tata Me Graw Hill

Publishing Company Ltd., New Delhi, 2008,pp 33-100.

8. Zikmund W.G, "Business Research Methods", 7th Edition, Thomson Asia Pte

Ltd., Singapore, 2004

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