Market

Abstract: College students nowadays become a special group which is affected by the environment. Studying their consumption psychology is conducive to study consumer trends in the future. In order to have better understanding of consumer psychology and problems of students at Beijing University of Technology, the study collected the data of students and consumer psychology consumption through questionnaires. We analyze the data by gender, family income and so on. Data show that consumer psychology is influenced by gender,household income,major and grade.

Most dents at Beijing University of Technology have reasonable consumer psychology and consumer behavior. Key words:college student,consumer psychology Introduction With the development of the market economy, people’s consumption psychology is changing all the time. College students serve as an important social group. Their consumer psychology will have more and more important influence on the social consumption psychology. So, the study need to study college students’ consumption Soot Analysis/ Foreign Market Entry: Kea Invades America By yearling consumers in the whole process of purchasing behavior.

It is the Comprehensive reflection of consumers to objective consumption object and own subjective demand. There have been many surveys about college students’ consumption psychology. Some think the college students’ consumption psychology is reasonable, and the other part of people think that college students’ consumption psychology is unhealthy. Handing Fang(2006) showed college students kept a traditional concept of saving, while the consumption idea often reveal its avian-grade. He thought College students’ consumption idea and consumption patterns were more representative, he represented a trend.

J Gao(2008)considered”College students’ consumption have a strong practical color. On the premise of reasonable consumption, they will choose fashion and avian-grade consumption. Moreover, they may choose personalized consumption and respecters of brand. ” However, according to Juan Huh(2003),the current college students’ consumption structure is unreasonable, high cost and waste is serious. She claimed that college students exist high consumption, heavy enjoyment; the pursuit of fashion, the blind competition; emotional investment, large overhead and consumer spending freely, liabilities consuming.

The knowledge bevel and ideological level of college students are both high. Studying their consumption psychology is conducive to study consumer trends in the future. The study also find their problems through research and find a solution to regulate their consumption behavior. According to the above situation, we propose the following research questions. What kinds of Consumer psychology do students at Beijing University of Technology have? How does gender have influence on Consumer psychology ?

How does household income have influence on Consumer psychology? How does major have influence on Consumer psychology? How does grade have influence on Consumer psychology? The project uses questionnaire survey to get the reality of Beijing industrial university students’ consumption psychology. Through the analysis of the data can get the corresponding conclusions about college students’ consumption psychology. Method Along with the development of Electronic Commerce, many students would like to shop online.

They don’t need to go out to shopping, they could Just stay at home and surfing the Internet to make a deal with seller. They often buy something because it is very cheap rather than they really need it. Due to this advantages of online shopping, many people may shopping unreasonably. So the method is to make a questionnaire to investigate consumer psychology of Beijing University of Technology. We choose this subject because we are interested in it and it has connection with our major”advertisement. And 302 women and 198 men filled out 500 questionnaire.

Resources have been researched to look up how other people design a questionnaire to investigate students’ consumption concept. After retrieving questionnaires, we first count the choices and classify it into different category. And then we analyze people’s nonuser consumption through their answers. Finally we look up the problem of consumer psychology in Beijing University of Technology. 4 contingency tables of of the household income can make a significant impact for students on consumer attitudes, consumption patterns, consumer psychology.

The results are shown in Tables 1 to 4. Results Tablet : Gender and consumption concept Gender consumption concept Total Prefer high cost performance Choose low price as far as possible Just attention the high-quality for something important Always pursuit of high-quality Boy 302 Girl 198 Total 500 From tablet is summarized that both boys and girls are prefer to choose a high- effective consumption concept. This table shows that practical consumption holds dominant position in students’ Consumption.

However, this table also shows that girls pay more attention to the quality of the goods while they are compared with boys. It is concluded that gender is one of the important factors which can have significant impact on consumer psychology. Tablet: Household income and consumption concept Household income consumption concept the high-quality for something important Always pursuit of high-quality High- income 114 Middle-income 318 Low-income 68 From tablet, students from high-income family are more likely to pay attention to high-quality products.

Compared with students from low-income family it is found that the percentage of high family income students who think highly of product quality is 4 times as much as low family income students’ which shows that family income has a great influence on students’ consumption psychology. Tablet: Major and consumption concept Microinstructions concept Total the high-quality for something important Always pursuit of high-quality Arts 200 science students 300 Tablet shows obviously that 41% of science students think highly of high-cost performance while there are only 25% of arts students consider that.

Obviously, science students prefer to buy low-price goods while arts students prefer high- quality goods. This indicates that arts students will cost more on daily cost than science students. Tablet: Grades and consumer impulse Grades The quantity of commodity that never been used Total Little Many Some Freshman 73 second grade of college 194 Third grade of college 156 Fourth grade of university 77 Tablet shows that 64% of college students has commodities which are never been seed. It also shows that students in grade one are more likely consume irrationally.

However, when they adapt to university life gradually, they began to reduce the purchase of useless goods. In other words, consumer psychology of college students will change while their age and experience have changed. Findings Among the data what can be got is that gender does significant impact on consumption psychology. Boys and girls are bound to have different consumer psychology and even have a big gap. These students which come from high-income family pay more attention to the quality of product while the low household income dents think cost-effective is important.

We all know that income determines consumption. Therefore, students come from high-income family will spend more than the low household income students every month. They are also more prone to develop unhealthy consumer psychology. What’s more, compared with science students, arts students are more likely to shopping impulsively. Faced with commodity, science students will become more rational while arts students are emotional. The higher grades students stay in, the more mature consumption psychology they have. Conclusions Overall, the consumption concept of students in Beijing University of

Technology is reasonable for they have a reasonable consumer psychology based on different household income. It is not a mainstream to excessive pursuit of fashion and brand, comparisons of psychological or has poor awareness of savings. The students who majored in Arts should pay attention to develop their own rational consumption psychology. High-income families should note that cultivate children’s opportunities for college students to enhance their social experience. Schools are advised to set up a reasonable Consumption and Financial Planning courses to meet the requirements of college students.

Cost of Capital at Ameritrade Day 1

1. What factors should Ameritrade management consider when evaluating the proposed advertising program and technology upgrades? Why? -They should see how revenues have changed after adopting the new ad program and technology upgrades -They need to see ROI for their investments over time
2. How can the Capital Asset Pricing Model be used to estimate the cost of capital (required return) for calculating the net present value of a project’s cash flows? it will help us determine the Cost of capital or discount rate which we can use to calculate NPV, in other terms the numerator will never change (FCF), only the denominator will based on the cost of capital
3. What is the estimate of the risk-free rate that should be employed in calculating the cost of capiual for Ameritrade’s proposed investment? – the risk free rate should be the T-bills rate or the average annualized total annual returns on US government securities = 3. %. In my opinion, we should use the risk-free rate equal to yield of 20-year US government securities, because it is long-term capital investment. We may use 30-year rate, but we are investing in technology, and concerning the speed of technological enhancements, 20-year rate is optimal. So it is 6,69% 4. What is the estimate of the market risk premium that should be employed in calculating the cost of capital for Ameritrade’s proposed investment?

Market Risk Premium

Three distinct concepts are part of market risk premium:

1. Required market risk premium: the return of a portfolio over the risk-free rate (such as that of treasury bonds ) required by an investor;
2. Historical market risk premium: the historical differential return of the market over treasury bonds;
3. Expected market risk premium: the expected differential return of the market over treasury bonds. Also called equity premium, market premium and risk premium.

Market Risk Premium = Expected Return of the Market – Risk-Free Rate The expected return of the market can be based on the S;P 500, for example, while the risk-free rate is often based on the current returns of treasury bonds. First to find the Expected Return of the market, from Exhibit 6, We take the aggregate stock market and multiply by 12: = 15. 71% The Risk-free rate is 3. 8% =;gt; The market risk premium= 15. 7 – 3. 8 = 11. 9% (That is why we may use the difference between US Government Securities rate (6,69%)and historical Large Company Stocks annual returns.

But we have 2 numbers: during1950-96 and 1929-96. The difference between them is 1,3%. I think that we should use“ younger” value of 14%, because the years 1930-1949, of course, were under market economy, but at the same time there were not so stable laws, a Second World War passed, many companies at that time worked for government orders, so this number may be a bit out of overall tendencies.

In principle, how would one go about determining beta for purposes of calculating the cost of capital for Ameritrade’s proposed investment?

TO calculate Beta for cost of capital, or asset beta: We need to find first the Equity Beta = by regressing stock returns over market returns and it will then be the slope. We also need to calculate the market value of the equity of the firm which is the price per share multiplied by the total number of shares outstanding (see attached notes) A cost of capital is a weighted average of the cost of debt and equity. Likewise, the asset beta is the weighted average betas of debt and equity. We use market value proportions of debt and equity (see CAPM, p. 476). Ba = (D/D+E)BetaD+ (E/D+E)BetaE

It is common to assume that debt has no relationship to market risk; that BetaD=0 Empirical studies of corporate debt returns suggest it would be better to assign some market-related risk to corporate debt, and use estimates ranging from 0. 20 to 0. 30. To get BetaE, the equity beta for Ameritrade, we would normally run a regression of equity returns on stock market returns. That is, we would estimate the slope of the line that best fits: Unfortunately, Ameritrade had their IPO (Initial Purchase Offer) in March of 1997, so there is not enough data at the time of the case to calculate a reliable beta estimate.

So instead, we will look at comparable firms. Firms in the same industry pursuing the same types of projects will have the same sorts of risks, thus their asset betas will be approximately the same. The returns we calculate for these firms, based on stock price movement, dividends, and stock splits, are their equity betas. These are influenced by the degree of leverage each company is using (recall that higher leverage leads to higher ROE, EPS and DPS, but also leads to greater variability in earnings).

Knowing the amount of debt in their capital structures (at market values), we can calculate the asset beta for each comparable firm. Then we will average these to use as a proxy for Ameritrade’s asset beta Note: An agent that mediates sales and exchanges between securities buyers and sellers at even lower commission rates than those offered by a regular discount broker . As one might expect, deep discount brokers also provide fewer services to clients than standard brokers; such brokers typically provide little more than the fulfillment of stock and option trades, charging a flat fee for each.

The problem that must be overcome in determining the implementation decision is the uncertainty of the cost of capital.

Other Methods of Estimating Cost of Equity Capital

• The EP Method r = EPS / Stock Price
• The Constant Growth (Gordon) Model r = DIV1 / P 0 + g compute g from earnings, dividend, or cash flow growth or use the sustainable growth estimate

Equity Betas, the relationship of a given equity’s risk to that of the larger market, reflects two kinds of risk

• The risk of the business itself
• The risk that the debt a business has will prevent cash flow to equity
• We can de-lever these equity betas to strip out financial risk associated with leverage and find the implied beta for the business itself (asset beta)
• Asset beta measures the business risk only and does not change with capital structure

Often, the best way to estimate a forward looking asset beta for a company is to take a median of its industry peers asset betas (historically calculated) since one-time company events in the past will be averaged out? We can then find the equity beta for the company by re-levering the industry asset beta to the target debt / cap ratio of the company?

Exhibit 4 provides various choices of comparable firms. Which firms do you recommend as the appropriate benchmarks for evaluating the risk of Ameritrade’s planned advertising and technology investments? Determine the betas for these firms. Let us agree that Charles Schwab is a comparable firm. Their price changes, dividends,and stock split information for 1992-1996 is in Exhibit 5. If there were no stock split, thereturn, compared to the previous period, is given by: For example, if the price the previous period was $100, then wentup to $104, and in addition had a dividend of $8, the return would be +0. 12, or 12%.

In ashort time period, the returns will be much closer to 0. If there is an X for y stock split, use the formula: Copy the Return values into Exhibit 6 alongside the appropriate dates, then regress theSchwab returns against the value-weighted NYSE returns for the same period. The slopeof the line is the equity beta. Do this for the other comparable firms. Calculate the asset betas using the formula inquestion 5 (twice, once with Beta D = 0 and once with 25. 0). Average the results. This should be a good estimate of Ameritrade’s asset beta. Finally, put these results back into the equation in #2 to estimate Ameritrade’s cost of capital

COMPANY PROFILE

Sharekhan is a firm which is working under SSKI (Shantilal, Shevantilal, Kantilal, Ishwarlal) Ltd. SSKI was founded in 1922. SSKI is one of India’s oldest brokerage houses having eight decades of experience into:

• Institutional Broking
• Investment Banking Retail Broking

It is one of the founding members of the Stock Exchange, Mumbai and Pioneer Institutional Broker. SSKI Entered into Retail Broking in 1985. Share khan is the Retail Broking Arm of the BIG 82 Years old organization i. e. of SSKI and “Sharekhan” is the Brand Name given to its Retail Business. SSKI carries out its Retail Broking Activities under Sharekhan Brand Name. Sharekhan is One of India’s Leading Broking Houses. They Provides you a Complete Life-Cycle of Investment Solutions in Equities, Derivatives, Commodities & Depository Services.

But now a days it mostly concentrates on online trading account through which a customer can buy and sell shares in an instant from any part of the globe through website. It does not take into account any type of physical restriction of going to the broker for carrying out a transaction or any type of settlement of payment. It facilitates the customer a speedy and hassle free transaction.

Then Sharekhan provides a Trading A/C through this trading account, a Sharekhan customer can directly transfer his funds from his savings account i. e. from bank account to Sharekhan to his trading account without any paper work. He can buy and sell shares from the website and also view the market prices of the shares he trades on the terminal. Sharekhan. com allows trading at present only on NSE. BSE trading will be shortly available. To open an account a customer requires filling up a form consisting of 12 agreements, a passport size photograph, a residential proof, a photo ID proof and a cheque drawn of respective amount in favour of S.S. Kantilal Ishwarlal securities Pvt. Ltd. & from 22 March, 2007 cheque is drawn in favour of Sharekhan LTD itself. After opening an account with Sharekhan, a customer will be given User ID, Membership password and trading password, which will enable him to access his account and trade. Bank Connection:- Sharekhan has affiliation with 11 banks, which allows its customers to enjoy the facility of instant credit and transfer of funds from his savings bank account to his Sharekhan trading account.

The basic functions of SEBI is to protect the interests of investors in securities, to regulate the securities market & to promote its development.

Functions of SEBI

• To register & regulate the working of capital market intermediaries.
• To regulate the working of mutual funds. To promote self-regulatory organizations.
• To prohibit fraudulent & unfair trade practices in securities market.
• To promote investor’s education of intermediaries.
• To prohibit insider trading in securities.
• To regulate acquisition of shares & takeovers of companies.

Primary & Secondary Market

Primary Market In primary markets securities are bought by way of public issue directly from the company. In simple words “A market is primary if the proceeds of sales go to the issuer of the securities sold. ” This is part of the financial market where enterprises issue their new shares and bonds.

It is characterized by being the only moment when the enterprise receives money in exchange for selling its financial assets. b)Secondary Market The market where securities are traded after they are initially offered in the primary market. Most trading is done in the secondary market. To explain further, it is trading in previously issued financial instruments. Examples are the New York Stock Exchange (NYSE), Bombay Stock Exchange (BSE), National Stock Exchange NSE, bond markets, over-the-counter markets, residential mortgage loans, governmental guaranteed loans etc.

BSE is the oldest stock exchange in Asia and has the greatest number of listed companies in the world. It is located at Dalal Street, Mumbai, India. BSE was established as “The Native Share & Stock Brokers’ Association” in 1875. BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certifications. BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE has two of world’s best exchanges, Deutsche Bores and Singapore Exchange, as its strategic partners.

Today, BSE is the world’s number 1 exchange in terms of the number of listed companies and the world’s 5th in transaction numbers. An investor can choose from more than 4,700 listed companies, which for easy reference, are classified into A, B, S, T and Z groups.

• Bull Market: There are two classic market types used to characterize the general direction of the market. Bull markets are when the market is generally rising, typically the result of a strong economy. A bull market is typified by generally rising stock prices, high economic growth, and strong investor confidence in the economy.

Simply put, bull markets are movements in the stock market in which prices are rising and the consensus is that prices will continue moving upward. During this time, economic production is high, jobs are plentiful and inflation is low. A key to successful investing during a bull market is to take advantage of the rising prices. Bear Market :- The opposite of a bull market is a bear market when prices are falling in a financial market for a prolonged period of time. A bear market tends to be accompanied by widespread pessimism. A bear market is slang for when stock prices have decreased for an extended period of time.

If an investor is “bearish” they are referred to as a bear because they believe a particular company, industry, sector, or market in general is going to go down. Bear markets are the opposite – stock prices are falling, and the view is that they will continue falling. The economy will slow down, coupled with a rise in unemployment and inflation.

Buy

• We can buy the shares on market price.
• We can also negotiate and buy the shares on lower price than the market price.

Sell

• We can sell the shares on market price.
• We can also negotiate and sell the shares on higher rate than the market price.

Short sell

• Short selling starts with borrowing a stock from your broker
• You sell the borrowed stock hoping to buy it back at a lower price and return (short cover) it to your broker for a profit
• All rules for buying still apply

Short cover

• Must have already short sold the stock
• May set a maximum price limit
• All other rules for selling apply

Derivative Market

Derivative is a product whose value is derived from the value of one or more basic variables, called bases (underlying assets, index) in a contractual manner.

The underlying assets can be Equity, Forex, commodity, Bullion or any other assets. The emergence of the market for derivative products, most notably forwards, Futures and Option, can be traced back to the willingness of risk adverse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets are marked by a very high degree of volatility. Through the use of derivatives products, it is possible to partially or fully transfer price risks by locking in asset price.

For example, wheat farmers may wish to sell their harvest at a future date to eliminate the risk of a change in prices by that date. Such a transaction is an example of derivative. The price of this derivative is driven by the spot price of wheat, which is the “underlying”.

Types of Derivatives

The most commonly used derivatives contracts are forwards, futures and options.

• Forwards: A forward contract is a customized contract between two entities, where settlement takes place on a specified date in the future at today’s pre-agreed price. A Forward contract is an agreement to buy or sell an asset on a specified date for a specified price.

The salient features of forward contracts are:

• They are bilateral contracts and hence exposed to counter party risk.
• Each contract is custom designed, and hence is unique in terms of contract size, expiration date and the asset type and quality.
• The contract price is generally not available in public domain.
• On the expiration date, the contract has been settled by delivery of the assets.
• If the party wishers to reverse the contract, he has to compulsory go to the same counterparty, which often results in high prices being charged.

Futures: A future contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Future contracts are special type’s forward contracts in the sense that the former are standardized exchange traded contracts. The futures markets were designed to solve the problems that exist in forward markets. A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. But unlike forward contracts, the futures contracts are standardized and exchange traded.

To facilitate liquidity in the futures contracts the exchange specified certain standard features of the contract. It is a standardized contract with standard underlying instrument, a standard quantity and quality of the underlying instrument that can be delivered and a standard timing of such settlement.

• Options: Option is a legal contract in which the writer of the option grants to the buyer, the right to purchase from or sell to the writer a designated instrument or a scrip at a specified price within a specified period of time.

There are basically two types of options

• Call Option: An option contract that gives its holder the right (but not the obligation) to purchase a specified number of shares of the underlying stock at the given strike price, on or before the expiration date of the contract, regardless of the prevailing market price of the underlying asset. One buys a call option if one believes the price for the underlying asset will rise by the end of the contract. If the price does rise, the holder may buy and resell the underlying asset for a profit.

If the price does not rise, the option expires and the holder’s loss is limited to the price of buying the contract. Call options may be used on their own or in conjunction with put options to create an option spread in order to hedge risk. Buying a call option gives you, as owner, the right to buy a fixed quantity of the underlying product at a specified price, called the strike price, within a specified time period. For example, you might purchase a call option on 100 shares of a stock if you expect the stock price to increase but prefer not to tie up your investment principal by investing in the stock.

If the price of the stock does go up, the call option will increase in value. You might choose to sell your option at a profit or exercise the option and buy the shares at the strike price. But if the stock price at expiration is less than the strike price, the option will be worthless. The amount you lose, in that case, is the premium you paid to buy the option plus any brokerage fees. In contrast, you can sell a call option, which is known as writing a call. That gives the buyer the right to buy the underlying investment from you at the strike price before the option expires.

If you write a call, you are obliged to sell if the option is exercised and you are assigned to meet the call.

• Put Option: A put option is a financial contract between two parties, the writer (seller) and the buyer of the option. The buyer acquires a short position by purchasing the right to sell the underlying instrument to the seller of the option for a specified price (the strike price) during a specified period of time. If the option buyer exercises their right, the seller is obligated to buy the underlying instrument from them at the agreed upon strike price, regardless of the current market price.

In exchange for having this option, the buyer pays the seller or option writer a fee (the option premium). By providing a guaranteed buyer and price for an underlying instrument (for a specified p of time), put options offer insurance against excessive loss. Similarly, the seller of put options profits by selling options that are not exercised. Such is the case when the ongoing market value of the underlying instrument makes the option unnecessary; i. e. the market value of the instrument remains above the strike price during the option contract period.

Purchasers of put options may also profit from the ability to sell the underlying instrument at an inflated price (relative to the current market value) and repurchase their position at the much reduced current market price.

COMMODITY MARKET

Commodity trading is an interesting option for those who wish to diversify from the traditional options like shares, bonds and portfolios. The Government has made almost all commodities entitled for futures trading. Three multi commodity exchanges have been set up in the country to facilitate this for the retail investors.

The three national exchanges in India are:

• Multi Commodity Exchange (MCX)
• National Commodity and Derivatives Exchange (NCDEX)
• National Multi-Commodity Exchange (NMCE)

Commodity trading in India is still at its early days and thus requires an aggressive growth plan with innovative ideas. Liberal policies in commodity trading will definitely boost the commodity trading. The commodities and future market in the country is regulated by Forward Markets commission (FMC). Offerings of the Sharekhan:- Sharekhan offers both offline and online trading account.

But now a days it mostly concentrates on online trading account through which a customer can buy and sell shares in an instant from any part of the globe through website. It does not take into account any type of physical restriction of going to the broker for carrying out a transaction or any type of settlement of payment. It facilitates the customer a speedy and hassle free transaction.

The Quantitative Strategic Planning Matrix or (QSPM) is structured to show the key factors by which a company can derive its success in the industry. These factors are both internal and external. Based from the above matrix, QSPM finds that market penetration or expansion is the solution to the marketing and business strategy that Wal-Mart should and ought to follow to sustain continuous growth in the retail industry, both in United States and abroad.

Since Wal-Mart basically has dominated the retail market industry in its home based, it needs to follow the dictate of a globalized multi-national company where it has its operation internationally. The potential that an expansion in the international retail market for Wal-Mart is promising considering that it has already set strong brand recognition in United States. Strategy Selection As mentioned above, there are basically three major strategies that are available for Wal-Mart Store to follow.

These strategies are picked from possible and available means as listed in the OASM. These strategies basically are the ones the previous matrixes have shown as the best possible means by which Wal-Mart can lead its whole organization. These are forward integration, market penetration through expansion and horizontal diversification. Since what the QSPM suggests highly of a lucrative potential for earnings and more revenue for Wal-Mart if it would follow the business maneuver of market penetration, this strategy is already chosen to be applicable for the company.

All the factors for a successful path regarding a prospective strategy are answered marvelously by marketing penetration through expansion. It is said earlier that since Wal-Mart has already built strong brand recognition in United States, the potential of earning more for the company is given by the option of going international or expansion and this needs market penetration. The implementation of this strategy will constitute the unified actions of the company’s different department.

This means that each and every department of the organization will design and create business plans aligned with the primary goals and objectives of the firm. Each department will have to construct projects and operational activities for their corresponding sector that will address the realization of the adapted business strategy by the organization. Nevertheless, each department is already given a specific task or responsibility by which they can direct their action in congruent with the macro-scheme of Wal-Mart Store.

For the Research and Development Department, its primary goal will be the maintenance of the web site of the establishment. This activity is for the purpose that the company can give more information regarding the firm’s array of services plus the status, progress and development of the strategy embraced by the whole organization. Meanwhile, the overall operation department will be given the task to perform varied programs and activities directed towards the goal that more customers should be entice to patronize the company’s stores.

This can be done through various methods of addressing customer satisfaction. The marketing department on its part will be taken to task of interacting with advertising and other media agencies to achieve an aggressive ads campaign. Since the main strategy here is to penetrate the international market, the marketing department ought to create and design schemes by which to double its consumer base in the new location and territories where Wal-Mart Stores will be built.

The automobile industry today is the most lucrative industry. Due to the increase in disposable income in both rural and urban sector and easy finance being provided by all the financial institutes, the passenger car sales have increased at the rate of 38% per annum in June 2005-06 over the corresponding period in the pervious year. Further competition is heating up in the sector with a host of new players coming in and other like Porsche, Bentley, Audi, and BMW all set to venture in the Indian markets.

One factor that could help the companies in the marketing of their product is by knowing and creating a personality for their brands. This report attempts to answer some of the questions regarding brand personality of selected cars in India by conducting the market research. This report is categorized into parts, deals with introduction to brand personality, companies selected, product and the industry. The automobile industry today is the most lucrative industry.

Due to the increase in disposable income in both rural and urban sector and easy finance being provided by all the financial institutes, the passenger car sales have increased at the rate of 25% per annum in June 2005-06 over the corresponding period in the previous year. Further competition is heating up in the sector with a host of new players coming in and others like Porches, Bentley, Audi, and BMW all set to venture in Indian markets. One factor that could help the companies in the marketing of their products is buying Behavior of the consumers.

The Buying Behavior of the customers can be studied by knowing their perceptions about the cars in the market and about the possible entrants in the market. One such technique is by knowing and creating a personality for the brands. This personality sketching will help in knowing what a customer (or a potential customer) thinks about a given brand of car and what are the possible factors guiding a possible purchase. Similarly, the idea of measuring the customer satisfaction will serve the same purpose of determining the customer perception.

Thus, by measuring the” willingness of existing users of a car to recommend it to others” will help the car manufacturers to chalk out the entire Customer Buying Behavior. The reports shall attempt to answer some of the questions regarding brand personality of selected cars in India by conducting a market research. The market research will be helpful for the new car entrant companies in India to find out the possible gaps between the customer expectations and the present market offerings. This way these companies will be able to find their share in the ever-expanding Indian market pie.

It is true fact that if you are satisfied you recommended to others. Word of mouth and customer satisfaction play a very important role in determining market perception about an automobile. It is the market perception that determines the success of a company and so it is very important for the car manufacturers to measure the “willingness of existing users of a product to recommend it to others”. The same is a lot of interest to customers as well for it helps them make the purchase decision. Is an Indian consumer ready for more? Which is the driving motive behind the effective demand of the car?

How the coming of new models like swift does is going to effect the buying decision of consumer and especially the Tata 1 lakh car. In other words, from the spread of choices offered by various manufacturers under various segments, of which one the customer will finally turn the ignition on and drive. Customer satisfaction index: some of the most advance thinking in the business world recognizes that customer relationships are best treated as assets, and that methodical analysis of these relationships can provide a road map for improving them

“If you cannot measure it, you cannot improve it. ” – Lord William Thomson Kelvin (1824-1907). “As one of the measurements of the performance of the quality management system, the organizations shall monitor information relating to customer perception as to whether the organization has met customer requirements. The method for obtaining and using this information shall be determined” The requirement has been there in the QS9000 standard clause 4. 1. 6 which says: “…

Trends in customer satisfaction and key indicators of customer dissatisfaction shall be documented and supported by objective information. These trends shall be compared to those of competitors, or appropriate benchmarks, and reviewed by senior management. ” There is obviously a strong link between customer satisfaction and customer retention. Customer’s perception of service and quality of product will determine the success of the product or service in the market. With better understanding of customer’s perceptions, companies can determine the actions required to meet the customer’s needs.

They can identify their own strengths and weaknesses, where they stand in comparison to their competitors, chart out the path future progress and improvement. Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the company. Customer expectations are the customer-defined attributes of your product or service. We cannot create satisfaction just by meeting customer’s requirements fully because these have to be met in any case. However falling short is certain to create dissatisfaction.

From the beginning of this world we have seen or to put it more correctly heard of God creation of this world. This demonstrates the immense power of imagination possessed by God. His imagination is unequal to anything we can think of and he has managed and maintained everything up to this day. We are all given a small amount of this God given creative power.

Some of us just happened to never see pass our limitations and allow our imagination power to grow freely. Persons that have good imagination or creative ideas are needed in today”s business world of fast changing demands and supply. Business calls for managers and employees with quick minds that know how to solves problems quickly and their imagination are not limited. Being creative provides numerous benefits for companies and that the management level it should be replicated down to the levels of employees level.

What precisely is creativity, one might ask? Basically it is that processes of generating new ideas. It does not matter what that idea might be once it is a bit different from what was their already it”s a creative idea. Sometimes creativity is confused with innovation, which is about planning and implementing ideas. By being creative with in companies and businesses the amount of benefits increases. Not being creative set back companies to the classic school of management, which does not produce much growth for cutting edge businesses that wish to excel.

Creation of new markets by diversity is a benefit that creativity brings about. As it can be seen in 3M case on page 35 of the Management organization textbook. This small mining company 3M (Minnesota Mining and Manufacturing Company) was nearly bankrupt but due to the quick reaction by management things were quickly turned around from heading down hill. Seeing that thing were failing in the mining venture they made a key decision to turn from that and focus on the mine”s output- abrasive grit.

This carried them off into focusing on sandpaper and grinding wheels. These areas were also somewhat difficult. Over time the company continued to experiment with a Varity of products ideas. Many of there ideas came from its employees and customers. In this we can see that they implemented more recent schools of management theories such as behavioral, system, and contingency. Management listened to its employees and customers. Which does not happen in the classical school. New ideas helped this saved this company but most importantly of all was that willingness to accept and implement these ideas by management.

With creativity skills business are able to use or see new ways of satisfying their customers needs. Managers should know that the survival and profitability of their organization are directly linked to meeting or exceeding customers needs and expectations. They satisfy customers by guaranteeing that all individual efforts and their results posses guilty.

This can be demonstrated in the automotive industry. From the early ages of this automotive industry it can be seen that different ideas in creative design have lead to some of the most successful automotive companies. Toyota by using new fuel-efficient technology produces cares that run longer distances with the same amount of fuel. This attracts customers because they can use the some amount of fuel and increase mileage of their travel. Hereby we see that the ultimate goal is achieved increased revenue by the creative power of new idea and innovation in technology.

Increased revenue is usually the goal of many business companies and by implementing new ideas and new and more efficient way of carrying on business organizations can move forward. In the 21st century without managers and employees who do not think that they are creative need to really “check if they still want to have jobs”. As given in the hand out there are basically 3 saying which limit persons thinking they are 1. I”m not creative. 2. I don”t know how to be creative. 3. It”s not ok to e creative around there. We need to overcome these limits and release our minds from these mental blocks.

The creative powers are instilled in each of us as children but because of lack of use or prohibition of use. Some of use grow up thinking so logical (lift side brain thinking) that we need to practice to be creative. The (right side brain thinking) the creative side need to be use along side the left side to create the most fantastic results.

It is the managers position to instill and encourage creativity at all levels of management. First line or operating management level will have to be more creative than that top and middle management. This is because they are the supervisor team leaders. Who over see the work of non-management people.

Organizations or businesses can do a wide Varity of thing to increase creativity. The simple structured techniques like brain storming and mind mapping are good places to start. Some other methods used to access creative potentials are storytelling, dance, mask work, visualization, poetry, painting, sculpting and metaphor. It is also important to note that some methods will work will with certain organizations and others will not. Creativity as seen is an essential core requirement to the survival in the business world. More and more person and organizations are realizing this and taping into this natural skill and reaping the benefits. Therefore as student”s teachers, workers and managers we should all encourage and promote these creative powers.

Introduction

Metropol is one of the leading Security Companies in Canada. Mainly its business depends upon un-armed security guards. The company is well known for its quality service and customer service and it targeting commercial sector primarily. However the management at Metropol has decided to expand its market share and to form a new mission statement, so that they can effectively identify the future opportunities they want to work with.

Canadian Security Market and Metropol

The security market in Canada is huge and has many key players in it. Metropol is one of the major player along with its competitors such as Pinkertons. The industry offers products like, un-armed uniformed guards, mobile patrol, investigations, alarms, fences, locks, safes and consulting. The industry is very competitive as it is very easy to enter the market and start a new business. As the clients are more interested in cost of the security, companies are forced to keep their margins as low as possible. The analysis of the Canadian security market is done by using Porter’s 5 points.

1. Threat of substitute products:

This is the major competitive factor for all the companies as there are many companies who are offering the security products. Metropols major business is of providing security guards where as there are many other companies who are also providing the security guards. Clients’ perception about the products is very much same, most of the customers do not differentiate between the two companies quality of service they provide, this makes the customer to switch easily from one company to other.

The cost of the switching on the other hand is also less, as the customers’ perception about two different services is same. Where as, there is a growing sense among the customer of quality security and thus they are considering Metropol. This is an opportunity for Metropol to attract such customer and make more customers like them.

2. Threat of New Entrants:
   Due to the growth in security needs of the businesses the security service providing industry in Canada is also growing. It is due to many reasons, such as locations of plants and offices at remote locations, growing number of crimes and increasing number of un-employed people in the country. Also there is a big gap between the security provided by the government (fire and police) and the security needed by the company.

Many new companies are entering to fill this gap of different segments and in current segments, as the investment is very low and experience is all you need. Metropol has the opportunity to capture the market where they are not present, before there is a new entrance by other company.

3. Competitive Rivalry:
   Metropol has two major competitors the Pinkertons and Burns. Pinkertons has 12.5% market share where as Burns has 7.5% and Metropol has 7% of the market share. It means that Metropol is not far away from becoming the markets most customer company. Metropol considers all other companies as its competitors as well, as it is operating heavily in the west region of Canada and not that much in Ontario, thus they can capture market in that region as well. Its competitors are already lowering the prices and are capturing the new customers on the basis of price competency.

Where as Metropol has the reputation and has the better profit margin than its competitors. The competitors of  Metropol is also providing ESDs in a complete package, where as Metropol is more focusing on guards as its major business lies there. ESDs segment is the fastest growing business in the industry. The major competition in the industry is the price, and this is due to the small poorly managed companies and the big multi nationals who actually started this strategy in order to capture the market share. Metropol can work on ESDs segment in order to compete with their competitors.

4. Bargaining power of Customers:
   Due to the high elasticity of demand, customer has the power to bargain. The switching cost is low, customers perception about the substitute product is same and substitute products are available. This has reduced the profit margins for the companies and has increased the competition with the greater bargaining power in the hand of customers.

5. Bargaining power of suppliers:
   As the industry is operating on low margins and low switching cost of customers, the bargaining power of the suppliers has been almost gone. Now its all about providing service needed by the customer on his (customer’s) desired rates. Where as Metropol has a advantage as they have a reputation and are known for their quality, their customer also value their services, hence giving some bargaining power to Metropol.

Metropol and Competitive advantage

Three types of strategies can give a company competitive advantage, Cost leadership, Differentiated and focused. Currently Metropol is following a focused strategy, which has actually worked for them and has made them the most successful company in terms of quality service, customer dealing, reputation and profit margins. Currently company is only targeting those companies who actually understands the need of better security and differentiates between security services given by different firms. On the other hand almost all the competitors of the company are following the cost-leadership strategy and are increasing the price competition in the market.

That is the reason Metropol has failed to capture the most market share, as the customer at the time don’t see a difference in services provided by the company or they don’t understands the need of better security in future. Metropol has effectively made their customer loyal by educating seminars for their customers and telling them that how much are they safe in their security, while others are loosing if they are not using Metropol.

Now to increase the market share of the company, Metropol should adopt differentiating strategy. As their product is different and is better than any one else they should increase their marketing campaigns and educating seminars and should invite the businesses who are not using their services. This will create awareness about the need of good security service and people would think about having the better security and would be ready to spend more money.  This will allow the company to capture more customer and charge little higher with a greater profit margin. This differentiated strategy would change the perceptions of the customers and people would differentiate between the security provided by different companies.

Strategic Strengths and Weaknesses of Metropol

Strength:

• Provides greater value to its customers.
• Metropol has 24 hours dispatch serves, which other don’t have.
• Company provide extra and special training to their guards for dealing with , fire, hostage taking, and bomb threats. This differentiates it from its competitors.
• Conduct educational seminars for their clients. This added the value in their product and reputation and increased the switching cost
• Cost control was a major key of success for Metropole in general. Infect Metroploes’ average was higher than of the industry.
• Metropol’s supervisors and customer services representatives has maintained a very good reputation of quality service, where as over all industry has a very bad image and reputation.

Weaknesses:

• Despite of having other services than unarmed guards, 90% of the revenues depend up on unarmed guards.
• Metropol spends $100,000 more in annual cost as compared to its competitors.
• Company has high employee turn over ratio just as the industry has.
• Spends more on insurance than on actual product.
• Company does not provide their own hardware and arranges it from outside, this makes a cost little higher. Where as customers prefer to have single security company providing them services in order to avoid over lap or any gap in the security system.

Metropol Mission Statement

To expend the business to new geographic locations and capture new markets such as Home security consumers by differentiating our product and service in the eyes of customers and to make them (customers) realize about the importance of quality security service and the future need of it.

Strategic options of Metropol

Following are the strategic options identified by Pat for the future of Metropol.

• Geographic expansion
  Expending business to new cities or even countries. This will increase the market chare of the company as will as the revenues of the company. Currently company is operating majority of their business in the western Canada.
• Focused strategy
  it means that company should only target to the customers who are willing to work with the company, and that company must put more focus on its customer rather than attracting new customers. In other words keeping you current customers loyal and satisfied. This strategy has worked well for the company in the past years.
• Expanding the range of products and services offered by the company
  Customers prefer using single security company for their complete security solution in order to avoid any gap. Where as Metropol has only limited range of products in its product line. Currently they arrange hardware for their customer from outside.
• Diversification into other areas other than the security
  Pat considers it as an option, meaning diversifying into other businesses such as Nursing care and secretarial work provider. These would be contractual jobs. The previous attempt of the company to diversify has failed completely as it required professional skills in field other than security.
• Serving the consumer home security market
  Metrolpol is also thinking or entering into home security business, where products are small, like alarm, lights, mobile home checks, locks and safes. These products are small and have good profit margins. Currently in Canada people don’t feel that they have a need for home security and their perception about home security is, that we don’t need it.

Recommendations

• As also mentioned in the mission statement, Metropol should expand its geographical locations of business. Currently they are operating well in western region and has 25% of the market share, but they can increase their 7% over all market share by capturing market in the Ontario and Toronto where business is available and is on growing trend. As mentioned in the case it would be wise to merge with some companies in that region and work with them with the name of Metropol. Also capturing the business of Northern Telecom can provide a very good start to the company. Merging with small company and then making them better will require little investment where as the greater infrastructure in comparison.
• As the company will expand its business, it is necessary to change the strategy as well. As is new markets company has to attract the new customers and that can be very well done by making people aware of their security need and then differentiating your product and then make them buy.
• As the company will expand its business it is a great opportunity for the company to capture the new market that is home security business. As Pat mentioned in the case study, that talks have taken place between Metropol and some suppliers to provide them hardware and ESDs on the low rates with the branded label of Metropol, it will enhance then marketing campaign of the company.
• As mentioned in the mission statement, on of the aim of the company is to change people attitude and perception about the security services provided by different companies, Metropol educational programs must be continued with a larger audience.
• Metropol should run a marketing campaign focusing on their different product and realizing people about the need of better security service in affordable price. This will help the company in changing the attitude and the perception of the customer and will provide a chance for a company to capture new customers, as people would like to have better security and Metropol is already well know for their service and quality.