The term ‘portfolio’ is usually applied to combinations of securities, but the principles underlying security portfolio formation can be applied to combinations of any type of assets, including investment projects. Most firms diffuse their efforts across a range of products, market segments and customers in order to spread more thinly the risks of declining trade and profitability. If a firm can reduce its reliance on particular products or markets, then it can withstand more comfortably the impact of a major reverse in any single market. Diversification can generate some major strategic advantage, for example, the wider spread of activities, the greater the potential access to high performing market sectors.
The modern portfolio theory was developed by Harry Markowitz, presenting it in 1952 in an article entitled ‘Portfolio Selection’. Markowitz was the first to show the important benefits from diversification that arise from combining individual securities into portfolios and to demonstrate that the portfolio decision problem of an investor is equivalent to the maximisation of his or her expected utility. Modern Portfolio Theory explores how risk averse investors construct portfolio in order to optimise market risks against the expected return. The theory suggested that we could reduce the standard deviation of returns on asset portfolio by choosing assets, which do not move together.
Allocating funds to a single security can be an extremely risky investment. The primary reason for investing in portfolios is diversification, that is, the allocation of funds to a variety of securities in order to reduce risk. As the number of securities held in the portfolio increases, the overall variability of the portfolio’s return, measured by its standard deviation, diminishes very sharply for small portfolios, but falls more gradually for larger combinations. This decline in risk is achieved because the exposure to the risk of volatile securities can be offset by the inclusion of low-risk securities or even high-risk ones, so long as their returns are not closely correlated. The key point here is that not all the risk of individual securities is relevant for assessing the risk of a portfolio of risky shares. The total risk of a portfolio is composed of two components:
1. Specific risk. The variability of a security’s rate of return due to factors unique to the individual firm.
2. Systematic risk. The variability of a security’s rate of return due to dependence on factors which influence the return on all securities.
Specific risk refers to the expected impact on sales and earnings of largely random events like industrial relations problems, equipment failure, R achievements. In a portfolio of shares , such factors tend to cancel out as the number of component securities increases. Systematic risk refers to the impact of movements in the macro-economy, such as fiscal changes, swings in exchange rates and interest rate movements, all of which cause reactions in security markets, captured in the movement of an index reflecting securities prices in general. No firm is entirely isolated from these factors, and even portfolio diversification cannot provide total protection against this form of risk. For this reason, it is often called market risk.
Reduction in the total risk of a portfolio is achieved by gradual elimination of the risks unique to individual companies, leaving an irreducible, undiversifiable, risk floor.
Substantial reduction in specific risk can be achieved with quite small portfolios, and the main scope for risk reduction is achieved with a portfolio of around thirty securities. To eliminate unique risk totally would involve holding a vast portfolio comprising all the securities traded in the market. This is called market portfolio and has a pivotal role in the CAPM, but for the individual investor it is neither practicable nor cost-effective, in view of the likely scale of the dealing fees required to construct and manage it. Since relatively small portfolios can capture the lion’s share of diversification benefits, it is only a minor simplification to use a well-diversified portfolio as a proxy for the overall market such as one of the well-known market indices
1. It is clear that risk-verse investors should diversify
2. Investors should not expect rewards for bearing specific risk
3. Securities have varying degree of systematic risk
The rate of return of a portfolio can be described by a probabilty distribution. The assumption is that such a probability distribution can only be characterized by its expected return and the variances of rates of return. The rate of return on a two-security portfolio is a weighted average of the rates of return on the two individual securities in the portfolio, where the weight associated to a security is the proportion of portfolio funds invested in the security.
The expected return on a portfolio E(R) comprising 2 assets a and b, whose individual expected returns are E(Ra) and E(Rb) and a and 1- a are respective weightings.
The riskiness of the portfolio expresses the extent to which the actual return may deviate from the expected return. This may be expressed in terms of the variance of the return s2 or in terms of its standard deviation s.
Portfolio analysis deals with the calculation of the efficient frontier. The outputs will be an efficient frontier; a set of portfolios with expected return greater than any other with the same or lesser risk, and lesser risk than any other with the same or greater return.
Portfolios lying along the efficient frontier dominate all other risk/return combinations lying to the right or below the efficient frontier. They are clearly better than any in the interior of the shaded area.
The individual securities can be combined into portfolios. All the possible combinations represent the set of available investment opportunities. Among these opportunities we prefer the portfolios with the higher expected returns and lower standard deviations. Once the efficient frontier is identified, the investor’s risk/return preferences are taken into consideration The final choice of an individual investor is dependent upon the following two factors: (a) his/her preferences regarding a particular risk/return combination; and (b) relevant investment opportunities on the efficient frontier. A combination of these two factors gives the investor’s optimal portfolio, i.e., the efficient portfolio that maximazes his/her expected utility with reference to the risk/return trade off.
Investors will prefer one of the portfolios on the efficient frontier and their selection depends upon personal preferences for a low portfolio expected return versus a larger and more risky portfolio expected return.
However we cannot specify an optimal portfolio, except for an outright risk-minimizer, who would select portfolio D or the maximizer of expected return who would settle at poit A. A risk averse investor might select any portfolio along AD, depending on his degree of risk aversion, i.e, what additional return he would require to compensate for a specified increase in risk. So, the most desirable combination of risky assets depends on the decision -maker’s attitude towards risk. If we know the extent of his or her risk-aversion that is, how large a premium he/she requires for a given increase in risk, we could specify the best portfolio.
The portflolio combination model, although having limited operational usefulness for many investment projects, provides the infrastructure of a more sophisticate d approach to investment decision-making under risk, The capital asset pricing model (CAPM). This is based on an examination of the risk-return characteristics and resulting portfolio opportunities of securitires. The CAPM explains how individual securities are valued, or priced, in efficient capital markets. Essentially, this involves discounting the future expected returns from holding a security at a rate which adequately reflects the degree of risk incurred in holding that security. A major contribution of the CAPM is the determination of the premium for risk demanded by the market from different securities. This provides a clue as to the appropriate discount rate to apply when evaluating risky projects.
The second part of optimization involves the risk-free asset.. Because the portfolio expected return is the weighted average of its component expected returns, whereas its standard deviation is less than the weighted average of the component standard deviation, portfolio is less than perfectly correlated assets always offer better risk-return opportunities than the individual securities on their own. The lower the correlation between the assets, the greater the gain in efficiency.
In the case of two risky assets, the solution for the weights of the optimal risky portfolio can be shown as follows
5 10 15 20 25
CAL is the capital allocation line. It depicts all the risk-return combinations of risky and risk-free assets available to investors. The slope of the CAL equals the increase in the expected return of the chosen portfolio per unit of additional standard deviation.
The CAL that is supported by the optimal portfolio P, is tangent to the efficient frontier. This CAL dominates all alternative feasible lines
Now I am going to discuss relevant risk measures for portfolios and models regarding the way capital assets are priced in relation to their risks. was originally erected by Sharpe (1964) to explain how the capital market sets prices. If the market, that vast impersonal mass of investors, sets a value on a security which implies a particular discount rate, it is reasonable to conclude that any further activity of similar risk to existing ones should offer at least the same rate. This argument depends critically on the market prices being unbiased indicators of the intrinsic value of firms, thus resting heavily on the validity of the Efficient Market Hypothesis. The CAPM postulates that when the capital market is in equilibrium, i. e. all securities are correctly priced, the relationship between risk and return is given by an expression known as the security market line (SML). In a competitive market, the expected risk premium varies in direct proportion to beta. The equation of the SML states that the required return on shares is made up of two components: the return on a risk-free asset, plus a market risk premium, which varies according to the Beta of the share in question. The CAPM formula consists of three elements: the risk-free rate, the risk premium on the market portfolio and the Beta coefficient.
E(Ri) = the expected return on security or portfolio i.
Rf = the return on the riskless security.
E(Rm) = the expected return on the market portfolio.
Bi = the beta coefficient of a security or portfolio i.
The CAPM indicates that an investor can obtain above the riskless return only by taking on additional risk. The Beta coefficient for security I can be expressed as
Bi = Qim/Q2 m the CAPM indicates that a portfolio’s return is
directly determined by a single risk factor, beta.
Where Qim = the covariance between the rate of return on the market portfolio and the rate of return on security I, Q2m = variance of rate of return on portfolio m.
If Beta is 1, then the required return is simply the average return for all securities, i.e. the return on the market portfolio. The higher the Beta, the higher the risk premium and the total return required. A relatively high beta does not guarantee a relatively high return. The actual return depends partly on the behaviour of the market, which acts as a proxy for general economic factors.. Similarly, expected returns for the individual security hinge on the expected return for the market.
By acquiring investments that are not subject to the same influences on market value, a Mr. can reduce covariance
within the portfolio and increase the safety of the trust capital. This is the principal benefit flowing from diversification of the
portfolio. It is the central pillar of modern portfolio theory.
The cornerstone of Modem Portfolio Theory, developed by Harry Markowitz, is the efficient frontier consisting of portfolios
with a maximum level of expected return, given some investor-selected level of risk. In his landmark Joumal of Finance paper,
“Portfolio Selection,” published in 1952, Markowitz legitimized the concept of risk diversification. He demonstrated that the
riskiness of a portfolio depends on the covariance of its holdings, not on the average riskiness of the separate investments.
Aggregate portfolio risk for all potential portfolios is determined by the sum of the covariances of its holdings. For a given level
of risk, only the portfolio with the maximum level of expected return belongs on the efficient frontier. Importantly, such a
portfolio could be determined through a new construct he developed, called portfolio optimization.
Pike, R. and Neale, B.,1996. Corporate Finance and investment. Decisions and Strategies. Second edition. Prentice Hall Europe. HG5436 P4
Diacogiannis, G., 1994. Financial Management. A modelling approach using spreadsheets. McGraw-Hill Book Company.
c. Portfolio analisys ; rateof return, efficient frontier
In the case of PLC, there are two important messages. First, it is not enough just to spread your activites. Different activities are subject to different types of risk, which are not always closely related. The factors affecting the profitability of packaging operations, such as…….. If changes in these influences are random and relatively uncorrelated, diversification may significantly reduce the variability of company earnings. Second, to generate an appreciable impact on overall returns, diversification must usually be substantial in relation to the whole enterprise. These are the key
Pike, R. and Neale, B.,1996. Corporate Finance and investment. Decisions and Strategies. Second edition. Prentice Hall Europe. HG5436 P4
Diacogiannis, G., 1994. Financial Management. A modelling approach using spreadsheets. McGraw-Hill Book Company.
Project On Detergent
With the increase in per capita income and wide range of choices being available, consumers are main focus for many detergent producing organizations. With competition at its all time peak and with changing trends in demand the companies are finding it hard to survive or to retain their market share.
In order to lure the consumers, companies study the quantity being purchased by consumers and at what price.We here try to find out how these factors, confining ourselves to detergent market of India, and many other factors effect the demand of consumers for detergents. Executive Summary This is based on our research work on Detergents, being FMCG, it made us go to households and interact to find out the consumer’s buying behavior. Our objectives were to find out what are the main features consumers look in detergents while buying, brand loyalty towards a particular brand, major reasons of switching from one brand to the other.
To gather the data we used the questionnaires method. This data was fed in a data analysis tool SPSS. With the help of which we analysed and interpreted the data gathered, pertaining the buying behavior of consumers. Along with questionnaires, we also used Internet to find out about the detergent industry and the various brands available.
There are more than 10 brands available in the Indian market, but we have chosen 6 major brands. The Indian laundry market is Rs 5000 crore, with HUL enjoying highest 38% of share, followed by others like P&G, Nirma, Ghari etc.Detergent bar comprises of 43% of market share and powder enjoying the rest 57%. The brands which we tapped are Nirma, Ariel, Surf, Tide, Wheel, Surf Excel and leaving others as option.
Competition in this market is really high with HUL, P&G, Nirma etc strategizing and innovating to capture the market. The research design used in our research was descriptive incorporating knowledge from secondary information analysis, qualitative research, methodology selection, question measurement & scale selection, questionnaire design and sample design to be used.And simple random sampling was done. Target customers were mainly housewives, bachelors and others who are using detergents.
Introduction to Project Detergent Detergent is a material intended to assist cleaning.The term is sometimes used to differentiate between soap and other surfactants used for cleaning. As an adjective pertaining to a substance, it (or “detersive”) means “cleaning” or “having cleaning properties”; “detergency” indicates presence or degree of cleaning property. The term detergent by itself is sometimes used to refer specifically to clothing detergent, as opposed to hand soap or other types of cleaning agents.
Plain water, if used for cleaning, is a detergent.Probably the most widely used detergents other than water are soaps or mixtures composed chiefly of soaps. However, not all soaps have significant detergency and, although the words “detergent” and “soap” are sometimes used interchangeably, not every detergent is a soap. The term detergent is sometimes used to refer to any surfactant, even when it is not used for cleaning.
Ingredients that modify the foaming properties of the cleaning surfactants, to either stabilize or counteract foam Ingredients to increase or decrease the viscosity of the solution, or to keep other ingredients in solution, in a detergent supplied as a water solution or gel Ingredients that affect aesthetic properties of the item to be cleaned, or of the detergent itself before or during use, such as optical brighteners, fabric softeners, colors, perfumes, etc.
Ingredients such as corrosion inhibitors to counteract damage to equipment with which the detergent is used Ingredients to reduce harm or produce benefits to skin, when the detergent is used by bare hand on inanimate objects or used to clean skin Preservatives to prevent spoilage of other ingredients Sometimes materials more complicated than mere mixtures of compounds are said to be detergent.For instance, certain foods such as celery are said to be detergent or detersive to teeth.
There are several factors that dictate what compositions of detergent should be used, including the material to be cleaned, the apparatus to be used, and tolerance for and type of dirt. For instance, all of the following are used to clean glass. Other detergent surfactants came from saponin sand ox bile. The detergent effects of certain synthetic surfactants were noted in 1913 by A. Reychler, a Belgian chemist. The first commercially available detergent taking advantage of those observations was Nekal, sold in Germany in 1917, to alleviate World War I soap shortages.
Detergents were mainly used in industry until World War II.By then new developments and the later conversion of USA aviation fuel plants to produce tetrapropylene, used in household detergents, caused a fast growth of household use, in the late 1940s. In the late 1960s biological detergents, containing enzymes, better suited to dissolve protein stains, such as egg stains, were introduced in the USA by Procter & Gamble. Indian detergent market The first companies to manufacture detergents in India were HLL and Swastik.
HLL test marketed Surf between 1956 and 1958 and began manufacturing it from 1959. Swastik launched Det, a white detergent powder, in 1957. By 1960, Det had made rapid inroads in eastern India.Surf, a blue detergent powder, became the national market leader with dominant positions in the west, north and south.
In the early 1960s, the total volume of detergents manufactured in India grew from around 1600 tonnes to 8000 tonnes. HLL dominated the market with a share of almost 70 % compared to Det’s 25%. In 1966, another player entered the fray. Tata Oil Mills Company (TOMCO) 2 launched its detergent powder ‘Magic’.
Detergent bars comprise 43 per cent of the total market and detergent powders comprise the balance 57 per cent. However, the detergent bar market is shrinking in India Detergent Brands NIRMA Various Products offered by Nirma are: Nirma Washing Powder This product created a marketing miracle, when introduced in the domestic marketplace. In 1969, when the detergents were priced so exorbitantly that for most of the Indians, it was a luxury item.
Nirma envisioned the vast Fabric Wash market segment and sensed a tremendous potential therein. This product was priced at almost one third to that of the competitor brands, resulting into instant trial by the consumers.Owing to its unique environment-friendly, phosphate-free formulation, the consumers became loyal to this brand, helping it to over-take the decades’ old brands, in terms of volumes. This brand had been ranked as the “Most widely distributed detergent powder brand in India” as per All India Census of Retail Outlets carried out in 435 urban towns by the AIMS (Asian Information Marketing & Social) Research agency [Brand Equity – The Economic Times, March 11, 1997].
As per the ORG-MARG Rural Consumer Panel [December 1998] survey, Nirma brand has been ranked as highest in terms of penetration in washing powder category [BT Rural Market Watch, Business Today, June 22, 1999].Super Nirma Washing Powder Exploding the myth that ‘better quality always demands higher price”, Nirma introduced a spraydried blue coloured washing powder in the premium segment, in 1996. Available in 25g, 500g and 1000g packs, this product out-classed its competitor brands. Though, priced almost 40 % lesser, thus providing a very attractive ‘value-for-money’ proposition.
This brand, within a short span of two years, had cornered substantial market share in the premium detergent segment and continues to perform well. Nirma Popular Detergent Powder To cater to the needs of the specific target audience, Nirma launched a good quality product at a very affordable price.The objective is to convert the non-users of detergents into users and also prevent the competitors and local manufacturers to lure away the prospective Nirma consumers by sub-standard products. This product has created a loyal consumer base of its own and has established substantial amount of volumes.
It is available in pack sizes of 500g and 1000g pack sizes. Nirma Detergent Cake Deriving inspiration from its success in the Detergent Powder market, Nirma expanded its product portfolio by introducing the “Nirma detergent cake” in 1987. Here again, the excellent pricequality equation tempted the consumers to try the product. Available in 125g and 250g pack sizes, this brand has done exceptionally well.
AIMS survey ranked Nirma detergent cake as “The Most widely distributed detergent cake brand”.Due to its unique formulation, this product offers benefits like less melting in water, better stability, and therefore lasts longer. As per the ORGMARG Rural Consumer Panel[December 1998] survey, Nirma brand is ranked highest in terms of penetration in washing cakes / bars category [BT Rural Market Watch, Business Today, June 22, 1999]. Super Nirma Detergent Cake To meet the growing aspirations of consumers and to offer them value-chain product portfolio, Nirma introduced Super Nirma Detergent Cake, in 1992.
Available in 125g and 250g pack sizes, this product, within a short span, convinced the consumers of competitor brands to switch their loyalty towards Super Nirma detergent cake.With a high detergency value, this product offers quality wash to their consumers. Super Nirma Detergent Cake was ranked as the fastest Climber for the year 1997-98 in the detergent cake/ bars category. Nirma Popular Detergent Cake The positioning of Nirma Popular Detergent Cake is similar to that of Nirma Popular Detergent Powder.
This product is available in 125g and 250g pack sizes, targeted to first-time detergent cake user segment. WHEEL Wheel – your smart laundry choice The largest laundry brand in Bangladesh, Wheel has always been focused in making laundry a pleasurable and delightful experience for the housewives.Based on its years of understanding of its consumers and huge experience in laundry, Wheel has been continually improving its formulation and form to suit the modern day users. Different formats and pack sizes of Wheel has been designed to cater to the requirements of users with different family sizes, laundry requirements and income groups.
Wheel Laundry Soap Wheel Laundry Soap has a perfect formulation that not only gives great clean, but also is gentle to both hand and cloth. The soap comes in individual shrink wrap designed to ensure that the consumers receive a fresh soap with great lemon fragrance. The improved formulation of Wheel Laundry Soap also helps the users to wash more number of clothes than the traditional ball soap.Wheel Washing Powder A dominant market leader in the detergent segment, Wheel Washing Powder is known for its great cleaning ability with minimum effort.
The superior formulation of Wheel Washing Powder is enhanced with the power of lemon, which not only removes the tough dirt in your cloth, but also leaves a pleasant lemon fresh fragrance well after washing. The convenience provided by Wheel Washing Powder has relieved many housewives from the laborious laundry process of the tradional Ball Soaps. ARIEL Ariel is a marketing line of laundry detergents made by Procter & Gamble. It is the flagship brand in Procter & Gamble’s European,Mexican, Japanese, Brazilian, Peruvian, Turkish, Filipino, and Venezuelan portfolios.
Ariel first appeared on the UK market circa 1968 and was the first detergent with stain-removing enzymes. It was a high-sudsing powder designed for twin-tub and top-loading washing machines. With the rise in popularity of automatic front-loading washing machines, a suitable low-suds variant was launched in the early 1970s. The mid-eighties saw the range expanding to encompass liquid detergent and compact powder.
The compact powder was originally known as “Ariel Ultra”; and was subsequently reformulated into the nineties as “Ariel Futur”. This was possibly in response to Unilever’s launch of the ultimately doomed “Persil Power”, which was seen to damage clothes.Compact powders never proved popular in the UK; so when the tablet variant appeared in July 1999, the compact version disappeared. In 2003, Ariel brought out its quickwash action to its detergents, to allow consumers to be able to do their laundry on a quickwash cycle.
In 2006, Ariel started its “turn to 30” campaign to inspire consumers to wash in cool water so that energy can be saved. Ariel launched a concentrated version of their liquid detergents named Ariel Power in the spring of 2008. In October 2008, Ariel launched their new Excel Gel product which can be used in temperatures as low as 15 degrees celsius. This product was launched under Ariel’s “cold is the new hot” campaign.
The latest move comes in the wake of the high profile launch of Tide detergent bar. Tide and Ariel always created problems for Surf and Rin. The migration of Rin Supreme bar to Surf Excel bar is aimed at countering Tide. HLL has announced a drastic reduction in price by Rs 20 per kilo on Surf Excel, its premium detergent brand, making it cheaper than competing brand Ariel from Procter & Gamble (P&G).
rice cut, from Rs 155 to Rs 135 per kg. Research Objective Objectives The following project has been given to us in order to make us understand the real environment of the market in which research is conducted. Marketing research, being a very important field of study in management can only be learned through practically working in the markets. The subject of our study being an FMCG product made us go and interact with the households and know their buying behaviour, preferences and expectations from the detergents they use.
In our study we defined our research objectives as follows:
- To find the customer preference in the forms of detergents
- To ind the customer frequency of use of detergents/ number of times they purchase a product in a month
- To find the various ways by which the customers wash their clothes/ dishes
- To find the brand loyalty of the customers
- To find the qualities they look for while buying a detergent
- To study the reasons that made the customer switch from their previous brands
- To find the mode of communication through which they came to know about the qualities/ features of their present brand
- To find the number of times the customer switches from one brand to another
- To find the role of packaging in the purchase behavior of a product- quantity.
Consumers’ awareness about the harmful effects of the detergents. The objectives hence set paved the way for the exhaustive research that we conducted in the field to elaborate and analyse separately in order to get a complete and a dynamic overview.
Market Research Market Research Market research is any organized effort to gather information about markets or customers. It is a very important component of business strategy. The term is commonly interchanged with marketing research; however, expert practitioners may wish to draw a distinction, in that marketing esearch is concerned specifically about marketing processes, while market research is concerned specifically with markets. Market research as defined by the International Code on Market and Social Research, includes social and opinion research is the systematic gathering and interpretation of information about individuals or organizations using statistical and analytical methods and techniques of the applied social sciences to gain insight or support decision making.
Quantitative marketing research Quantitative marketing research is the application of quantitative research techniques to the field of marketing. It has roots in both the positivist view of the world, and the modern marketing viewpoint that marketing is an nteractive process in which both the buyer and seller reach a satisfying agreement on the “four Ps” of marketing: Product, Price, Place (location) and Promotion. As a social research method, it typically involves the construction of questionnaires and scales. People who respond (respondents) are asked to complete the survey.
Marketers use the information so obtained to understand the needs of individuals in the marketplace, and to create strategies and marketing plans. Qualitative Market Research Qualitative marketing research is a set of research techniques, used in marketing and the social sciences, in which data is obtained from a relatively small group of respondents and not analyzed with inferential statistics. This differentiates it from quantitative analyzed for statistical significance.Qualitative research tools are used primarily to define a problem and generate hypotheses.
They are often used as the prelude to quantitative research in order to identify determinants, and develop quantitative research designs. They can be better than quantitative research at probing below the surface in order to understand what drives and motivates behaviour. Because of the low number of respondents involved and the idiosyncratic nature of some data collection methods findings from qualitative marketing research should be applied to larger populations with caution. They are however, very valuable for exploring an issue and are used by almost all researchers at various points during large research campaigns.
In short, most businesses use one or more of six basic methods to perform market research: literature, surveys, focus groups, personal interviews, observation and field trials. The type of data you need and how much money you’re willing to spend will determine which techniques you choose for your business 1. Literature search involves reviewing all readily available materials. These materials can include internal company information, relevant trade publications, newspapers, magazines, annual reports, company literature, on-line databases, and any other published materials.
It is a very inexpensive method of gathering information, although it generally does not yield timely information. Literature searches take between one and eight weeks.
Using concise, straightforward questionnaires, you can analyze a sample group that represents your target market. The larger the sample, the more reliable the results In-person surveys are one-on-one interviews typically conducted in high-traffic locations such as shopping malls. They allow you to present people with samples of products, packaging or advertising and gather immediate feedback. In-person surveys can generate response rates of more than 90 percent, but they are costly.
With the time and labor involved, the tab for an in-person survey can run as high as $100 per interview. Telephone surveys are less expensive than in-person surveys, but costlier than mail.However, due to consumer resistance to relentless telemarketing, getting people to participate in phone surveys has grown increasingly difficult. Telephone surveys generally yield response rates of 50 percent to 60 percent.
Mail surveys are a relatively inexpensive way to reach a broad audience. They’re much cheaper than in-person and phone surveys, but they only generate response rates of 3 percent to 15 percent. Despite the low return, mail surveys are still a cost-effective choice for small businesses. Online surveys usually generate unpredictable response rates and unreliable data because you have no control over the pool of respondents.
But an online survey is a simple, inexpensive way to collect anecdotal evidence and gather customer opinions and preferences. Focus groups.In focus groups, a moderator uses a scripted series of questions or topics to lead a discussion among a group of people. These sessions take place at neutral locations, usually at facilities with videotaping equipment and an observation room with one-way mirrors. A focus group usually lasts for one to two hours, and it takes at least three groups to get balanced results.
Like focus groups, personal interviews include unstructured, open-ended questions. They usually last for about an hour and are typically recorded. Focus groups and personal interviews provide more subjective data than surveys do. The results are not statistically reliable, which means they usually don’t represent a large segment of the population.
Nevertheless, focus groups and interviews yield valuable insights into customer attitudes and are excellent ways to uncover issues related to new products or service development. Individual responses to surveys and focus groups are sometimes at odds with people’s actual behavior.
When you observe consumers in action by videotaping them in stores, at work or at home, you can observe how they buy or use a product. This gives you a more accurate picture of customers’ usage habits and shopping patterns. Placing a new product in selected stores to test customer response under real-life selling conditions can help you make product modifications, adjust prices or improve packaging.Small business owners should try to establish rapport with local storeowners and Web sites that can help them test their products.
A questionnaire is research instrument consisting of a series of questions and other prompts for the purpose of gathering information from respondents. Although they are often designed for statistical analysis of the responses, this is not always the case. The questionnaire was invented by Sir Francis Galton. Questionnaires have advantages over some other types of surveys in that they are cheap, do not require as much effort from the questioner as verbal or telephone surveys, and often have standardized answers that make it simple to compile data.
However, such standardized answers may frustrate users.Questionnaires are also sharply limited by the fact that respondents must be able to read the questions and respond to them. Thus, for some demographic groups conducting a survey by questionnaire may not be practical. Question types Usually, a questionnaire consists of a number of questions that the respondent has to answer in a set format.
A distinction is made between open-ended and closed-ended questions. An open-ended question asks the respondent to formulate his own answer, whereas a closed-ended question has the respondent pick an answer from a given number of options. The response options for a closedended question should be exhaustive and mutually exclusive.
Four types of response scales for closed-ended questions are distinguished:
- Dichotomous, where the respondent has two options
- Nominal-polytomous, where the respondent has more than two unordered options
- Ordinal-polytomous, where the respondent has more than two ordered options
- Continuous, where the respondent is presented with a continuous scale
- A respondent’s answer to an open-ended question is coded into a response scale afterwards.
An example of an open-ended question is a question where the testee has to complete a sentence (sentence completion item) Question sequence In general, questions should flow logically from one to the next. To achieve the best response rates, questions should flow from the least sensitive to the most sensitive, from the factual and behavioural to the attitudinal, and from the more general to the more specific. Before designing the questionnaire, many decisions have to be made. These decisions affect the questionnaire, and should be part of the draft plan for a survey.
The draft plan should address the following issues: Survey objectives and data requirements In order to address the survey’s objectives, you should prepare a document that provides a clear and comprehensive statement of the survey’s goals, data requirements, and the analysis plan. This document will determine the variables to be measured, and ultimately, the survey questions and response alternatives. When formulating the questions, consult with subject-matter experts and if possible, members of the target audience. Also, examine questions from other surveys on the same or similar topics.
This research will provide you with a useful starting point and will help you create appropriate and informative questions.Make certain that the questions are relevant to the survey objectives and information requirements and ensure that there is an established rationale behind each question. Also, you should explain how the information gathered from these questions will be used and whether they will be good measures of the required data.
Analysis plan. The next step in designing a questionnaire is to create an analysis plan. First, outline the questionnaire’s objectives and data requirements. Describe the target audience as clearly as possible. Then, identify the reference period (the time period under construction—in the last year, in the last month etc. ). Develop a list of the units to be sampled (e. g. , students, houses, teachers, etc. ). Decide on the method of data collection to be used (e. g. face-to-face interview, telephone interview, mailed questionnaire, etc. ).
Explain how the questionnaire content, wording, format and pre-testing process will be developed; as well as the procedures put in place to deal with the interviewer training and non-response results. Also, choose the methods to be used during the data processing (e. g. , coding, editing etc.).
Some of the other issues that can be analysed during this step include estimation methods, result output tabulations, result reports and the analysis. Finally, the last two important issues to be considered are the time required to complete the entire process and the budget that has been allotted to it. Survey target population Often the target population (the population for which information is required) and the survey population (the population actually covered) differ for practical reasons, even though they should, in actuality, be the same.
Sometimes, it is necessary to impose geographical limitations excluding certain parts of the target population because they are inaccessible due to difficulty or cost. It is also possible that some of the survey concepts and methods that are used can be considered inappropriate for certain parts of the population. For example, consider a survey of post-secondary graduates where the objective is to determine if the graduates found jobs and, if so, what types of jobs.In this case, you might exclude graduates who specialized in religious seminaries or military schools, as these types of graduates would be reasonably assured of securing employment in their respective fields.
Thus, the target population might contain only those graduates who graduated from universities, colleges and trade schools. • Method of data collection This next step in questionnaire design involves developing the methods of data collection. This is important step because you need to consider the costs, physical resources, and time required to conduct the survey. First, select the best method for gathering the required data.
Keep in mind that cost and data quality will be directly impacted by the method you choose.There are several options available: face-to-face interviews or computer assisted personal interviewing (CAPI) are two examples. These methods are administered by a trained interviewer and can have either a structured or unstructured line of questioning. There are also two telephone methods available: telephone interviews or computer assisted telephone interviewing (CATI).
Both of these methods are also administered by a trained interviewer, but the telephone versions are structured with a more formal interview schedule. Finally, there is also the option of a collecting data through a selfcompleted questionnaire. This method allows the respondent to complete the questionnaire without the aid of an interviewer.It is highly structured and can be returned by mail or through a drop-off system.
Internet Marketing
Vietnam has fierce competed with the competitors such as SC TV shopping, 123. Van, hothead. Van and other e-shop. With the SOOT, Busty Vietnam has become the most e-shop is succeed in selling products online. Besides that, Busty still have a lot of problems about their attitude, product quality and customer relationship. I recommend: Busty Vietnam maintain their positions in Vietnam Busty Vietnam should have more activities for get more customers to them and develop their relationship with the customer Busty Vietnam should expand their outlets, headquarter to other provinces.
I. Background Information 1. Introduction Traditional retail still dominated. Vietnam is in 23rd place, and is still attractive, with an expected market size of $113 billion by 2012 and growing populations 88. 9 million. Vietnam official opened its retail market to international entrants with 100 percent foreign capital in early 2009, at the height of the global economic crisis, when many multinational companies were taking a more conservative approach to expansion. Because of this reason, a lot of e-shop has joined to this field to improve the financial of their company.
Therefore, Busty an e-shop with fifty years of experiences in selling products on the internet so hey have succeeded to get though the economic crisis. 2. Highlight background information Best Buy Vietnam is one of the largest Direct Television, E-shop Company in Vietnam distributing though out Vietnam since 2002 specializing in distributing western origin consumer goods such as kitchen items, fitness, and household products and cosmetics via retail stores, internet and direct marketing channels.
Besides that, Busty Vietnam will have a “Big Box”, Best Mall which is bigger than the Best Mall in China. And you should know that Busty is in top 5 of the e-shop in over the world generally and in Vietnam particularly. The first thing is to confirm all activities of Busty Vietnam always put the quality on the top with slogan is “Quality is our honor”, Busty frequently find the ways to reduce the cost to provide the preferential policies and reasonable price for the customer. The goal of Busty Vietnam is maintaining the positions of customer care services are leading in Vietnam.
Not only this, Busty always innovate everything from smallest to the biggest such as in attitude marketing, improving product’s quality, and taking care passionately and advising customers to help Busty become successful on the path of rebinding the Vietnam market. Past 10 years ago, it is too long with rebinding process, but with Busty, ten years past also marked a journey full effort to strive to reach and sever customers. Ten years are enough time for Busty to prove its position, the trust that the consumers in Vietnam dedicated for Busty.
II. Electronic – Customer relationship management System review (E-CRM) 1. Secondary market search: Busty Vietnam is one of the largest Direct Television, E-shop Company in Vietnam, so Busty Vietnam is more difference than other e-shop such as 123. Van, SC television shopping or eBay. Van. For Busty, we will believe Busty UT the quality on the top so what are different than other websites and other television shopping. Thus, I have a research about comparing Busty, SC television shopping and 1 23. Van Busty Vietnam SC Television shopping 123. N Customer Purchases Busty is a big boss in selling products on television and on the internet. With the powerful workforce, has the most prestigious product’s quality. Busty has three headquarters in Hanoi, Ho Chi Mini city, Dad Nag City. All products from Best Buy are provided by Best Buy from American and Europe. With Busty policies, customer can change the new stuff if it has problem and customers do tot like products, they can take the products to shop, they can receive their money back on SC Television is a company which is selling product on the television and on the internet.
All products from SC are provided by almost from American. SC has two headquarters in Hanoi, Ho Chi Mini city. With Sac’s policies, customer can change the new product if it has problem. 123. Van is an online shopping website providing both Vietnamese and overseas’ products from selected products, customers can buy secure products with the commitment from the providers in 123. Van. You can replace a broken product in 7 days or take ace your money Service and support contact All information will be update automatically in all of social media such as social network, social search, on television.
And if you need supports, you can contact to hotlist, official website or you can send the email or send question from 24/24. Customer will have home warranty. Information will be up on the official website and on the television. And if you need support you can call the support service. All necessary information will be uploaded to 1 23. Van. In case you need supports, you can call hotlist, send email or send questions from email 24/7, 123. N will answer it as soon as possible. Sales force Contacts Both of them have a powerful sales force contact.
This sales force will contact to the customer by the internet or the phone when the customer need to buy something on their website. 123. Van is just online shopping center, and it is a intermediaries who ad supplier’s products but not sell products directly to customer so they do not have sales forces contact Sales experience Busty is a big company from the United States. This company has a lot of headquarters in over the world generally and Vietnam Particularly. This company as established in 1966 So Busty has a lot of experiences in selling product on the internet and on the television.
SC Television Shopping is a company from Korean. This company has a lot of headquarters in Asia. Company was established in 1994, so they have a lot of experiences on selling products on the television. 123. Van is an e-shop. This e-shop is established for selling products on internet. This e-shop is established by VAN in 2006. Because almost products are game online. So they still young in the selling products. 2. Online survey Busty always have survey for customer to judge the customer service, Bessie, products and attitude. Because of these reasons, Busty has become a most successful company on e-shop and on Direct Television.
This survey is created for helping Busty to improve them. HTTPS://docs. Google. Com/forms/d /1sPBLJH03CP81SW8vECQ5U46ajxgBspl-xx 1 Rigorous/vermiform 1. Have you ever gone shopping on the internet? Yes, have done it Never done it 2. Which page do you want to visit for buying product online? Busty Vietnam sq Hothead. Van munching. Van Other: 3. Have you ever bought products on Busty Vietnam? Yes No 4. Can you rate the information from website of Busty Vietnam? 2 3 4 5 the best Select a value from a range of l,the best, to 5,the worst,. The worst 5.
If you have opportunity to get discount off buying products on Busty Vietnam, do you want to try it I will want to try it I do not believe on discount off Do not everything 6. Which do you buy products from our company Beauty care product Sport equipment Electronic accessories Kitchen appliances Household accessories 7. What do you think we should change to improve Busty Vietnam website (You can write everything what is in your mind) Some charts about the customer’s expectation: 3. Strengths, weaknesses, opportunities and threats (SOOT) 1 . Strengths: Busty Vietnam has 5 strengths and it inherits from the Busty.
It includes Powerful Global Home Product, Strength in Size, Busty Mobile, Cash Cow, Geek Squad. Because of 5 strengths, Busty has confirmed brand on the S-shaped country. Powerful Global Home Product: Busty is one of the most company is succeeded on selling household for everyone from over the world. Therefore, Busty Vietnam inherits all essences from Busty, from the brands to the products quality. Customer will be satisfied with Busty Vietnam. All products from Busty Vietnam always have the evaluation from the old customers so the ewe customer will see the effective from the products before they buy.
Strength in Size: With powerful in size, Busty totally confirmed them on Vietnam country. They have three 3 headquarters in three big cities such as Ho Chi Mini City, Dad Nag City, Hanoi. Otherwise, they have a lot of outlets in provinces. Busty Vietnam has created 80 percent of its consumers from the outlets. Besides that, they have attracted more than 20 million viewers in one year. Busty Mobile: Busty Vietnam follows the Busty to create a plan to get the Busty Mobile to Vietnam. Busty Mobile is growing up by the day.
With three undress outlet focus on selling mobile and tablet and devices connecting to the internet is creating income for Busty by day. Cash Cow: With selling products on the internet and on direct television. It has made a lot of money for Busty and it made about 1. 5 million in free Cash flow a year Geek Squad: It is customer services for the customer want to fix their Electronic Computers which they bought from other retailer and it out of warranty. Geek Squad can help customer to fix if their products do not have warranty anymore. And now Geek Squad becomes a reaction force to fix the product quickly. 2. Weaknesses:
Because of some fake retailers, it effects to the Busty Vietnam and it totally makes Busty Vietnam has stuck in attract the attention to the customers. Besides, with appearing competitors competitive fiercely in the market such as SC TV shopping, 123. Van. In addition, in production progress, some products are not good at quality so it can effect to the Busty’ brand. 3. Opportunities: With policies of Busty, Busty is advertising on direct television and on the internet with a lot of invites the customers to join the activity to have a discount from the company or get reasonable prices when they buy products.
Moreover, Busty want to be the best e-shop in Vietnam and it is a goal for Busty want to become succeed. To promotion, Busty has created the brand to become the most successful brand in over the world generally and Vietnam particularly, 4. Threats: A lot of problems are threatening to Busty Vietnam: The economic situation in Vietnam are changing by the day with promoting from the world economic, Busty has a lot of competitors to against with them and they have to get thought or being passed thought. The Taxes from the Vietnam policies has effected to Busty such as place, prices and product.
It can make the Busty have to raise the price and lose the customer to other e-shop. For Busty, they will have faced to the problem are popular on selling products on the internet is the fake products and it make company lose human resource, money, time and customers and Busty maybe close some outlets. 4. The use of electronic customer relation marketing: As you see the chart, comparison, the SOOT about shopping online are being popular in Vietnamese and with the development of technology helps buying products online become normal, reasonable, convenient.
Besides that, the chart an show us to know which e-shop is the best for customers and consistent with the cultural, people and lifestyle of Vietnamese. Moreover, with globalization, Busty joined to Vietnam to become a successful e-shop and direct television shopping. Besides, Busty are successful to become the most website selling products on the internet and change the shopping habits of Vietnamese, and these reasons make the economy of Vietnam are growing up day by day.
However, with the Vietnam market, Busty has been fighting with a lot of competitors to get the customers to the company. With Busty, Vietnam market s a big field for growing up on selling product online when the globalization are developing and Busty still growing up from 2002 to 2013 with a lot activities to surprise customers to attract to shopping online. With doing that, it makes Busty become an e-shop have more customers than other e-shop. Although Busty succeed to change shopping habits of Vietnamese.
But Busty has get though hard time and when it is succeed, Busty has confirmed their brand on Vietnam market particularly and over the world generally. Finally, with the successful, Busty has a lot of confusion from customers about the quality rodents, customer care or attitude marketing. On the other hand Busty has improved the fail and change policies to get the best things for the customer. With Busty, customer, quality products are the most important. Like their slogan “Quality is our Honor”.
Ill. Conclusion: think Busty has a lot of opportunities for Vietnam market. Because with fifty years of experiences to sell product on the internet. Besides that, Busty Vietnam also inherits from the Busty to confirm them in Vietnam Busty Vietnam is developing more and more on selling products. So they can reach their goal is become the number one of the e-shop in Vietnam. Moreover, with the customer’s opinion, Busty Vietnam can improve their quality product and rebind in Vietnam.