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ONOPPORTUNITIES:A company which serves over 1 billion people per day in more than 200 countries with refreshing series ofmore than 400 products has always have great opportunities to grab. Some of these opportunities are :• Countries like India, company have great opportunities to serve over 1 billion people.• In India company have more than 60 percent market share only with 11 products, So here big opportunityto offer more than 400 brand products from its product basket.THREATS:A company which serves in more than 200 countries is always prone to threats. Some of these threats are :• Government Policy.• Market Competitors mainly PepsiCo.• Dependent over distributor for distribution.• Wrong weather forecasting for production.• Cultural Restrictions. 3…..OBJECTIVE OF STUDYOBJECTIVEMBA is a stepping stone in the management career. In order to achieve practical, positive and concreteresults, the classroom learning needs to be effectively feted to the realities of the situation existing outsidethe classroom.Every study is incomplete without having a well planned and concrete exposure to the student, Managementstudies are not exceptional. Scope of the work at this level is very ranging.
So, my MBA institute provide us opportunity to work in external environment by Summer InternshipProgram and the Management Thesis. So, I decided to prepare my thesis on Coca Cola India. ThisManagement Thesis will provide sound basis to adopt the theoretical knowledge and on the other hand it willgive me the opportunity for exposure to the real market situation, it will give me the base practicalexperience which will be helpful throughout my professional career.My topic of this management thesis is “Comparative Study of Different Promotional Schemes Adopted byCoca Cola India”.The main objective of this thesis is to study the different promotional schemes adopted by Coca Cola Indiain the past and in present and compare the merits and demerits of these schemes. In this thesis I will alsotry to focus on the impact of these schemes both on the market and on the management of the Company.In my initial study about the company I found that all the schemes are designed around the 3 P‟s which arePLANET, PEOPLE and PORTFOLIO.LIMITATIONLIMITTIONSFollowing are the limitation for Coca Cola Company and trainees too are:The report is time barred .
Volatility in the Sparkling soft drink market just because of seasonal effect.Bad perception in the mind of general public due to recent pesticides controversy.Competitor providing better schemes to increase its market share.Weak distribution network, particularly in some part of India.Company has offer very few products in India from its impressive product profile of more than 400 productsacross the globe.Some products are expensive as compared to its close competitors.The Company relies on numerous groups to work together to make our brands available to consumersthroughout the world.Questionnaire data was not filled properly by the retailers & even some of them refused to fill the same. 4………………..RESEARCH METHODOLOGYRESEARCH METHODOLOGYFactual material or Data unknown or untapped so far can be obtain from many sources direct or indirect. Itis necessary to involve a systematic procedure to collect es¬sential data. Relevant data, adequate inquantity & qual¬ity sufficient reliable and valid should be collected. For this purpose one may use variousdevices. For each and every type of research certain tools are used to gather new facts or to explore newfield are needed. The selection for suitable for collecting various kinds of information is the main purpose.The researcher may use ore or move of the tools in combination. He should familiarize himself with thenature, merits & limitation of these tools. I am also attempt to learn how to constructed and use themeffectively. There are various tool of data collection. Before making major, decision about tool of datacollection.
1. Observation:The observation method is the most commonly used method especially in studies relating to behavioralsciences. In a way we all observe things around us but this sort of observation in not scientific observation.Observation becomes a scientific tool and the method of data collection for the researches, when it serves aformulated research purpose, in systematically planned and recorded. Under the observation method, theinformation in sought by way of investigators own direct observation without asking from respondent. Themain advantage of this method in that subjective bias eliminated, if observation in done accurately.Secondly the information obtained under this method relates to what event is happening it is notcomplicated by either the past behavior or intention or attitudes.Thirdly this method is independ¬ent ofrespondents willing to respond and as such is rela¬tively less-demanding of active cooperation on the partof respondents as happen to be the case in the interview or the questionnaire method. However observationmethod has various limitations.Firstly it is an expensive method. Secondly, the informal ion provide by this method in very limited.Sometimes we talk of controlled and uncon-trolled observation if observation takes place in the naturalsetting, it may be termed as uncontrolled obser¬vation, but when observation takes places according todefinite, pre-arranged plans, involving experimental pro¬cedure, the same is then termed controlledobservation.2. Interview Method:-The interview method of collecting data involves presentation of oral-verbal stimuli and reply in term of oral-verbal responds. This method can be used through personal interviews and if possible through telephonein¬terview. A. Personal interviews:Personal interview method requires a person known as the interviewer asking questions generally in a faceto face contract to the other person(§). This sort of interview may be in the form of direct personalinvesti¬gation or it may be an indirect oral investigation. In the case of direct personal investigation theinterviewer has to be collect.Information personally from the sources con¬cerned. He has to be on the spot and has to meet people fromwhom data has to be collected. This method is par¬ticularly suitable for intensive investigation. The methodof collecting information through personal interview is usually carried out in a structured wav. As such we allthe Interviews as structured inter-views. Such interviews involve set of predetermines questions and ofhighly standardized tech¬niques of recording.
Thus the interviewer in a structured interview follows a rigid procedure had clown, asking questions in aform and order prescribed. As against it the unstructured interviews are characterized by a flex¬ibility ofapproach to questioning.Unstructured interviews do not follow a system of predetermined question and standardized techniques ofrecording information. In a non structured interview, the interviewer is allowed much greater freedom to askin case of need the supplementary questions or at times he may omit certain questions if the situation sorequires. Unstructured interviews also demand deep knowledge and greater skill on the part of theinterviewer.With a variation in interview-techniques, the major advantages and weakness of personal interview can beenumerated in general way. The chief merits of the interview method are as follows:-(I) More information and that too in greater depth can be obtained.(ii) Interviewer by his own skill can overcome the re¬sistance, if any if the respondents, interview methodcan be made to yield an almost perked sample of the general population.(iii) There is greater flexibility under this method as the opportunity to restructure questions is always there,especially in case of constructors interviews.(iv) Personal information can as well be obtained easily under this method.But there are also certain weaknesses of the interview method.1. It is a very expensive method especially when large and widely spread geographical sample is taken.2. There remains the possibility. Of the bias of inter¬viewer as well as that of respondent, there alsoremains the head chief of supervision and control of interviews.3. This method in relatively more-time-consuming, especially when the sample in large and recalls upon therespondents are necessary. .4. Under the interview method the interviews required for selecting and supervising the field-staff is morecomplex with problems.B.Telephone interviews:-This method of collecting information consists in contacting respondents on telephone itself. It is not a verywidely used method, but plays important part in industries surveys, particularly in devolved regions. It ismore flexible in comparison to mailing method because in this method, direct contract between respond andinterviewer.3. Questionnaires:-
This method of data collection is quite popular, particularly in case of big enquiries. It is being adopted byprivate individuals, research workers, private and public organizations and even by Governments. In thismethod a questionnaire is sent (usually by post) to the persons con-cerned with a request to answer thequestions and return the questionnaire.A questionnaire consists of a number of questions printed or typed in a definite order on a form or set offorms. A questionnaire is mailed to respondents who are expected to read and understand the questions andwrite down the reply in a space meant for the pur¬pose in the questionnaire itself. The respondents have toanswer the question on their own.The method of collecting data by mailing the questionnaires to respondents in most expensively em¬ployedin various economic and business surveys.Merit1. There is low cost even when the universe is large and widely spread geographically.2. It is free from the bias of the interviewer. Answers are in respondents own words.3. Respondents who are not easily approachable can also be reached conveniently.4. Large samples can made use of and there the results can be made more dependable and reliable.Demerits:-1. Low rate of return of the duly filled in questionnaires biased due to the no response is oftenindeterminate.2. It can be used only when respondents are educated and coopering.3. The control over questionnaires may be lost once it is sent.4. There is also the possibility of ambiguous replies or omission of replies altogether to certain questioninter¬pretation of omission is difficult.Main aspect of questionnaireQuite often questionnaire is considered as the heart of a survey operation. Hence it should be very carefullyconstructed. If it is not properly set up, then the sur¬vey is bound to fail. This fact requires us to study themain aspect of questionnaires.1. General Form:-So for as the general for of a questionnaire is concerned, it can either be structured or unstructuredquestionnaire. Structured questionnaires are those questionnaires in which there are definite concrete andTeditemine questions. When those characteristics are not resent in a questionnaire, it can be termed asunstruc-ared on non structured questionnaires.2. Question Sequence:-In order to make the questionnaire effective and to ensure quality to the replies received, a researcher
should pay attention to the question sequence in pre-par-g the questionnaire.3. Question formulation and wording:-With required to this aspect of questionnaire, the researcher should note that each question must be veryclear for any sort of misunderstanding can do harm to a survey. Question should also be impartial in ordernot to give are biased picture of true state of affairs.4. Schedules:-Data collection through schedules is very much like the collection of data through questionnaire. The lit¬tledifference which lies in the fact that schedules (Performa containing a set of questions) are being filled in bythe enumerators who are specially appointed for this purpose. These enumerators along with schedules goto respondents, put to them the questions from the Performa in the order the questions are listed andrecord the re¬plies in the for the same in the Performa. Enumerators explain the aim and objects of theinvestiga¬tion and also remove the difficult which any respondent may feel.After going through the Company profile, the first step to start my thesis is the collection of data fromdifferent sources like consumers, distributors and the company management through the personalinterviews and questionnaires. The second step will be the comparison of the collected data and to representit through the following standards:ANOVA: Analysis of variance is a collection of statistical models, and their associated procedures, in whichthe observed variance is partitioned into components due to different explanatory variables.T- TEST: T-test is any statistical hypothesis test in which the test statistic has a Students t distribution if thenull hypothesis is true. It is applied when sample sizes are small enough that using an assumption ofnormality and the associated z-test leads to incorrect inference.BAR CHART: A bar chart, also known as a bar graph, is a chart with rectangular bars of lengths proportionalto that value that they represent. Bar charts are used for comparing two or more values. The bars can behorizontally or vertically oriented. Sometimes a stretched graphic is used instead of a solid bar.PIE CHART: A pie chart (or a circle graph) is a circular chart divided into sectors, illustrating relativemagnitudes or frequencies or percents. In a pie chart, the arc length of each sector (and consequently itscentral angle and area), is proportional to the quantity it represents. Together, the sectors create a full disk.It is named for its resemblance to a pie which has been sliced.
DATA ANALYSISANALYSISThe soft drink market of India are by and large controlled and governed by the soft drink giant company,COCA-COLA and PEPSI. Except these two, there is a very weak and limited participation is felt by theCADBURY SCHWEEP.The only presence of the two giant company doesn‟t mean absence of competition rather a neck to neckcompetition, a dual of strategy and counter strategy is all time present to capture a greater market share.For extracting the total strength, two companies have a wide variety of soft drink.Different flavour and different packs are available from both the companies. Let us take a glimpse of thedifferent flavour available for both the company.Flavour Coca-cola PepsiCola Thums-Up, Coke PepsiClear Lemon Sprite Mountain Dew, 7-UpCloudy Lemon Limca Lemon MirindaOrange Fanta MirindaFruit Juice Maaza SliceSoda Kinley EveressWater Kinley Aquafina
By the survey of retailers out lets, we have got the relative demand of each different flavour both thecompaniesFlavour Coca-cola PepsiCola Thums-Up, 35Coke 25 Pepsi 40Orange Fanta 60 Mirinda 40Cloucly Lemon Limca 80 Lemon Mirinda 20Clear Lemon Sprite 45 Mountain Dew 357‟ UP 20Fruit Juice Maaza 80 Slice 20Soda Kinley 45 Evress 55Water Kinley 40 Aquafina 60TOTAL 410 290DEMAND OF COLA FLAVOUR INRURAL AREAFor cola flavour coca-cola has two product‟s coke and Thums-UP and Pepsi percentage in shown below.Flavour Company Product Demand in %Cola Coca-Cola Thums-UP 35Coke 25Pepsi Pepsi 40It is represented by the following pie chart.DEMAND OF ORANGE FLAVOUR INRURAL AREA
For orange flavour coca-cola has the product name is Fanta and Pepsi has the product range is Mirinda.Flavour Company Product Demand in %Orange Coca-Cola Fanta 60Pepsi Mirinda 40It is represented by the following pie chart.DEMAND OF CLOUDY LEMON FLAVOUR IN RURAL AREACoca-cola has the most popular product limca in cloudy lemon flavour and Pepsi has Lemon Mirinda.The relative demand is shown in the following table.Flavour Company Product Demand in %Cloudy Lemon Coca-Cola Limca 80Pepsi Lemon Mirinda 20It is represented by the following pie chart.DEMAND OF CLEAR LEMON FLAVOURRURAL AREAIN clear lemon coca cola has sprite, pepsi has two products . products in this are 7-up and Mountain Dew.The relative demand is shown in the following table.Flavour Company Product Demand in %Clear Lemon Coca-Cola Sprite 45Pepsi Mountain Dew 35
7‟-Up 20It is represented by the following pie chart.DEMAND OF FRUIT JUICE IN RURAL AREAIn fruit juice Coca-Cola product is Maaza and Pepsi product is Slice. The demand of percentage is shownbelow :-The relative demand is shown in the following table.Flavour Company Product Demand in %Fruit _Juice Coca-Cola Maaza 80Pepsi Slice 20It is represented by the following pie chart.DEMAND OF SODA IN RURAL AREACoca-Cola has the product Kinley in Soda and Pepsi has Evress. The demand of % is shown below :-Flavour Company Product Demand in %Soda Coca-Cola Kinley 45Pepsi Evress 55It is represented by the following pie chart.DEMAND OF WATER IN RURAL AREAAnd the final and lost product from Coca-Cola is water KINLEY and the PEPSI is Aquafina . the demand ofpercentage is shown below :-Flavour Company Product Demand in %Water Coca-Cola KINLEY 40Pepsi AQUAFINA 60
It is represented by the following pie chart.DEMAND OF COCA-COLA AND PEPSI INRURAL AREAOVER ALL MARKET DEMAND OF COCA-COLA AND PEPSIOver all demand of Coca-Cola and Pepsi in Shahadra area is 58% coca-cola and 42% of PEPSI.DEMAND OF COCA-COLA AND PEPSI IN VARIOUS CUSTOMER GROUP IN RURAL AREAOn the basis of survey and with the help of questionnaire. The demand of coca-cola and pepsi in variouscustomer group is presented in the following table:-Customer Company Demand of %MALE COCA-COLA 65PEPSI 35FEMALE COCA-COLA 55PEPSI 45CHILDREN COCA-COLA 70PEPSI 30DEMAND OF FEMALE CUSTOMER GROUP N RURAL AREA
The demand of Female customer group is represented by the following chart:-DEMAND OF VARIOUS PACKS OF COCA-COLA IN RURAL AREAPACK DEMAND IN %200 ML 40%250/300ML 30%500 ML 12%1 Litre 3%1.5 Litre 5%2 Litre 10%DEMAND OF CHIILDREN CUSTOMER GROUPIN THE RURAL AREATHE DEMAND OF CHILDREN CUSTOMER GROUP IN RURAL AREA IS REPRESENTED BY THE FOLLOWING PIECHART:FINDINGSFINDINGSWith the predetermined objective for finding the customer demand and retailers respondent for Coca-Colaproduct is AGRA CITY area. A detail survey of the retailer and proper analysis of the available data has beendone.Coca-Cola is having a greater customer demand for its product. Bur PEPSI is no longer for behind. They arealso coming up with their full strength and has started to capture the market with & customasssers.
The total marked of Shashadra can be grouped in to main areas, Nand Nagri, Dilshad garden, Bhajanpura,Gokulpuri, Jyoti Nagar, Maan sarovar park, , Mojpur, Karaval Nagar, Bhajanpura, Sleempur, Sewa DhamRoad. All there are quite vast and possess a fish customer demand. Numbers of outlets there from kiroktoretorement. Denbite of bisg demand and loge number of our lets, company provider only and distributorsSUGGESTION AND CONCLUSIOONSUGGESTIONSometimes the delivery vans of Coca-Cola starts late from the distribution point and that of rivals reachearly .so eateries, which generally serve soft drinks in the glass, buy the soft drinks from the delivery vanwhich arrives first.Salesman at the delivery van to be inconsistent on certain meters likes the concept of broken bottles. Whendealing with the shop and the eatery owners some salesman do exchange bottles while some do not?Finally, Following are the findings and suggestions after analyzing all data:Promotional scheme played important role in the sale of carbonated drinks.Availability is also the important factor in the sale of cold drink after taste.RTM and Red are the most successful policy of the company.Free bottles per crate offer will be more successful if it is club with the RED scoring instead of SalesExecutive decision.Consumer are most interested in Bumper prize policy of promotion.CONCLUSIONFrom the analysis of the data, it can be concluded that the market share of Coca-Cola is more than the
market share of Pepsi. The demand of Coca-Cola‟s product is more with the comparison of Pepsi product.Supply of various flavours is not adequate. Flavour likes Limca and Maaza have a high customer demand,but their supply is irregular. Competitors are taking advantage of thisReplacement procedure of faulty bottles is very low. It promotes retairs dissatisfaction.It can be noticed that the company has spent a lot on its advertising and sales promotion, its sales arebetter. The only thing that is lacking to some extent is service. So by enhancing the quality of service andalso by modifying some of the routes of distribution, the company can gain more turnover from the marketwhat the company just doing is just concentrating on increasing the sales without bothering the relationshipwith the retailers. So, instead of relying on volume of sales, the company should try to build a long-lastingrelationship with the retailers.ANNEXUREQuestionnaireQUESTIONNAIRE FOR RURAL CONSUMERName :Age : Gender :Address :City :Q.1 Do you take carbonated drinks?a) Yes b) NoQ.2 On what criteria do you select the drink of your choice? Rank the following in order of your preference.a) Taste ( ) b) Brand ( )c) Availability ( ) c) Advertisement ( )Q.3 Do promotional schemes affect the choice of your drink?a) Yes b) NoQ. 4 Which one of the following policies affects your selection of drink?a) Discount Policy b) Promotional Policy
Q. 5 Four different companies launch different promotional schemes on their respective drinks. Rankthese schemes in order of your preference that will change your buying decision.a) Money back offer on the bottle cap. ( )b) Prizes on the bottle cap. ( )c) Prices on the specific number of bottle caps. ( )d) Bumper prize. ( )QUESTIONNAIRE FOR RURAL DEALEROutlet Name: Dealer Name:Address :Q1. Which marketing strategy or scheme dramatically affects the sale of Carbonated drinks?a) Availability b) Proper Merchandizingc) Good Advertising d) Low Price/CostQ2. Rank the following offers in order of your preference that attracts you the most to sell a particular brandof carbonated drink?a) Brand that offer discounts ( )b) Brand that offer good promotional schemes ( )c) Brand that offer stock on credit basis ( )d) Brand that offer good marketing support ( )Q3. What is the effect of RTM (Route to Market) scheme on the sale of Coca Cola products?a) Increase b) DecreaseQ4. What is the effect of the implementation of RED (Right Execution Daily) scheme on the sale of Coca Colaproducts?a) Increase b) DecreaseQ5. What is the percent increase in the sale of Coca Cola products after the implementation of RED and RTMschemes?a) Not Increase b) Increase 1 - 25%c) Increase 26 - 50% d) Increase 51 - 75%e) Increase 76 - 100% f) Increase more than 100%Q6. Coca Cola Company is offer free bottles per crate on the basis of following criteria. Rank the following inorder of your preference.a) On the basis of sale per day. ( )
b) On the basis of prime location. ( )c) On the basis of RED scoring. ( )d) Decision made by the company‟s Sales executive. ( )REFERENCESFinally, Following are the references which are used to collect the data till date:Agra Sales and Marketing.www.cocacola.com.www.cocacolaindia.comDifferent dealers in Agra and Aligarh.Consumers.Competitors.posted by muqeem khan at 8:19 pm 1 commentsfriday, january 29, 2010jaypeeSUMMER TRAINING REPORTONREAL ESTATE TRENDS IN THE CURRENT MARKETSUBMITTED IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OFMASTER OF BUSINESS ADMINISTRATIONSUBMITTED BYROLL NO. - ………….INDUSTRY GUIDE UNDER THE SUPERVISION OACKNOWLEDGEMENTSIt was a great opportunity for me to work with JP Group, one of the leading companies in Real Estate
business in India. I am extremely grateful to those who have shared their expertise and knowledge with meand without whom the completion of this project would have been virtually impossible.Firstly, I express my sincere gratitude and thank to…….., Manager, Marketing, JP Group Industries, …….,New Delhi for whose kindness I have the precious opportunity of attaining training at JP Group. Under hisbrilliant untiring guidance I could complete the project being undertaken on the “REAL ESTATE TRENDS INTHE CURRENT MARKET” successfully on time. I would also like to thank the overwhelming support of allthose people who helped me a lot with their suggestions and ideas in the making of this project report.I would also like to thank my faculties of ……..for their constant enthusiastic encouragement and valuablesuggestions, without which this project would not have been successfully completed.I would also like to thank my parents and rest of my family members for being patient and very supportivealways especially during the project study.PREFACE
This report is one of a series based on an analysis undertaken by contraction and infrastructure Group toincrease the body of knowledge in India about the significance of real-estate industry in facilitating economicproductivity and enhancing National competitiveness. The reports aim to increase the house communitysunderstanding.A project team within construction India has undertaken this work - with the assistance, in some cases, ofcontract expertise, and the cooperation of all provincial and territorial governments in the provision of houseand devolvement authority.CONTENTSCertificateAcknowledgementPrefaceCHAPTER 1. INTRODUCTION1.1 GENERAL INTRODUCTIONS ABOUT THE SECTOR.1.2 INDUSTRY PROFILE.CHAPTER 2. PROFILE OF THE ORGANIZATION2.1 ORIGIN OF THE ORGANIZATION2.2 GROWTH AND DEVELOPMENT OF THE ORGANIZATION2.3 PRESENT STATUS OF THE ORGANIZATION2.4 PRODUCT AND SERVICE PROFILE OF THE ORGANIZATION COMPETITORS2.5 MARKET PROFILE OF THE ORGANIZATIONCHAPTER 3. DISCUSSION ON TRAININGS3.1 OBJECTIVE OF THE STUDY3.2 DESCRIPTIONS OF LIVE EXPERIENCES
CHAPTER 4. STUDY OF SELECTED RESEARCH PROBLEM4.1 STATEMENT OF RESEARCH PROBLEM4.2 RESEARCH DESIGN AND METHODOLODY4.3 ANALYSES OF DATA4.4 SUMMARIES OF FINDINGS4.5 SUMMARY OF LEARNING‟S EXPERIENCECHAPTER 5. DATA INTERPRETATIONCHAPTER 6. CONCLUSION AND RECOMMENDATIONSBibliographyAnnexureCHAPTER 11.1: GENERAL INTRODUCTIONREAL ESTATE INDUSTRYThe Delhi Residential real estate market has maintained its buoyancy in 2004. The growing housing demandof the burgeoning middle and upper middle class supported by the competitive low interest rates continuesto fuel the growth of the suburban residential market.This growth is evident in the overall evolution of the residential developments in the suburbs highlighted bythe new highland mid end developments in Gurgaon and Noida, such as World Spa,Pinnacle, Belmonte,
Uniworld City, The Forest etc. All these projects boost of high specifications in terms of quality ofconstruction in comparison to the previous projects along with luxurious amenities and facilities. Also mostof these projects have witnessed recompilation bookings to the extent of 75 to 80% both by endusers andinvestors.The South Delhi residential market is mirroring a similar market sentiments the suburban region, the onlydifference being in the profile of the buyer. The demand is mainly led by small time investor group lookingto place their funds in relatively liquid assets (as compared to other Real-Estate options) with a steadyreturn on investment.This heightened demanding South Delhi from investors (which include Indian residents as well as NRIinvestor) and end users has lead to a shortage of good quality stock in the prime areas. It is interesting tonote that in the last 6-8 months, the supply and demand dynamics in the market have reflected a completeturnaround with demand outstripping the supply. This scenario has resulted into a25-30% rise of capital values in colonies such as Vasant Vihar, Westend, PanscheelsPark, Defence Colony,Golf Links etc.Rising trend of foreign investment in integrated townships.Foreign investment in the integrated township sector is displaying a rising trend after the Government ofIndia, in the first quarter of 2002, allowed up to 100% foreign direct investment (FDI) for the developmentof integrated townships with a minimum area of 100 acres. Although the policies governing investment inthe sector are still largely restrictive in terms of pre-conditions for interested parties,major developers, especially those from South East Asia, have been active in collaborating with localpartners to execute large integrated township projects in major cities across the country.The first FDI project in the sector was a 100-acre residential township proposed for development in Delhi‟ssuburban business district of Gurgaon. Indian infrastructure and property consultancy firm FeedbackVentures Ltd tied up with Malaysian developers Kontur Bintang and Westport for this project.The total capital outlay is estimated to be USD 160 million.Another Malaysian firm, IJM Berhad, is also involved in two major projects – a 2,200-unit apartment projectin the southern city of Hyderabad in a joint venture with the Andhra Pradesh Housing Board (APHB) and a500-acre integrated township in SAS Nagar in Mohali, in North India, for which a memorandum of
understanding (MoU) has been signed with the Punjab Urban Development Authority (PUDA).Two more prominent projects are underway in Bangalore and Chennai, involving Singapore-baseddevelopers Keppel Land and Lee Kim Tah Holdings respectively. While Keppel Land‟s Bangaloreproject is in association with private developer Purvankara Projects, Lee Kim Tah Holdings has signed a MoUwith the State Industries Promotion Corporation of Tamil Nadu (SIPCOT) for the Chennai project.These five major projects, committed within a span of two years since FDI was allowed in the sector, istestimony to the fact that regional developers are optimistic about the Indian real estate market, particularlythe residential segment. However, a marginal relaxation in foreign investment pre-requisites is needed tofurther align India‟s real estate market with its regional counterparts.ECONOMIC OUTLOOK:The Centre for Monitoring Indian Economy (CMIE) estimates that, Indias gross domestic product (GDP) willgrow significantly by 2003-2004. From July 1, for high-value real estate transactions, Form 37(I) IncomeTax clearances are not required. Budget 2002 had provided for the repeal of this provision allowing thegovernment the pre-emptive right to purchase immovable property. This is a progressive step thatsignificantly reduces the three-month waiting period before large-value transactions could be registered. ARs 50 billion (US$1.02 billion) Urban Reforms Incentive Fund (URIF) has been proposed to motivateagencies at every level to undertake infrastructure reforms. Extra funds have been announced to thoseStates pushing reforms, especially in the context of the Urban Land Ceiling Act. The soft interest ratesregime has lowered cost of funds to housing finance institutions, translating into a drop in interest rates.This has triggered off a large take-up of finance by end users.CURRENT SCENARIO:Office markets showed signs of revival towards the end of Q1 2002, post September 11. Outsourcing drovethese to India of back office operations of financial institutions and call centers. However, the market sawsome uncertainty as a result of tensions on the India-Pakistan border. The subsequent travel warningsissued by some Western governments delayed decision-making. The market is now looking more buoyant,with most corporate perceiving the travel advisories as an over-reaction.
In Delhi, rental and capital values continue to be soft and the principle business districts are seeingmovement of small corporate from secondary markets to the CBD, focused on A or B+ grade buildings. Thesuburban markets of Gurgaon and Noida are driven by larger space requirements of IT-enabled service(ITES) providers, primarily call centers. Major corporate offices are also relocating from the CBD to Gurgaon,primarily driven by quality and size of space offered. Landlords are offering single flexible and divisible floorplates of up to 25,000 sq ft.There is a clear link between shifting corporate destinations and the boost this provides to housing. This isevident in Gurgaon in Delhi where residential take-up has been in tandem with corporate influx. The middleto upper middle class residential market is active across the country. This market is driven by:Tax incentives offered by the government on housing loans.Lack of other attractive investment options such as the stock market or personal savings schemes.Improvement of transport linkages.Good quality products offered at reasonable cost by developers to boost lack-lustre marketsThe last quarter saw fresh leasing activity in Gurgaon with space commitments of approx. 150,000 sq. ft.However, values are expected to continue to be under pressure as new supply of over 65,000 sq. ft. isadded.In the next 8-12 months, demand for IT enabled services will be in excess of 1.2-1.4 million sq. ft.Approximately 65% of this demand is likely to be split over 6 cities: Mumbai, Pune, Delhi, Bangalore,Hyderabad and Chennai.RESIDENTIAL VALUES:Location Capital ValuesRs/ sq ft. Rental ValuesRs/sq. ft./ monthCENTRAL DELHIPrime 10,200-18,500 100-150SOUTH DELHIPrime 14,500-15,500 140-150Secondary 13,500-14,000 80-100WEST DELHI
Prime (New Rajender Nagar) 12,300 50Secondary 1,200-1,900 20-30EAST DELHIPrime 10,000-12,500 25-50Secondary 1,200-1,500 15-20GREATER NOIDALand 3,5000- 60,000 -Apartments 11,200- 12,500 -OFFICE MARKETCURRENT SCENARIO:Corporate take-up is driving Delhis office market as well as call centers and other IT-enabled users.Tenants are generally seeking fully fitted office space. In the CBD, such space is often vacated by corporatewho have relocated to the suburbs. Sometimes landlords fit out space to attract good tenants. Takers ofsmaller office space such as Infar, Tellabs and Frederic R Harris in the CBD have opted for fully fittedfacilities, vacated by previous tenants. In Gurgaon and Noida too, there has been take-up of fully fittedaccommodation.Most landlords offer air conditioning and power back up, supported by professional real estate propertymanagement. In the CBD, landlords of properties such as Ashoka Estate and Hindustan Times House haveimproved these buildings, which have enabled them to upgrade tenant profile.The industrial areas of Udyog Vihar, Okhla and Mohan Co-operative too are seeing take-up by IT-enabledservices. In the suburbs, developers have land and schemes, which are being marketed to corporate withlarge build-to-suit requirements. Noida and Gurgaon offer buildings with such larger floor plates which caterto large space users.At present, Noida has better road infrastructure than Gurgaon. However, a six-lane flyover project on theNational Highway 8 is scheduled to start soon in Gurgaon. This will improve the road connectivity toGurgaon from Delhi.Both Noida and Gurgaon have emerged as prime residential locations, which produce an English-speaking
workforce capable of servicing call centres, and IT enabled services companies. There areapprox 40 call centres operational in Gurgaon and Noida. Call centres typically employ upwards of 100people at a per-person-per-sq ft ratio of 70. Call center space take-up is therefore typically in excess of7,000 sq ft upto approx 200,000 sq ft. Large players such as GE Capital, EXL Services, Spectramind andDaksh have head counts upwards of 2,500 operating out of multiple locations.OFFICE VALUES:Location Capital ValuesRs/ sq ft. Rental ValuesRs/ sq ft./ monthPRIMEConnaught Place A Grade** 17,000-19,000 100-150Connaught Place B Grade** 15,000-16,500 70-100SECONDARYBhikaji Cama Place# 13,000-14,000 50-60Nehru Place# 13,000-14,000 30-50Okhla Industrial Estate* 7,000-9,000 50-70Okhla Industrial Area* 5,000-6,500 30-35Mohan Cooperative*^ N.A. 25-60SUBURBANGurgaon A Grade 6,000-7,000 45-50Gurgaon B Grade* 5,200-6,000 25-30Noida A Grade 8,000-10,000 60-80Noida B Grade 5,500-6,000 20-25Greater Noida 6,400- 7,000 -RETAILCURRENT SCENARIO:
Rentals are improving due to paucity of space in traditional retail areas of Connaught Place, SouthExtension, Greater Kailash I & II, Basant Lok, PVR complex and New Friends Colony.Retailers are moving towards the affluent areas of Vikaspuri, Rajouri Garden, Pitampura and Vaishali inGhaziabad. Approx 2.2 million sq ft of retail space will become available in the Delhi region over the nextfew years in approximately 15 malls, which are currently under construction.Restaurants are major drivers of Delhi‟s retail sector, in areas such as Basant Lok, Vasant Vihar, SouthExtension and Defence Colony.RETAIL VALUES:Location Capital ValuesRs/ sq. ft. Rental ValuesRs/ sq. ft./ monthConnaught PlaceInner Circle 8,000-9,000 120-150Outer Circle - 70-100South Extension 20,000-25,000 250-325Basant Lok 12,000-15,000 110-120PVR Saket 10,000-12,000 110-125GK-I 20,000-25,000 250-350GK-II 8,000-9,000 80-100New Friends Colony 9,000-10,000 90-110Noida 8,000-9,000 90-100Gurgaon 5,000-6,000 50-60Greater Noida 4,000- 6,000 -RETAILDLF, MGF, Sahara and Ansals are each developing shopping malls in Gurgaon.Regents Plaza is a shopping mall covering an area of 70,000 sq ft over four or five floors. It is going to be
exclusively hosting fashion designers like Giorgio Armani, Versace & Gucci.RESIDENTIALFeedback Ventures is developing 100acre residential development in GurgaonDLF has launched Trinity Towers, a 4 BR condominium development in Phase V GurgaonATS Infrastructure has launched Phase II of ATS Greens in Sector 50, NOIDAKamalka Lakelands is a 9-hole golf course real estate project in GurgaonGESCO has launched Central Park, a 2,3, 4 BR condominium development in GurgaonArdee Infrastructure is constructing The Residency, 4-BR, serviced, and uni-bed, low-rise apartments nearSouth City, GurgaonCOMPARATIVE:PROMOTERAREA PRICE(basic) LOCATIONNRI CITYPUTTINGGREENS 2104 Sq.ft1900/-Per sq.ft3 Bed room G.NOIDANRI CITYPUTTINGGREENS 2362 Sq.ft 1900/-per sq.ft4 Bed room G.NOIDANRI CITYPUTTINGGREENS 4244 Sq.ft 2100/- per sq.ftPenthouse G.NOIDAPARSVNATHPLATINUM 1500 Sq.ft G.NOIDAATS GREENSVILLAGE 1300 Sq.ft
INTERNATIONALRS. 2350/- Per sq.ftRs.2500/- Per sq.ft GURGAON1657,1990,2113 sq.ft Rs.2000/- sq.ft GREATER NOIDACOMPANY PROFILEJaypee Group was founded by Mr. Jai Prakash Gaur in 1958 as a civil contracting firm. In 1979, they cameto be known as Jaiprakash Associates Private Ltd (JAPL). Jaypee Rewa Cement Plant (JRCL) with an initialcapacity of 1 million tonnes was established in 1980. This marked the beginning of Jaypee Groupsstronghold in the cements industry in India. Continuing the legacy was Jaypee Bela Cement Plant (JBCP) in1996 with an initial capacity of 1.9 million tonnes.The hospitality business of Jaypee Infratech is splendiferous with brand names in themselves. In 1980, JAPLset up Hotel Siddharth and Hotel Vasant Continental in New Delhi, landmarks in their respective areas.These were luxury epitomized and a centre places for all the key business conferences. Another crowningglories are Jaypee Place Hotel Agra and Jaypee Residency Manor Mussoorie. Both Jaypee Palace and JaypeeResidency Manor are iconic structures giving new definitions to hospitality business.Jaypee Groups associate business areas extend to:o Hydropower Projects operational in Bapsa- II and Karcham Wangtoo (H.P.) and Vishnu Prayag(Uttaranchal).o Other Hydropower and Irrigation Projects under execution in Dulhasti and Baglihar in J&K, Tehri inUttaranchal, Teesta - V in Sikkim, Tala in Bhutan, Sardar Sarover in Gujarat, Omkareshwar in M.P. andAlimineti Madhva Reddy Project in Andhra Pradesh.
o Educational institutions at Samirpur and Solan in Himachal Pradesh, Noida and Anoopshahar in UttarPradesh and Guna in M.P.o 5 Star and 5 Star Deluxe Hotels in Mussoorie, Agra and Delhi.o Golf Resort in Greater Noida, U.P.o Taj expressway Project connecting Agra with Noida.o Integrated Township in Greater Noida.o Information TechnologyThe integrated township by Jaypee Group is Jaypee Greens. This is 450 acres of peace and tranquility of thewilderness in Greater Noida. It includes two golf resorts, villas, penthouses, condominiums, studioapartments, commercial complexes and shopping malls. Jaypee Infratech in an upcoming real estate andconstruction company as far as new projects are concerned. It is already an established brand name in otherkey business areas it covers. In residential and commercial properties developments, Jaypee is an emergingname and will continue their rising story with the quality standards touching a new high.CHAPTER 2
2.1 ORIGIN OF THE ORGANIZATIONThe Jaypee Group is a well diversified infrastructural industrial conglomerate in India. Over the decades ithas maintained its salience with leadership in its chosen line of businesses - Engineering and Construction,Cement, Private Hydropower, Hospitality, Real Estate Development, Expressways and Highways. The grouphas been discharging its responsibilties to the satisfaction of all its shareholders and fellow Indians, summedby its guiding philosophy of "Growth with a Human Face"2.2 GROWTH AND DEVELOPMENT OF THE ORGANIZATIONTransforming challenges into opportunities has been the hallmark of the Jaypee Group, ever since itsinception four decades ago. The group is a diversified infrastructure conglomerate and has a formidablepresence in Engineering & Construction along with interests in the power, cement and hospitality. Theinfrastructure conglomerate has also expanded into real estate & expressways.ENGINEERING & CONSTRUCTIONThe Engineering and Construction wing of the group is an acknowledged leader in the construction of multi-purpose river valley and hydropower projects. It has had the unique distinction of executing simultaneously13 hydropower projects spread over 6 states and the neighboring country Bhutan for generating 10,290 MWof power. The group has been assigned “CR1” grade by ICRA Ltd indicating very “Strong Contract ExecutionCapacity with best prospects of timely completion of projects without cost overruns etc. for projects withaverage value of Rs.2500 crores.” It is the only group in India, which pre-qualifies on itsown for the bidding of various projects that are awarded in the country.A leader in engineering & construction of hydropower projects in India, the Company has the largest marketshare in the Indian hydropower, E&C and EPC sector having participated in 54% of hydropower projectsdeveloped in 10th 5-Year Plan in different capacities.
The company also has the distinction of executing three out of five hydropower projects contracted on anEPC basis in the country till March 2007. Two of these, 300 MW Chamera - II and 520 MW Omkareshwar,have been completed ahead of schedule.The 900 MW Baglihar (Stage-I and II) hydroelectric project in Jammu & Kashmir, in the challengingenvironment of the State with 22 million cubic meters of concrete, has been the largest EPC projectexecuted in the country in hydropower sector, so far.The key non-EPC projects completed/under execution across India are -• 1450 MW Sardar Sarovar Project, the largest water resource project in India,• 1000 MW Tehri Dam, Asias highest rockfill dam.,• 1000 MW Indira Sagar Power House, second largest surface power house in the country.••• 1500 MW Nathpa Jhakri Power House, the largest underground surface power house in the country.The in house Design and Consultancy company, Jaypee Ventures Pvt. Ltd. (JVPL), gives JAL a competitiveedge over its rivals. The design and engineering arm has been awarded “CT1” grade by ICRA with CIDC (TheConstruction Industry Development Council). This is the highest rating assigned to consultants in the field ofengineering.CEMENTJaypee group is the 3rd largest cement producer in the country. It produces Ordinary Portland Cement andPozzolana Portland Cement under the brand names “Buland” and “Buniyad”. Its Cement Division currentlyoperates modern, computerized process control cement plants with an aggregate capacity of 9.0 MTPA. Thecompany is in the midst of capacity expansion of its cement business in Northern, Southern, Central,Eastern and Western parts of the country and is slated to be a 25 MTPA cement producer by the year 2010and 30.5 MTPA by 2011 with Captive Thermal Power Plants totaling 308MW.Post expansion the Group will have 8 integrated cement plants supported by 308 MW of Captive ThermalPower, 8 split location plants, 11 railway sidings and one jetty giving the Group a pan India presence incement sector.
POWERJaypee Group, an integrated power player in the country after having established a strong presence in theHydro-Power Sector has initiated its entry into Thermal Power Generation, Power Transmission andalso forayed into Wind Power.The group with its operational projects of 300 MW Baspa-II (Himachal Pradesh) and 400 MW Vishnuprayag(Uttarakhand) is India‟s largest Private sector Hydro-power producer.Besides this, 1000 MW Karcham Wangtoo project (Himachal Pradesh) is under advanced stage ofimplementation. In addition to these, with 2900 MW projects (2400 MW Lower Siang & 500 MW Hirong )coming up in Arunachal Pradesh and 720 MW (270 MW Umngot and 450 MW Kynshi Stage –II) in Meghalaya , the Group will have total hydro-power generation capacity of over 5000 MW.The Group is also in the process of implementing 2 x 660 MW pit head based Nigrie Thermal Power Plant inDistrict Singrauli of M.P. and is setting up through M/s Suzlon, 50 MW of Wind Power in two phases of 25MW each in Maharashtra.The Group is setting up Transmission System associated with 1000 MW Karcham Wangtoo Hydro ElectricProject. The Transmission Project will consist of a 230 km long transmission line between Wangtoo inHimachal Pradesh and Abdullapur in Haryana.HOSPITALITYThe Group owns and operates 4 Five Star Hotels, two in New Delhi and one each in Agra and Mussoorie witha total capacity of 643 rooms. Another state-of-the-art resort and SPA of 250 rooms is being set up incollaboration with SIX SENSES at Greater Noida.REAL ESTATE AND EXPRESSWAYSThe Group is a pioneer in the development of India‟s first golf centric Real Estate. Jaypee Greens - a worldclass fully integrated complex consists of an 18 hole Greg Norman Golf Course. Stretching over 450 acres, italso includes residences, commercial spaces, corporate park, entertainment and nature in abundance.The Group is constructing 165 km long 6 lane Yamuna Expressway project from Noida to Agra andribbon development on 6250 acres at five or more locations along the expressway for commercial,
industrial, institutional, residential and amusement purposes, will also be undertaken as an integral part ofthe project. In addition to this, 1047 km long 8 lane Ganga Expressway from Greater Noida to Ballia(Eastern Uttar Pradesh) will also be developed by the Group which will be the largest private sectorinfrastructure project in India.SOCIAL COMMITMENTSThe group has always believed in growth with a human face and to fulfill its obligations it has set upJaiprakash Sewa Sansthan (JSS), a „not-for- profit trust‟ which primarily serves the objectives of socio –economic development, reducing the pain and distress in society and providing education at all levels of thelearning curve with sixteen schools, two ITI‟s and three universities.For over 3 decades now Jaypee Group has supported the socio-economic development of the localenvironment in which they operate and ensure that the economically and educationally challenged strata ofthe work surroundings are also benefited from the group‟s growth by providing education, medical and otherfacilities for local development.Apart from this sustaining the ecological balance is of paramount importance. Our ecological managementapproach has led to efficient and optimum utilization of available resources, minimization of waste. Ourgroup has also taken green initiatives, afforestation drives, resources conservation, water conservation, airquality control & noise pollution control and created a “green oasis‟‟ amidst the limestone belt at our cementcomplex in Rewa.Because we know, the environment is the prime essence of healthy life and healthy living as what we dotoday will be reaped by the next generation.2.3 PRESENT STATUS OF THE ORGANIZATIONJaiprakash Associates registers phenomenal growth in turnover for H1FY09PAT for H1FY09 at Rs 330.39 crore, up 35.71%; EBIDTA atRs 803.51 crore, up 34.5%PAT for Q2FY09 up by 96.03% to Rs 203.13 crore; EBIDTAup 60.79% at Rs 451.85 crore
H1FY09 Results (all comparisons with H1FY08)• Total Income at Rs 2474.75 crore, up by 28.44 % from Rs 1927 crore• EBIDTA at Rs 803.51 crore, up by 34.5% from Rs 597 crore• PAT at Rs 330.39 crore, up by 35.71 % from Rs 243.46 crore• PBT at Rs 475.51 crore, up by 38.54% from Rs 343.24 crore• EPS of Rs 2.82, up by 27.03 % from Rs 2.22 per share• Operating profit margin increased to 34 % from 30.9 %• PAT margin increased to 13 % from 12.6 %Q2FY09 Results (all comparisons with Q2FY08)• Total income at Rs 1286.63 crore, up by 39.52% from Rs 922 crore• EBIDTA at Rs 451.85 crore, up by 60.79% from Rs 281 crore• PAT at Rs 203.13 crore, up by 96.03 % from Rs 103.62 crore• PBT at Rs 284.37 crore, up 88.66% from Rs 150.73 crore• EPS of Rs 1.73, up by 82.1% from Rs 0.95 per share• Operating profit margin increased to 38 % from 30.4 %• PAT margin increased to 16 % from 11.27 %Highlights• First Interim dividend @ 15% per equity share (Re. 0.30 per equity share of Rs 2/-) for the year 2008-09• JAL‟s wholly owned subsidiary – Jaypee cement Limited is in the process of setting up 3 MTPA plant indistrict Krishna, Andhra Pradesh for which mining lease has been allotted• Setting up a cement plant of 3MTPA at Amrapatan in district Satna• Setting up a cement plant of 2MTPA in district Satna• MOU with Govt. of Chhattisgarh for setting up cement plant of 1.5 MTPA & Captive power plant of 25 MWin Chhattisgarh• 3 MOUs with M P Trade & Investment Facilitation Corporation limited (TRIFAC), a Govt. of M.P.undertaking• Allotted 1,00,00,000 equity shares of Rs 2/- each for cash at a premium of Rs 395/- per share to JVPL,against a equal number of share warrants issued to them at the rate of Rs 397/- per warrantSegmental Division Results Highlights – H1 FY09• Turnover from cement division (including cement products) at Rs 1060.79 crore• Turnover from Engineering Division (including real estate & others) at Rs 1413.96 crore
Segmental Division Results Highlights – Q2 FY09• Turnover from cement division (including cement products) at Rs 500.14 crore• Turnover from Engineering Division (including real estate & others) at Rs 786.49 croreNew Delhi, October 21, 2008; Jaiprakash Associates Limited (JAL), the flagship of Jaypee Group is theleading infrastructure conglomerate having business interest in cement and cement production, engineering& construction, power, hospitality and real estate recorded remarkable performance with total income of Rs2474.75 crore for the first half of FY 09; an increase of 28.44% as compared to Rs 1927 crore in thecorresponding previous period. EBITDA for H1FY09 improved to Rs 803.51 crore; anincrease of 34.50% as compared to Rs 597.40 crore in the corresponding previous period. Net profit for theH1FY09 was at Rs 330.39 crore as against Rs 243.46 crore in H1FY08. The earnings per share (EPS) forH1FY2009 stood at Rs 2.82 per share.Higher input costs resulted in higher expenses for the first half year which increased to Rs 1671.24 crorefrom Rs 1329.39 crore, an increase of 25.72% as compared to the same period in last fiscal.JAL‟s all operating subsidiaries – Jaiprakash Hydropower Ltd., Jaiprakash Power Ventures Ltd., Jaypee HotelsLtd. with its robust performance has made JAL a unique organization, whereby bucking the general trendtotal income for the Q2FY09 registered a growth of 39.52% and stood at Rs 1286.63 crore.EBIDTA for Q2FY09 was at Rs 451.85 crore. Operating margins for Q2FY09 stood at 38%. The share ofrevenue from cement division (including cement products) during the quarter constituted 38.87% ofthe Revenue while engineering division (including real estate & others) during the quarter constituted61.13% of the revenue.Net profit at Rs 203.13 crore for the quarter ended September 30, 2008 registered a robust growth of96.03% over the corresponding quarter of the previous year. Continued improvement in operational
efficiencies and cost control measures has enabled it to register an increase in the Operating Margins to 38% from 30.4% in Q2FY08. Higher input costs resulted in higher expenses for the quarter which increasedfrom Rs 641.20 crore to Rs 834.78 crore, an increase of 30.19% as compared to the same period in lastfiscal.Commenting on the Company‟s performance for H1 & Q2 FY2009, Mr. Manoj Gaur, Executive Chairman,Jaiprakash Associates Ltd., said, “Strong fundamentals of the organization combined withdiversification in related businesses with each business on its own strength achieving remarkable growth hashelped JAL to achieve all round improved performance. In the current fiscal, the momentum in all thebusiness sectors be it cement, E&C and power remains strong and unaltered. As the organization hasachieved financial closure of each project/s in time anddespite anxious credit conditions, JAL projects are on right track and we are committed to post handsomegrowth quarter after quarter”.With each business on growth trajectory Jaypee Group in last twelve months has added over 4200 newpeople in its work force and the human capital base of the group has now grown to 20, 000 peopleapproximately. The company expects that approximately 600 more people are expected to join the group innext six months.Mr. Gaur further explained, “Contrary to general perception of down syndrome in real estate, the real estatedivision of the group has clocked sale of 4 mn sq. ft. in last eleven months out of which 1.7 mn sq. ft. hasbeen sold in the first half of the current fiscal i.e. (period April 08 to September 08). The impeccable trackrecord of JAL in execution and with no forex exposure, we are confident that the real estate business of thegroup shall continue to march forward with unabated momentum as clocked so far”.OUTLOOKAll the sectors of the company are on track to register robust growth and work is progressing in the right
direction with momentum. The group‟s aggregate new cement capacities in excess of 6 MT are underadvanced stages of completion and plants are poised to be commissioned at Sidhi (MP), UP and Gujarat. Bythe end of the fiscal the group shall have in excess of 18 MTPA of cement capacity in operation. Constructionwork on approximately 135 km of the expressway (165 km Yamuna Expressway project)is in progress. Financial tie-up of the expressway project has been completed and the project is scheduled tobe completed by 2010. The power business of the company is also progressing well andboth, Baspa - II and Vishnuprayag projects are generating energy in excess of their design energy. Work onthe group‟s 1000 MW Karcham-Wangtoo project is progressing on fast track basis with the projectslated for commissioning six months ahead of schedule. The company has also completed Phase – I of 450MW Baglihar project in J&K in keeping with its reputation of successfully completing projects in the mostchallenging conditions. JAL has got nil foreign exchange exposure that can be adversely affected due to theglobal turmoil. Its series III foreign currency convertible bonds (FCCBs) issued in 2007 are due forconversation only in 2012. JAL, has the strongest credentials when it comes to project execution, buildingnew capacities, be it hydropower or cement and has consistently delivered in enhancing shareholder value.2.4 PRODUCT AND SERVICE PROFILE OF THE ORGANIZATION COMPETITORSMAJOR COMPETITORS IN THE REAL ESTATE MARKETUNITECHUnitech entered civil engineering in 1974 with its sights firmly set on the future. And thats where our visionis fixed today. Building upon experience and expertise Unitech is constantly looking for ways to improve allour lives. From power transmission lines and highways to theme parks, from steel plants toresidential developments, from indoor stadiums to hotels our work is often pioneering and always
challenging. Our enviable track record proves our ability to deliver.Launch of Iconic Towers - AQUA & TERA (part of the Unitech Grande)Imagine living in masterpieces of Architecture, the tallest residential buildings in NCR.A tribute to the menand women who outperform mere potential.Launch of Uniworld City in Mohali (part of the Chandigarh Tricity.)17th Jan08. Surrounded by acres of greenery, Uniworld City. Mohall is just a 15 minutes drive away fromthe Chandigarh airport as well as from the proposed Mohali airport.Launch of residential project Harmony at Uniworld City in Kolkata16th Aug07An ensemble of impressive towers enclosing a breathtaking Central Park, Harmony is located in southeastcorner of Uniworld City.DLFThe DLF group is a leading real estate developer in India. The group has over 224 million sq. ft. of existingdevelopment and 748 million sq. ft. of planned projects. DLF is committed to quality, trust and customersensitivity, and deliver on promises with agility, financial prudence and in tune with the highest globalstandards. The company has also entered into several strategic alliances with global industry leaders.The core business traditionally has been into three prime divisions: Homes, Offices and Shopping Malls. Tothese DLF has added three more divisions: Hotels, Infrastructure and SEZs.With over six decades of excellence, DLF is a name synonymous with global standards, new generationworkspaces and lifestyles. The Group has a distinction of developing commercial projects and technologyparks that are at par with the best in the world.DLF has pioneered the walk-to-work concept in the 3,000-acre DLF City, where well-planned residentialdevelopments are integrated with modern business and commercial complexes. DLFs contemporaryworkplaces are equipped with modern facilities that synchronize functional efficiencies with aesthetic appeal
and have been identified as preferred destinations by leading MNCs and Indian corporate, including manyFortune 500 companies.Business Enterprise in real estate industry are expanding at phenomenal pace to meet the ever expandingdemand for office and commercial space, especially for the knowledge industry.Recent research carried out by McKinsey NASSCOM estimates the total demand for office space to go up to500 million sq.ft. in the next 10 Years with IT/BPO contributing 60-70%. The remaining 25-40% shall bemet by non-IT and manufacturing sectors.Built on a foundation of strong lineage and an established reputation, DLF Home Developers, the residentialbusiness group of DLF, has been a trendsetter in contemporary urban development and housing. Thesedevelopments have always been all embracing with comprehensive solutions for eminent and quality living.DLF has pioneered some of the best-known urban housing and retail destinations in Delhi including SouthExtension, Greater Kailash, Rajouri Garden, Model Town, Hauz Khas and Kailash Colony.Featuring International standards geared to serve customer needs, the Groups complexes are truly areflection of quality living and contemporary lifestyles. The product categories of the Group deliver thesynergistic strengths of good architecture, appropriate designs, impressive aesthetics and safety features.The Group is also establishing partnerships with reputed leaders in the field of education, healthcare, andhospitality services.DLF‟S DOMINANT CURRENT POSITION IN INDIAN HOMES SEGMENTPIONEERED TOWNSHIPS AND GROUP HOUSING IN INDIA• 220 million square feet developed as colonies and townships in the past, including 17 million square feet ofresidential properties• Offers superior products in the super-luxury category• Several world-class projects in the pipe-line• Expansion into multiple cities across countryINDIA‟S LEADING PLAYER IN HOMES:• Three generations of relationships with customers• Trusted brand• Superior execution track recordSUPERIOR PLANNING AND EXECUTIONUNIQUE ABILITY TO CREATE INTEGRATED TOWNSHIPS• Pioneered the development of integrated townships with DLF city
• Creating the right mix of high quality housing, state-of the art offices, IT parks, world-class shoppingmalls, digital entertainment, leisure and recreation, efficient Infrastructure, schools, hospitals and othercommunity spaces like parks and clubsSTRONG SALES AND MARKETING ENGINE• Large network of dedicated direct sales agents• Close working relationships with financing institutions• High-caliber in-house team well positioned across the countryANSAL PLAZA:Ansal Plaza in Delhi at HUDCO Place revolutionized the shopping tradition as it brought the western mallculture and changed the task of shopping into a major style statement. Built by Ansal - API, in a primelocation of South Delhi, Ansal Plaza soon changed the face of New Delhi. Ansal Plaza in New Delhiaccommodates many international brands. It boasts of exquisite infrastructure with huge undergroundparking lot. The open air ampi-theatre in the centre of Ansal Plaza Delhi is very famous for organizing musicshows, kavi-sammelans, exhibitions, promotional activities as well as fashion shows. The astoundingconstruction with fountain and lush green surroundings has made Ansal Plaza, a landmark in Delhi.The two major brands at Ansal Plaza are Marks & Spencer and Shoppers Stop. One can find all majorbrands in it. It can be called a "one stop shop for all." It accommodates garment shops, book shop, musicshop, mobile shop, candy shop, gift shop, jewelry shop, sports accessories shop, art gallery, toy shop,beauty shop and many more. Several popular fast food joints are also housed in there like Subway, Mc.Donalds, Amorettos, Geoffreys, Pizza Express and Nescafe. The Funkie Orbit is a major attraction for kids.Ansal Plaza is one of the important malls in New Delhi that also offers exclusive services of Hutch, J&K Bankand Club Mahindra Holiday.Ansal Plaza is undoubtedly a paradise for shopping freaks as the excellent services provided with the best ofbrands available all under one roof. It has certainly become a brand in itself. Indiahousing.com offers theaddress of Ansal Plaza to meet all your shopping needs.REAL ESTATE LISTAnsals
Parsvnath NoidaHDIL Housing Development and Infrastructure Ltd.Unitech PropertyAnsal PlazaAshiana Builders and DevelopersArun Dev BuildersUnitech KolkataAnsal APIK Raheja Universal BuildersHDIL IssueVatika City BuildersAnsal BuildwellGMR InfrastructureUnitech IndiaOmaxe Group India LimitedAnsal Housing and Construction LimitedPrestige HomesUnitech Builders IndiaTriveni Constructions and PropertiesParsvnath CityMahagun BuildersUnitech BangaloreVatika GroupParsvnath BuildersShipra Real Estate GroupUnitech Greater NoidaTDI Developers
Supertech Builders And DevelopersJaipuria GroupKalpataru BuildersSahara InfrastructureShipra GroupConfident GroupEros GroupGoel Ganga GroupMontvert Builders And DevelopersAlpine GroupPushpanjali BuildersAchievers BuildersJMD BuildersTata HousingPrestige BuildersShriram BuildersDwarkadhis BuildersKanakia BuildersShapoorji Pallonji GroupAdarsh DevelopersAppaswamy Real Estate BuildersChaitanya BuildersNavin Group of BuildersM2K DeveloperCrossings RepublikEmaar MGF Group
Godrej PropertiesPanchsil Realty GroupBearys GroupVascon EngineersD S Kulkarni Builders & DevelopersOberai ConstructionsPurvankara BuildersJaypee InfratechLarsen & TourboHUDCOCREDAIKolte Patil DevelopersFuture Group2.5 MARKET PROFILE OF THE ORGANIZATIONThe Jaypee group is a well diversified infrastructural industrial group of India with a turnover of overRs.3000 crores (USD 650 million) that commenced its operations in 1972 as a partnership firm then knownas Jaiprakash Associates.Three decades later with growth and diversification the group is now engaged in the businesses ofEngineering and Construction, Manufacturing & marketing of Cement, Development of Hydro-Power projectsin the Private sector, Engineering Design and Consultancy Services, Expressways and HighwaysDevelopment, Hospitality, Golf Resorts and Real Estate Development and Information Technology.JAL, an acknowledged leader in the construction of multi-purpose river valley and hydropower projects,is capable of undertaking any such project anywhere in the world on EPC (Engineering, Procurement andConstruction) basis. It has the experience and expertise to successfully complete such projects in
challenging terrain under severe and adverse weather conditions. Most of the hydropower projects of thecompany are located in the Himalayas, which throws up major geological surprises including ruptured rocks,squeezing rock conditions and water bodies, frequently making the task that much morechallenging and tough. The company has executed around 127 km. of tunnelling work, mostly in theHimalayan range.The group has a unique niche in the private power sector on Build Own Operate basis with :300 MW Power Station in Baspa, Himachal Pradesh already in operation (India‟s largest Hydroelectric PowerStation in Private Sector) producing more than 1200 million units of clean & green energy, annually.400 MW Vishnuprayag Power Project in Uttaranchal in advanced stage of implementation which is slated forcommissioning by mid 2006, to produce 2000 million units of clean & green energy.1000 MW Karcham Hydro Power Project now being taken for implementation in Himachal Pradesh withplanned completion by 2010, to produce 4560 million units of energyTHE VARIOUS GROUP COMPANIES ARE:Jaiprakash Associates Ltd. is the flagship company of the Group and an acknowledged leader in constructionof river valley and hydropower projects on turnkey basis and has been in the business for more than 3decades. The company has had the unique distinction of executing simultaneously 13hydropower projects spread over 6 states and the neighbouring country of Bhutan for the generation of10,290MW of power. It is the only engineering company in India to be assigned "CR1" grade by ICRAindicating very strong contract execution capacity for hydropower (EPC) contracts with average values ofupto Rs.2,000 crores. The company has now made its foray into highway construction.The Cement Division of Jaiprakash Associates Ltd. located at Rewa, Madhya Pradesh has 3 plants (and agrinding unit), with an aggregate production capacity of 7 million tonnes per annum. This is the single-largest cement complex at one location in India.Jaiprakash Hydro-Power Ltd. is a subsidiary of Jaiprakash Associates Limited and is operating the 300 MWBaspa-II power station in Himachal Pradesh after commissioing it in June 2003.
Jaiprakash Power Ventures Ltd. and Jaypee Karcham Hydro Corporation Ltd. are implementing the 400 MWVishnu Prayag hydroelectric project in Uttaranchal and the 1,000 MW Karcham-Wangtoo hydoelectric projectin Himachal Pradesh respectively.Jaypee Ventures Ltd., the design and engineering arm of the group for mega hydroelectric projects has beenassigned CT-1 grade by the Credit Rating Agency (ICRA) and the Construction Industry DevelopmentCouncil (CIDC). This is the highest rating assigned to consultants in the field of engineering.Jaypee Hotels Ltd. has four 5-star deluxe hotels, 2 in Delhi and 1 each in Agra and Mussoorie.Jaypee Greens Ltd. is developing the 450 acre, Jaypee Golf Resort, with the 18-hole Greg NormanSignature golf course already operational. This international 18-hole championship course, with a length of7,343 yards, is the longest in India and third largest in Asia.Jaiprakash Enterprises Ltd. undertakes contracts of civil engineering construction of varying magnitude invarious parts of the country including complex industrial construction of large size thermal plants.JIL Information Technology Ltd. the infotech arm of the Group has pioneered Indias first digital classroomteaching aid, Bhartiyavidya. It also delivers high quality, cost-effective IT-enabled software sloutions andservices.Jaiprakash Sewa Sansthan, a „not-for-profit Trust, is the service wing of the Group with special emphasis oneducation at all levels of learning curve. This education initative is catering to over 9,000 students through12 institutions including 3 centres of higher learning.Jaypee Greens presents first of its kind Golf centric real estate development in India located in GreaterNoida - Stretching over 450 acres of nature,and includes a 18 Hole championship level Golf Course, GolfResort& Spa, an Integrated sports complex, 60 acre nature reserve, lakes and landscaped parks. The StarCourt masterfully crafted apartment towers of 15 storeys, are like islands in the sky, surrounded bylandscaped greens. Each apartment offers expansive views of the golf course and landscaped greens,inviting the light and nature, indoors.Jaypee Greens is a venture of Jaypee Group, a well-diversified infrastructural and industrial group with aturnover of over Rs. 3500 crores. Jaiprakash Associates Limited is the flagship company of the Group and isan acknowledged leader in construction of River valley and Hydropower projects, Engineering andConstruction, Cement manufacturing, Hospitality, Real Estate Development, and Infrastructure developmentin the form of Expressways and Highways
CHAPTER 33.1 OBJECTIVE OF THE STUDYTo present an overview of the Real Estate Industry.To critically analyze the Future Trends in Real Estate Industry.To critically evaluate the position and prospect of major players in Real Estate Industry.To enquire about the future prospect of Real Estate Industry
3.2 DESCRIPTIONS OF LIVE EXPERIENCESThis is one of the primary things that are required within the company. During my visits to differentCompany, I came across that there is no awareness of the company in the form of posters, stands and otherrelated things. One thing that I would like to recommend would be the introduction of more promotionalactivities so as to generate more revenues for the company. Company can introduce more--– Schemes– Get together‟ for channel partners– Brand recognition in the market– To Keep more inventories– Advertisement in Institutional AreasAlthough every effort has been in to collect the relevant information through the sources available, stillsome relevant information could not be gathered.Busy Schedule of Concerned Executives: The concerned executives were having very busy schedulebecause of which they were reluctant to give appointment.Time: The time duration could not provide ample opportunity to study every detail of the company.Unawareness: Executives were unaware of many terms related to same while asking to them.Confidential Information: As the company on account of confidential report has not disclosed some figures.Moreover, in some cases separate accounts of division are not separately maintained thereby, leading torestrictions in study.
4.1 STATEMENT OF RESEARCH PROBLEMResearch is a common language refers to a search of knowledge. Research is scientific & systematic searchfor pertinent information on a specific topic, infect research is an art of scientific investigation. ResearchMethodology is a scientific way to solve research problem. It may be understood as a science of studyinghow research is don‟t scientifically. In it we study various steps that are generally adopted by researchers instudying their research problem. It is necessary for researchers to know not only know research methodtechniques but also technology.The scope of Research Methodology is wider than that of research methods.The research problem consists of series of closely related activities. At times, the first step determines thenative of the last step to be undertaken. Why a research has been defined, what data has been collectedand what a particular methods have been adopted and a host of similar other questions are usuallyanswered when we talk of research methodology concerning a research problem or study. The project is astudy where focus is on the following points:4.2 RESEARCH DESIGN AND METHODOLOGYResearch is a common language refers to a search of knowledge. Research is scientific & systematic searchfor pertinent information on a specific topic, infect research is an art of scientific investigation. ResearchMethodology is a scientific way to solve research problem. It may be understood as a science of studyinghow research is don‟t scientifically. In it we study various steps that are generally adoptedby researchers in studying their research problem. It is necessary for researchers to know not only knowresearch method techniques but also technology.The scope of Research Methodology is wider than that of research methods.The research problem consists of series of closely related activities. At times, the first step determines thenative of the last step to be undertaken. Why a research has been defined, what data has been collectedand what a particular methods have been adopted and a host of similar other questions areusually answered when we talk of research methodology concerning a research problem or study. Theproject is a study where focus is on the following points:
RESEARCH DESIGN:A research design is defined, as the specification of methods and procedures for acquiring the Informationneeded. It is a plant or organizing framework for doing the study and collecting the data. Designing aresearch plan requires decisions all the data sources, research approaches, Research instruments, samplingplan and contact methods.Research design is mainly of following types: -1. Exploratory research.2. Descriptive studies3. Casual studiesEXPLORATORY RESEARCH:The major purposes of exploratory studies are the identification of problems, the more precise Formulationof problems and the formulations of new alternative courses of action. The design of exploratory studies ischaracterized by a great amount of flexibility and ad-hoc veracity.DESCRIPTIVE STUDIES :Descriptive research in contrast to exploratory research is marked by the prior formulation of specificresearch Questions. The investigator already knows a substantial amount about the research problem.Perhaps as a Result of an exploratory study, before the project is initiated. Descriptive research is alsocharacterized by a Preplanned and structured design.CASUAL OR EXPERIMENTAL DESIGN :A casual design investigates the cause and effect relationships between two or more variables. Thehypothesis is tested and the experiment is done. There are following types of casual designs:I. After only designII. Before after designIII. Before after with control group designIV. Four groups, six studies designV. After only with control group design.VI. Consumer panel design
VII. Exposit facto design4.3 ANALYSES OF DATAA) DATA COLLECTION METHODPRIMARY SECONDARYDirect personal InterviewIndirect personal InterviewInformation from correspondents Govt.publicationMailed questionnaire Report Committees & CommissionsQuestion filled by enumerators. Private PublicationResearch InstitutePRIMARY DATA:These data are collected first time as original data. The data is recorded as observed or encountered.Essentially they are raw materials. They may be combined, totaled but they have not extensively beenstatistically processed. For example, data obtained by the peoples.SECONDARY DATA:Sources of Secondary DataFollowing are the main sources of secondary data:1. Official Publications: Publications of the JAYPEE REAL ESTATE and by the corporate office of JAYPEE REALESTATE.2. Publications Relating to Trade: Publications of the trade associations, stock exchange, trade union etc.
3. Journal/ Newspapers etc.: Some newspapers/ Journals collect and publish their own data, e.g. IndianJournal of economics, economist, Economic Times.4. Data Collected by Industry Associations: For example, data available with JAYPEE REAL ESTATE.5. Unpublished Data: Data may be obtained from several companies, organizations, working in the sameareas. For example, data on JAYPEE REAL ESTATE magazines.Period of Study: This study has been carried out for a maximum period of 8 weeks.Area of study: The study is exclusively done in the area of marketing. It is a process requiring care,sophistication, experience, business judgment, and imagination for which there can be no mechanicalsubstitutes.Sampling Design: The convenience sampling is done because any probability sampling procedure wouldrequire detailed information about the universe, which is not easily available further, it being an exploratoryresearch.Sample Procedure: In this study “judgmental sampling procedure is used. Judgmental sampling is preferredbecause of some limitation and the complexity of the random sampling. Area sampling is used incombination with convenience sampling so as to collect the data from different regions of the city and toincrease reliability.Sampling Size: The sampling size of the study is 50 users.METHOD OF THE SAMPLINGPROBABILITY SAMPLING:It is also known as random sampling. Here, every item of the universe has an equal chance or probability ofbeing chosen for sample.Probability sampling may be taken inform of:
SIMPLE RANDOM SAMPLINGA simple random sample gives each member of the population an equal chance of being chosen. It is not ahaphazard sample as some people think! One way of achieving a simple random sample is tonumber each element in the sampling frame (e.g. give everyone on the Electoral register a number) andthen use random numbers to select the required sample.Random numbers can be obtained using your calculator, a spreadsheet, printed tables of random numbers,or by the more traditional methods of drawing slips of paper from a hat, tossing coins or rolling dice.SYSTEMATIC RANDOM SAMPLINGThis is random sampling with a system! From the sampling frame, a starting point is chosen at random, andthereafter at regular intervals.STRATIFIED RANDOM SAMPLINGWith stratified random sampling, the population is first divided into a number of parts or strata according tosome characteristic, chosen to be related to the major variables being studied. For this survey, the variableof interest is the citizens attitude to the redevelopment scheme, and the stratificationfactor will be the values of the respondents homes. This factor was chosen because it seems reasonable tosuppose that it will be related to peoples attitudesCLUSTER AND AREA SAMPLINGCluster sampling is a sampling technique used when "natural" groupings are evident in a statisticalpopulation. It is often used in marketing research. In this technique, the total population is divided intothese groups (or clusters) and a sample of the groups is selected. Then the required information is collected
from the elements within each selected group. This may be done for every element in these groups or asubsample of elements may be selected within each of these groups.NON PROBABILITY SAMPLINGIt is also known as deliberate or purposive or judge mental sampling. In this type of sampling, every item inthe universe does not have an equal, chance of being included in a sample.It is of following type:CONVENIENCE SAMPLINGA convenience sample chooses the individuals that are easiest to reach or sampling that is done easy.Convenience sampling does not represent the entire population so it is considered bias.QUOTA SAMPLINGIn quota sampling the selection of the sample is made by the interviewer, who has been given quotas to fillfrom specified sub-groups of the population.JUDGMENT SAMPLINGThe sampling technique used here in probability > Random Sampling.The total sample size is 50 profiles.4.4 SUMMARIES OF FINDINGSBUSINESS STRATEGIES OF THE REAL ESTATE INDUSTRYTHE MARKETING CONCEPTThe marketing concept is a business philosophy that challenges the three business orientations we justdiscussed. Its central tenets crystallized in the mid-1950s.
• The marketing concept holds that the key to achieving its organizational goals consists of the companybeing more effective than competitors in cre¬ating, delivering, and communicating customer value to itschosen target markets.The marketing concept has been expressed in many colorful ways:"Meeting needs profitably.""Find wants and fill them."Love the customer, not the product.""Have it your way. (Burger King)"Youre the boss." (United Airlines)"Putting people first." (British Airways) "Partners for profit." (Milliken & Company)Theodore Levitt of Harvard drew a perceptive contrast between the selling and marketing concepts:Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied withthe sellers need to convert his product into cash; marketing with the idea of satisfying the needs of thecustomer by means of the product and the whole cluster of things associated with creating, delivering andfinally consuming it.The marketing concept rests on four pillars: target market, customer needs, integrated marketing, andprofitability. They are illustrated in Figure where they are contrasted with a selling orientation. The sellingconcept takes an inside-out perspective. It starts with the factory, focuses on existing products, and calls forheavy selling and promoting to produce profitable sales. The marketing concept takes an outside-inperspective. It starts with a well defined market, focuses on customer needs, coordinates all the activitiesthat will affect customers, and produces profits by satisfying customers. see the Marketing Insight “Scholarsand Dollars: Marketing and Selling Comes to College”.TARGET MARKETCompanies do best when then choose their target market(s) carefully and prepare tailored marketingprogramsCUSTOMER NEEDSA company can define its target market but fail to correctly understand the customers needs. Consider thefollowing example:
A major chemical company invented a new substance that hardened into a marble ¬like material. Lookingfor an application, the marketing department decided to tar¬get the bathtub market. The company createda few model bathtubs and exhibited them at a trade show. They hoped to convince manufacturers toproduce bathtubs with the new material. Although bathtub manufacturers thought the tubs were at-tractive,none signed up. The reason soon became obvious. 7he bathtub would have to be priced at $2,000, whereasmost bathtubs sold in the $500 range. For the higher price, consumers could buy tubs made out of realmarble or onyx. In addition, the bathtubs were so heavy that homeowners would have to reinforce theirfloors.Understanding customer needs and wants is not always simple. Some customers have needs of which theyare not fully conscious. Or they cannot articulate these needs. Or they use words that require someinterpretation. What does it mean when the customer asks for an inexpensive" car, a powerful lawnmower, a fast lathe, an "attractive" bathing suit, or a restful" hotel?Consider the customer who says he wants an inexpensive car. The marketer must probe further. We candistinguish among five types of needs:1. Stated needs (the customer wants an inexpensive car)2. Real needs (the customer wants a car whose operating cost, not its initial price, is low)3. Unstated needs (the customer expects good service from the dealer)4. Delight needs (the customer would like the dealer to include a gift of a U.S. road atlas)5. Secret needs (the customer wants to be seen by friends as a savvy consumer)Responding only to the stated need may shortchange the customer. Consider a woman who enters ahardware store and asks for a sealant to seal glass window panes. This customer is stating a solution,not a need. The salesperson might suggest that tape would provide a better solution. The customer mayappreciate that the salesperson not her need, not her stated solution.A distinction needs to be drawn between responsive marketing, anticipative market¬ing, and creativemarketing. A responsive marketer finds a stated need and fills it. An anticipative marketer looks ahead intowhat needs customers may have in the near future. A creative marketer discovers and produces solutionscustomers did not ask for but to which they enthusiastically respond. Hamel and Prahalad believe thatcom¬panies must go beyond just asking consumers what they want:Customers are notoriously lacking in foresight. Ten or 15 years ago, how many of us were asking for cellular
telephones, fax machines, and copies at home, 24-hour discount brokerage accounts, multi valveautomobile engines, compact disc players, cars with on-board navigation systems, hand-held global satellitepositioning re¬ceivers, automated teller machines, MTB, or the Home Shopping Network?Why is it supremely important to satisfy target customers? Because a companys sales each period comefrom two groups: new customers and repeat customers. One estimate is that attracting a new customer cancost five times as much as pleasing an existing one. And it might cost sixteen times as much to bringthe new customer to the same level of profitability as the lost customer. Customer retention is thus moreimportant than customer attraction.INTEGRATED MARKETINGWhen all the companys departments work together to serve the customers interests, the result isintegrated marketing. Unfortunately, not all employees are trained and motivated to work for the customer.An engineer once complained that the salespeople are "always protecting the customer andnot thinking of the companys interest! He went on to blast customers for "asking for too much." Thefollowing example high¬lights the coordination problem:The marketing vice president of a major European airline wants to increase the air¬lines traffic share. Hisstrategy is to build up customer satisfaction through pro¬viding better food, cleaner cabins, better trainedcabin crews, and lower fares. Yet he has no authority in these matters. The catering department choosesfood that keeps down food costs; the maintenance department uses cleaning services that keep downcleaning costs; the human resources department hires people without regard to whether they are naturallyfriendly; the finance department sets the fares. Be¬cause these departments generally take acost or production point of view, the vice president of marketing is stymied in creating an integratedmarketing mix.Integrated marketing takes place on two levels. First, the various marketing functions-sales force,advertising, customer service, product management, marketing re¬search-must work together. Too oftenthe sales force thinks product managers set prices or sale quotas "too high"; or the advertising directorand a brand manager all ¬not agree on an advertising campaign. All these marketing functions must be co-
or¬dinated from the customers point of view.Second, marketing must be embraced by the other departments; they must also "think customer."According to David Packard of Hewlett-Packard: "Marketing is far too important to be left only to themarketing department!" Marketing is not a department so much as a company wide orientation. Xerox goesso far as to include in every job description an explanation of how that job affects the customer. Xeroxfac¬tory managers know that visits to the factory can help sell a potential customer if the factory isclean and efficient. Xerox accountants know that customer attitudes are af¬fected by Xeroxs billing accuracyand promptness in returning calls.To foster teamwork among all departments, the company carries out internal mar¬keting as well as externalmarketing. External marketing is marketing directed at people outside the company. Internalmarketing is the task of hiring, training, and motivating able employees who want to serve customers well.In fact, internal mar¬keting must precede external marketing. It makes no sense to promise excellentservice before the companys staff is ready to provide it.Managers who believe the customer is the companys only true profit center consider the traditionalorganization chart in Figure 1.8(a)- a pyramid with the pres¬ident at the top, management in the middle,and front-line people and customers at the bottom-obsolete. Master marketing companies invert the chart,as shown in Figure 1.8(b). At the top are the customers; next in importance are the front-line people whomeet, serve, and satisfy the customers; under them are the middle managers, whose job is to support thefront-line people so they can serve the customers well; and at the base is top management, whose job is tohire and support good middle managers. We have added customers along the sides ofFigure 1.8(b) to indicate that all the companys managers must be personally involved in knowing, meeting,and serving customers.PROFITABILITYThe ultimate purpose of the marketing concept is to help organizations achieve their objectives. In the caseof private firms, the major objective is profit; in the case of nonprofit and public organizations, it is survivingand attracting enough funds to perform useful work. Private firms should not aim for profits
as such but to achieve prof¬its as a consequence of creating superior customer value. A company makesmoney by satisfying customer needs better than its competitors. Consider Frank Perdues phi¬losophy:Most companies do not embrace the marketing concept until driven to it by circumstances. Variousdevelopments prod them to take the marketing concept to heart:• Sales decline: When sales fall, companies panic and look for answers. Today, newspapers are experiencingdeclining circulation as more people rely on radio, TV, and the Internet for their news. Some publishers nowrealize that they know little about why people read newspapers. These publishers• are commissioning consumer research and attempting to redesign newspapers to be contemporary,relevant, and interesting to readers. They are also starting Web pages.• Slow growth: Slow sales growth leads some companies to search for new markets. They realize they needmarketing skill to identify and select new opportunities. Wanting new sources of revenue, Dow•• Chemical entered consumer markets and invested heavily to acquire consumer marketing expertise toperform well in these markets.• Changing buying patterns: Many companies operate in markets characterized by rapidly changingcustomer wants. These companies need more marketing know- how if they are to track buyers changingvalues.• Increasing competition: Complacent companies may suddenly be attacked by powerful competitors. AT&Twas a regulated, marketing-naive telephone company until the 1970s, when the government began allowingother companies to sell telecommunications equipment. AT&T plunged into• the marketing waters and hired the best marketers it could find to help it compete. Companies inderegulated industries all find it necessary to build up marketing expertise.• Increasing marketing expenditures: Companies may find their expenditures for advertising, salespromotion, marketing research, and customer service to be poorly done. Management then decides it is timeto undertake a serious marketing audit to improve its marketing. In the course of converting to a