This document provides a case study analysis of Starbucks, a successful global coffee retailer. It discusses Starbucks' history and timeline from 1971 to 2009, including key acquisitions and expansions. It analyzes Starbucks' industry, core competencies, strategies, and SWOT. It finds that Starbucks' differentiation through premium products and customer experience has driven loyalty. It recommends Starbucks continue expanding internationally, especially in emerging markets, by tailoring its approach to local markets.

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Report On
An Exploratory and Descriptive Study of
Online, Offline and both Consumer Banking
An Insight into Consumer Behavior
Submitted To: Prof. Guruprasad
By: Prajakta Patil
Mayuri Negi
Surbhi Jindal
Sumit Shinde
Karthik Mysore
Sonia Grover

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Table of Contents
1. Abstract
1.1 Executive Summary…………………………………………………………………….4
Retail in INDIA……………………………………………………………………………………4
Introduction of Indian retail industry background one
successful retail company case from abroad
1.2 Starbucks Case Study……………………………………………………………….10
Indian Ecommerce-Online sales, Banking industry, one
successful online company case from abroad
1.3 Amazon………………………………………………………………………………………16
Online sales business and Online Banking business
1.4 E-Banking in India…………………………………………………………………….18
1.5 Retail in India……………………………………………………………………………25
1.6 Key Sectors Trends in India…………………………………………………….26
1.7 Online Retail in India……………………………………………………………….28
Case study analysis of one successful and one failed retail
business in India
1.8 Pantaloons……………………………………………………………………………….32
1.9 Subhiksha Retail Store…………………………………………………………….37
Case study analysis of one successful and one failed online
business in India
1.10 flipkart…………………………………………………………………………………….43
1.11 Yebhi………………………………………………………………………………………48

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2. Introduction
2.1 Banking Industry in INDIA………………………………………………………….51
2.2 Objectives……………………………………………………………………………………59
2.3 Limits of the Report…………………………………………………………………….60
2.4 Methods of Enquiry……………………………………………………………………..60
2.5 Proposed Development……………………………………………………………….61
3. Methodology
3.1 Collection of Data………………………………………………………………………..61
4. Research Findings
4.1 Result and Findings………………………………………………………………………65
4.2 Consumer Behavior………………………………………………………………………65
5. Discussion
5.1 Problem formulation…………………………………………………………………….67
5.2 Management problem………………………………………………………………….67
5.3 Research problem………………………………………………………………………..67
6. Conclusions…………………………………………………………………………………………68
7. Recommendations……………………………………………………………………………..68
8. Exhibits……………………………………………………………………………………………….69
9. GRAPHS………………………………………………………………………………………….….72
10. Bibliography…………………………………………………………………………………….90

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1. Abstract
Team went to Thane, Mulund, Karjat, and Ghatkopar. Basic age of
prospects was 30- 70 and our concept behind the research was how safe it
is for the consumers in using offline and online banking services. Team
analyzed that people of age 30 - 45 mostly preferred online services
depending on their education their knowledge of internet. Above the age of
45 most of them were preferring offline services and sometimes due to the
reason that they don’t feel online service are safer for them or easy to use.
We tried to understand their convenience.
1.1 Executive Summary
Internet banking has attracted the attention of banks, securities
trading firms, brokerage houses, insurance companies, regulators and
lawmakers in developing nations since the late 1990s. With the rapid
and significant growth in electronic commerce, it is obvious that electronic
(internet) banking and payments are likely to advance. Researches show
that impact of internet banking on cost savings, revenue growth and
increased customer satisfaction on Industry is tremendous and can be a
potential tool for building a sound strategy. However, it has raised many
public policy issues before the banking regulators and government
agencies. Interestingly, reliable and systematic information on the scope of
internet banking in Indian context is still not sufficient, particularly what
it means to the consumers and the bankers.
Retail Industry in INDIA
Introduction
The Indian retail industry has presently emerged as one of the most
dynamic and fast paced industries as several players have started to enter

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the market. It accounts for over 10 per cent of the country’s gross domestic
product (GDP) and around eight per cent of the employment in India. The
country is today the fifth largest global destination in the world for retail.
Several corporates have planned to exploit the opportunities in the Indian
retail space, such as Reliance Industries Ltd (RIL), which has lined up
capital expenditure of Rs 1.8 trillion (US$ 28.94 billion) for the next three
years for its petrochemicals, telecom and retail ventures. With the growth in
the retail industry, the corresponding demand for real estate is also being
created. Further, with the online medium of retail gaining more and more
acceptance, there is a tremendous growth opportunity for retail companies,
both domestic and international.
Market Size
India’s retail market is expected to double to US$ 1 trillion by 2020 from
US$ 600 billion in 2015 driven by income growth, urbanization and
attitudinal shifts, highlighted the Boston Consulting Group and Retailers
Association of India’s report titled, ‘Retail 2020: Retrospect, Reinvent,
Rewrite’. While the overall retail market will grow at 12 per cent per annum,
modern trade will grow twice as fast at 20 percent per annum, and
traditional trade at 10 percent, according to a report titled Retail 2020:
Retrospect, Reinvent, Rewrite by Boston Consulting Group and Retailers
Association of India. The retail spending in the top seven Indian cities of
India currently amounts to Rs 3.58 trillion (US$ 57.56 billion), with
organized retail penetration at 19 per cent in 2014.(see fig 1.3 & 1.4) It is
expected that the online retail will be at par with the physical stores in five
years India is expected to become the world’s fastest growing e-commerce
market on the back of robust investment activity in the sector and the rapid
increase in internet users. It is expected that India’s e-commerce market
will grow from US$ 2.9 billion in 2013 to over US$ 100 billion by 2020. E-
trailers are betting on more Indians switching to shopping online, with a
projection of 200 million new consumers by 2017, according to a report
released last year by Accel, India

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Investments
The Indian retail industry in the single brand segment has received foreign
direct investment (FDI) equity inflows to the tune of US$ 275.38 million in
the period April 2000—January 2015, according to the Department of
Industrial Policies and Promotion (DIPP). With the rising need for consumer
goods in different sectors including consumer electronics and home
appliances, many companies have invested in the Indian retail space in the
past few months.
Some of them are:
set up 30,000 to 50,000 retail outlets where its
customers can load cash on their digital wallets. The company is also
looking to enroll retailers - mostly kirana stores - as merchants for
accepting digital payments.
artnered with Jabong.com to
provide mobile payment services to Jabong's customers.
Data Wind has partnered with HomeShop18 to expand its retail footprint
in the country. Under the partnership, HomeShop18 and Data Wind will
jointly launch special sales programs across broadcast, mobile and internet
media to create greater access of the latter's tablet range.
Inc. and flip kart India will invest nearly Rs 2,300 crore (US$
369.87 million) in the near term as they plans to acquire more customers in
the country's fast-growing online retail market.
and You has opened three distribution hubs in Surat, Mumbai
and Bengaluru to hasten deliveries.
-based Lulu Group plans to invest Rs 2,500 crore (US$ 401.98
million) in a fruit and vegetable processing unit, an integrated meat
processing unit and a modern shopping mall in Hyderabad, Telangana.

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Government Initiatives
Ms Nirmala Sitharaman, Union Minister of Commerce and Industry,
Government of India has stressed on India building a culture of branding
and marketing its products to the rest of the world. The ministry is also
willing to take steps to start a Free Trade Agreement (FTA) with the
European Union (EU). The Government of India has taken various initiatives
to improve the re
Foreign Investment Promotion Board (FIPB) has cleared five retail proposals
worth around Rs 420 crore (US$ 67.53 million) from companies such as
Bestseller, Puma SA and Flemingo. Additionally, the board cleared three
100 per cent single-brand retail proposals worth Rs 222.5 crore (US$ 35.77
IKEA has entered into a memorandum of understanding (MoU) with the
Government of Telangana to set up its first store in India at Hyderabad.
IKEA retail outlets have a standard design and each location entails an
investment of around Rs 500-600 crore (US$ 80.38-
Government of India is also in the final phase of talks with the states for the
Goods and Services Tax Bill to be implemented.

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Road Ahead
The share of e-Commerce is growing steadily. Customers have an ever
increasing choice of products at the lowest rates. E-Commerce is probably
creating the biggest disruption in the retail industry and this trend will
continue in the year to come. Almost everything is sold on the internet now
and this means that pretty much all of the retail industry faces the
challenge of either being a part of e-commerce or taking it head on. For
better prospects of this industry, as a whole, both organized and
unorganized retail companies should work together to improve the overall
retail industry, while generating new benefits for their own customers. Also,
the retailers should take advantage of digital retail channels (e-commerce),
which would enable them to spend less money on real estate while reaching
more customers in tier-2 and tier-3 cities. Nevertheless, the long term
outlook for the industry remains to be positive on the back of rising
incomes, favorable demographics, entry of foreign players and increasing
urbanization.

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Introduction of Indian retail industry background one
successful retail company case from abroad
1.2 Starbucks case study
Starbucks Company Timeline
1971 Starbucks opens first store in Seattle’s Pike Place Market.
1982 Howard Schultz joins Starbucks as director of retail operations and
marketing. Starbucks begins providing coffee to fine restaurants and
espresso bars.
1984 Howard convinces the founders of Starbucks to test the coffeehouse
concept in downtown Seattle, where the first Starbucks Cafe Latte is
served. This successful experiment is the genesis for a company that
Schultz founds in 1985.
1985 Howard founds Il Giornale, offering brewed coffee and espresso
beverages made from Starbucks coffee beans.
1987 Il Giornale acquires Starbucks assets with the backing of local
investors and changes its name to Starbucks Corporation. Opens in Chicago
and Vancouver, Canada.
1990 Starbucks expands headquarters in Seattle.
1991 Becomes the first privately owned U.S. Company to offer a stock
option program that includes part‐time employees. Opens first licensed
airport store at Seattle’s Sea-Tac International Airport.
1992 Completes initial public offering (IPO), with common stock being
traded on the NASDAQ National Market under the trading symbol SBUX.
1994 Opens first drive‐thru location.
1995 Begins serving Frappuccino blended beverages. Introduces Starbucks
super‐premium ice cream. Announces second two‐for‐one stock split. Opens
roasting facility in York, Pa.

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1996 Begins selling bottled Frappuccino coffee drink through North
American Coffee Partnership (Starbucks and Pepsi‐Cola North America).
1997 Establishes the Starbucks Foundation.
Opens stores in: the Philippines.
1998 Extends the Starbucks brand into grocery channels across the U.S.
1999 Acquires Tazo Tea. Acquires Hear Music, a San Francisco–based
music company.
Announces third two‐for‐one stock split.
2000 Howard Schultz transitions to chairman and chief global strategist,
Orin Smith promoted to president and chief executive officer. Establishes
licensing agreement with Trans Fair USA to sell Fairtrade certified coffee in
U.S. and Canada.
2002 Establishes Starbucks Coffee Trading Company (SCTC) in Lausanne,
Switzerland.
2003 Acquires Seattle Coffee Company, which includes Seattle’s Best
Coffee and Torrefazione Italia coffee.
2004 Opens first Farmer Support Center in San Jose, Costa Rica.
2005 Jim Donald becomes president and chief executive officer to replace
retiring Orin Smith. Acquires Ethos Water. Announces fifth two‐for‐one stock
split.
2006 Launches the industry’s first paper beverage cup containing
postconsumer recycled fiber.
2007 Eliminates all artificial Trans-fat and makes 2 percent milk the new
standard for espresso beverages.
2008 Chairman Howard Schultz returns as chief executive officer. Launches
My Starbucks Idea, Starbucks first online community. Launches Pike Place
Roast.

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2009 Launches Starbucks VIA Ready Brew Coffee. Opens East Africa
Farmer Support Center in Kigali, Rwanda. Launches my Starbucks and
Starbucks Card iPhone apps and Starbucks Card Mobile payment.
2.2 Industry overview and analysis
In Starbucks primarily operates and compels in the retail coffee and snacks
store industry. After the decline in revenue in 2009, declining 6.6% to
$25.9 billion, the industry grew at a low annualized average growth rate of
0.9% from 2008 till 2013 with current industry revenue at $29 billion in
U.S.
Starbucks dominates the industry with the market share of 36.7%, dunk in
brands with 24.6% and other competitors like McDonald’s costa coffee, Tim
Horton’s etc.
The industry is in mature state with a medium level concentration
Starbucks and dunk in brands make up more then 60-% of market share,
giving them considerable market power in determining industry trends. The
industry’s demand for premium coffee and snake product are mainly driven
by a number of factors which include disposable income, per capita coffee
consumption, attitude towards health, world pricing of coffee and
demographics. Another crucial factor for analyzing the demand in the
industry is the per capita coffee consumption where the increase in coffee
consumption increases the revenue of coffee and snake shop.
There is an expected shift towards healthy eating and diet among the
consumers in 2014, and this could be a potential threat to the industry as
they become more aware of issues related to weight and obesity.
Porters Five Forces Analysis of the Retail Coffee and Snacks
Industry:

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2.3 Starbucks core competencies
The core competence of Starbucks has been its ability to effectively
leverage their cornerstone product differentiation strategies by offering a
premium product mix of high quality beverages and snacks. Starbuck’s
brand equity is built on selling the finest quality coffee and related products,
and by providing each customer a unique “Starbucks Experience”, which is
derived from supreme customer service, clean and well-maintained stores
that reflect the culture of the communities in which they operate, thereby
building a high degree of customer loyalty with a cult following. Its other
core competence is its human resource management's values-based
approach for building very strong internal and external relationships with
suppliers, which drives the successful deployment of its business strategy of
organic expansion into international markets, horizontal integration through
smart acquisitions and alliances that maintains their long-term strategic
objective being the most recognized and respected brands in the world. 2.4
SWOT analysis
Strengths:
y Initiatives:

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Weaknesses:
-Cannibalization through overcrowding
ge.
Opportunities:
advances
Threats:
2.5 Starbucks Key Strategies:
One of the key strategy that Starbucks followed since its inception is that of
product differentiation offering differentiators such as premium product mix,

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locations, coffee beverages reputation and supreme customer service that
translated to building a premium valued brand which is costly to imitate for
competitors. Starbucks has also followed a shrewd strategy of strategic
alliance and making smart acquisitions. Starbucks didn’t follow franchising
model and operated company oriented stores and joint ventures in
international markets. Starbucks has made some key acquisitions such as
Teavana (Tea products), Bay Breads (premium bread products), Evolution
Fresh (fresh juice products) etc. to use the product diversification strategy.
Starbucks acquisition strategy, as shown in their acquisition history in
Appendix, has been horizontal, product and market extensions acquisitions.
Another crucial strategy for Starbuck’s growth has been its international
strategies of expanding into key developed and emerging markets to
geographically diversify, and it has been highly successful with operation
spanning 60 countries. All these strategies have derive considerable
competitive advantage for Starbucks over its competitors.
2.6 Recommendations:
ggest growth is in its International segment. The emerging
markets of Brazil, India, China, South Africa and Mexico with a growing
middle-class population continue to offer significant opportunities to add
new stores and serve more customers. Starbucks has already made
significant inroads into the Chinese market but there still is a lot of
untapped potential growth in these markets. Starbucks should grow in
these emerging markets by winning locally Starbucks must remain relevant
to the customer in order to grow in these markets, and its management
teams should have the freedom to operate within their overall framework to
tailor store format, introduce local product mix and price points to the
needs, lifestyles and tastes of each individual market/community.
competencies and capabilities country to country and then gradually build
profit drivers in several countries as it continues its global expansion in an
organic way.

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t growth opportunities in Tea and Fresh Juice products
mix. They should build up these products along the same line of their core
coffee products.
beverages options, Starbucks should tailor its menu’s and expand to give
healthier product offerings in its mix.
have been wide fluctuations in the market prices of high quality coffee
beans. Starbucks could mitigate this price volatility risky by implementing
an effective hedging strategy like future contracts to lock in their estimated
quantity inputs at a low swing price so that the future costs can be
managed to a greater extent.
2010 Expands digital offerings for customers with free unlimited Wi‐Fi.
2011 Celebrates 40th anniversary with updated brand identity.
2012 Introduces Starbucks Blonde Roast.
Indian Ecommerce-Online sales, Banking industry, one
successful online company case from abroad
1.3 Amazon
About the company:
Amazon.com, Inc. is an American electronic commerce company with
headquarters in Seattle, Washington. It is the largest Internet-based
retailer in the United States. Amazon.com started as an online bookstore,
but soon diversified, selling DVDs, VHSs, CDs, video and MP3
downloads/streaming, software, video games, electronics, apparel,
furniture, food, toys, and jewellery. The company also produces consumer
electronics—notably, Amazon Kindle e-book readers, Fire tablets, Fire TV
and Fire Phone — and is a major provider of cloud computing services.

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Amazon also sells certain low-end products like USB cables under its in-
house brand Amazon Basics.
Amazon has separate retail websites for United States, United Kingdom &
Ireland, France, Canada, Germany, The Netherlands, Italy, Spain, Australia,
Brazil, Japan, China, India and Mexico. Amazon India will soon start offering
music, movie and video streaming services in India. Amazon also offers
international shipping to certain other countries for some of its products. In
2011, it had professed an intention to launch its websites in Poland and
Sweden.
The company's global headquarters are in 14 buildings in Seattle's South
Lake Union neighbourhood. The European headquarters are in
Luxembourg's capital, Luxembourg City. In Seattle, as of 2012, a three-
tower headquarters near Amazon's existing buildings with a capacity of
12,000 employees is under construction.
Problem in the Case
Solutions
Amazon web services face competition from established providers Dell,
Microsoft and Google.
MerchantservicesareincompetitionwithahostofInternetPaymentServiceprovid
erslocatedacrosstheworld
•Accumulated technological expertise in retailing
•Customer management technology
•3rd party selling platform i.e. Amazon marketplace

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Online sales business and Online Banking business
1.4 E-Banking in India
Introduction:
Banking business in India is more than 300 years old with the first ever
bank – the Bank of Calcutta originating in 1806 which later went on to
become State Bank of India, the largest public sector bank today in the
country.
With the advent of Internet and Communication Technology (ICT) in the
21st century, the banking industry has gone through a transformation in
the way business is done. Today most of the banking happens while you are
sipping coffee or taking an important call. ATMs are at your doorstep.
Banking services are accessible 24x7. There are more plastic cards in your
wallet than currency notes. Banks today operate in a highly globalized,
liberalized, privatized and a competitive environment.
Researches show that impact of internet banking on cost savings, revenue
growth and increased customer satisfaction on Industry is tremendous and
can be a potential tool for building a sound strategy. However, it has raised
many public policy issues before the banking regulators and government
agencies. Interestingly, reliable and systematic information on the scope of
internet banking in Indian context is still not sufficient, particularly what
it means to the consumers and the bankers.
As part of our assignment we have studied the research paper published by
Dr. Roshan Lal and Dr. Rajni Salu in Asia Pacific Journal of Marketing &
Management Review ISSN 2319-2836 Vol.1(4), December 2012 and
another paper by Prof. Sufyan Habib, published in Research Journal of
Management Sciences ISSN 2319-1171 Vol.1(3), 20-24, October 2012
Insights from the Literature:

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Industry size, structure, growth & global positioning:
E-Banking:
E-banking is the term that signifies and encompasses the entire sphere of
technology initiatives that have taken place in the banking industry. E-
banking is a generic term making use of electronic channels through
telephone, mobile phones, internet etc. for delivery of banking services and
products. The concept and scope of e-banking is still in the transitional
stage. E-banking has broken the barriers of branch banking.
Evolution of e-banking:
E-banking came into being in UK and USA in 1920s. It became prominently
popular during 1960s through electronic funds transfers and credit cards.
The concept of web-based banking came into existence in Europe and USA
in the beginning of 1980s. It has been estimated that around 40 percent of
banking transaction would be done through net.
E-Banking in India:
In India e-banking is of fairly recent origin. The traditional model for
banking has been through branch banking. Only in the early 1990s there
has been start of non-branch banking services. The good old manual
systems on which Indian Banking depended upon for centuries seem to
have no place today. The credit of launching internet banking in India goes
to ICICI Bank. Citibank and HDFC Bank followed with internet banking
services in 1999. Several initiatives have been taken by the Government of
India as well as the Reserve Bank to facilitate the development of e-banking
in India. The Government of India enacted the IT Act, 2000 with effect from
October 17, 2000 which provided legal recognition to electronic transactions
and other means of electronic commerce. The Reserve Bank is monitoring
and reviewing the legal and other requirements of e-banking on a
continuous basis to ensure that e-banking would develop on sound lines
and e-banking related challenges would not pose a threat to financial
stability.

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To cope with the pressure of growing competition, Indian commercial banks
have adopted several initiatives and e-banking is one of them. The
competition has been especially tough for the public sector banks, as the
newly established private sector and foreign banks are leaders in the
adoption of e-banking.
Indian banks offer to their customers following e-banking products
and services:
• Automated Teller Machines (ATMs)
• Internet Banking
• Mobile Banking
• Phone Banking
• Telebanking
• Electronic Clearing Services
• Electronic Clearing Cards
• Smart Cards
• Door Step Banking
• Electronic Fund Transfer
Internet revolution is global phenomenon and going by the current
growth statistics, India expects a spurt in the Internet penetration in
coming years particularly in the electronic commerce. It is an obvious
notion that electronic (internet) banking and payments are likely to
advance more or less in tandem with e-commerce. Researches indicate
that internet banking has a significant impact on the business models of
banks, securities trading firms, brokerage houses, insurance companies etc.
Internet banking has also attracted the attention of, regulators and
lawmakers in the developing nations since the late 1990s.

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Internet banking is a cause of concern to majority of the offline
banks who should be ready for an unprecedented competition from
the non-traditional banking institutions that offer banking and financial
services over the Internet. Although some of the traditional banks have
started offering their services on line, it is only an extension of their offline
services. Internet banking has now started motivating customers to
park their funds with the online banks, which has a substantially
impact on the deposit base of the brick and mortar banks.
The use of technology in banking has direct relationship with the
profitability. Cetris paribus, investment in electronic banking increase
the profit margin of banks by reducing costs and increase in non-
interest income, which will increases the Return on Assets (ROA) and
Return on Equity (ROE). Cost-effectiveness in delivery of services
directly implies comparatively high consumer satisfaction and a consequent
change in the revenue model for the banks. Adoption of the internet
mode of banking would result in increased consumer awareness,
attracts the entry of global majors in the market and would lead to the
emergence of open standards in the banking industry. The integration of
the banking services with e-commerce and emergence of e-cash would
positively affect the efficiency scores of the banks.
However, Internet banking is a mixed blessing in the form of
increased risk, the level of confidence reposed by the consumers and the
problem of blending it with the physical system. Internet banking has
brought about a new orientation to risks like settlement risk, international
technology transfer risk, crime or fraud risk, regulatory avoidance risk,
taxation avoidance risk, and competition risk. Basel II recommendation on
operational risk also supports this hypothesis. In India, some banks like
HDFC and ICICI have introduced payment gateways running on secure
systems having firewalls against hacking. Convenience, safety and cost
effectiveness are the jargons in the spectrum of online banking.
Computerization in Public Sector Banks:
Computerization as well as the adoption of core banking solutions was one
of the major steps in improving the efficiency of banking services. It is

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important to note that presently almost 98 percent of the branches of public
sector banks are fully computerized and within which almost 90 percent of
branches are on core banking platform.
The awareness level of private sector Indian banks is the highest followed
by the foreign banks. This is mainly due to the reason that private sector
Indian banks are relatively new and they have positioned themselves as
online banks from the very inception. Also, the various consumer groups do
not perceive the public sector banks as online banks. However, the banks
feel that their market perception is likely to change soon once they put on
intensive advertising. Banks proposing the Initial Public Offer (IPOs) of
securities in near future can think of simultaneously positioning themselves
as the new generation banks.
Electronic Clearing Cards:
Now-days Electronic Cash is being used in place of hard cash. Electronic
Clearing Cards such as debit and credit cards. Debit card allows „anywhere
any time accesses‟ to the customers with their savings or current account.
A customer possessing a Debit Card need not carry cash. Credit card also
serves as convenient medium of exchange. It enables a customer to
purchase goods or services within prescribed limits from certain authorized
retail and service establishments without making immediate cash
payments. It is also called plastic money. The most important difference
between a Credit card and a Debit card is that while credit card is a post-
paid and debit card is pre-paid.
Bank Group-wise outstanding number of debit cards issued by scheduled
commercial banks as at end March 2011. In 2010-11, Public sector banks
have highest number of debit cards issued (170.34) which is 74.76 percent
of total debit cards issued by the industry. Nationalized Banks (35.23) and
SBI group (39.53) have high percent of cards issued as compared to Private
sector banks (23.52). The share of new private sector banks is higher as
compared to old private sector banks. Foreign banks have 1.72 percent of
total debit cards issued.

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Consumer Behavior and Concerns:
Usage Patterns A significant variation exists between the various banks for
the frequency of usage (F= 7.503) with high value for Indian private banks
followed by multinational banks. Interviews conducted at banks revealed
that the use of Internet banking is mainly attributable to day-to-day
transactions, which is further confirmed by the questionnaire responses.
Gender wise usage of the Internet banking reflects a polarization towards
males. These results are obvious because the conventional, brick and
mortar banking is also dominated by the male users. This implies a good
scope for the Indian banks to capitalize the opportunity and focus on
females.
Results reveal that a significant portion of the frequent (1-5 times a
month) internet banking users (37.8%) is a graduate followed by
postgraduates who use Internet banking not more than 10 times a month.
Interestingly, the professionals’ category is not the frequent user. After
combining the categories of professionals and post graduates, it is
established that they are the second grade users of internet banking
though not using beyond 1-10 times a month. The study shows that
the income groups 2 and 3 {Less than Rs.15000 and Between Rs.15000-
30000} are frequent users of the Internet banking.
The expected level of performance and the actual performance of the
conventional banking system shows a huge gap. The least mean scores of
performance for parameters like accuracy, confidentiality, safety and
empathy indicate significant dissonance between expectations and
performance. However, trust is interestingly found to be a major area of
concern. Lesser variances are obtained for speed and customization. Also,
the computed value for F-ratio is significant for all parameters except
confidentiality.

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Recommendations:
1. E-banks should create awareness among people about e-banking
products and services. Customers should be made literate about the use of
e-banking products and services.
2. Special arrangements should be made by banks to ensure full security
of customer funds. Technical defaults should be avoided by employing well
trained and expert technicians in field of computers, so that loss of data can
be avoided.
3. Employees of banks should be given special technical training for the
use of e-banking so that they can further encourage customers to use the
same.
4. Seminars and workshops should be organised on the healthy usage of
e-banking especially for those who are ATM or computer illiterate.
5. E-banking services should be customised on basis of age, gender,
occupation etc so that needs and requirements of people are met
accordingly.
Conclusion:
In India, E-banking is in a nascent stage. No doubt Indian banks are
making sincere efforts for the adoption of advanced technology and
installation of e-delivery channels but still masses are wary of the concept.
Banks are making sincere efforts to popularize the e-banking services and
products. Younger generation is beginning to see the convenience and
benefits if e-banking. In years to come, e-banking will not only be
acceptable mode of banking but will be preferred mode of banking.
Consumers feel that Internet banking is easier compared to conventional
banking. Conventional banking lacks speed especially in case of public
sector banks and Ratings on various parameters are comparatively higher
in case of frequent users and high-income groups.

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1.5 Retail in India
Introduction:
The Indian retailing scene has never been more exciting both from
consumers’ and marketers’ points of view. The Indian consumer is now
spoilt for choice and has only one problem to deal with and that is the
Problem of Plenty!
From a marketer’s point of view, retail premise continues to be the battle
ground, where brand destinies get decided based on the consumers’
preferences. Given the charm of the Indian consumer, the churn in the
Indian retail scenario will continue. This report attempts to delineate key
trends that are likely to define the Indian retail sector in 2014.
Insights from the research paper published by KPMG
KEY GROWTH ENGINES
1. Favorable demographics 70% of the 1.2 billion rural Indian population is
a huge untapped market for the organized retail industry. The working age
group 15-64 years constitutes 65% of the total population – the main driver
for the consumer market going forward.
2. Rising Income levels and consumption expenditure India’s per capita
income (PCI) recorded a 11.66% CAGR between 2001-2011 (from $ 500 - $
1,500). IMF forecasts a PCI of USD 2,450 (2017). Private final consumption
expenditure (PFCE) to increase from $1,077 billion in 2012 to $ 2,046
billion in 2017.
3. Changing consumer preferences Exposure to the western lifestyle is
leading to a shift in consumer habits. The above trend along with rising
incomes will create a market for newer offerings.
4. Growing number of working women population as per the NSS 66th
round survey, as on January 2010, working women workforce stood at
127.3 million, which increased to 129.1 million in January 2012.

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KEY GROWTH INHIBITORS
High competitiveness Competition from the unorganized sector, making
available an alternative channel of retail for consumer. New entrants in the
organized sector increases competitiveness of existing players.
Policy induced barriers Dual management of sectorial policies by the
Ministry of Commerce (takes care of the retail policy) and, the Ministry of
Consumer Affairs (regulates retailing in terms of licenses and legislations).
Need for a single apex body to govern the industry.
Difficulty in availability of finance Absence of „industry status‟, to the
organized retail industry restricts financing ability and other fiscal
incentives. Real Estate related challenges; Infrastructural issues High rental
costs in prime areas, Service tax on rental value, limited space availability
in prime areas; the supply chain is plagued with infrastructural issues: to
poor cold storage, warehousing facilities etc.
Shortage of Skilled Manpower-There are very few courses specific to the
retail and graduates/post graduates from other streams are recruited.
Additionally, retail training opportunities such as niche courses for areas like
merchandising, supply chain and so on are limited.
1.6 Key Sector Trends in 2014
Food and Groceries Retail
In Tier 1 cities Small is Big Business, Tier 2/3 cities will embrace larger
retail formats Compact formats and hypermarkets will increase in tier 1&
tier 2/3 cities respectively.
Retail profitability depends a great deal on retail space productivity; hence
particularly in tier 1 cities with burgeoning real estate costs, compact
formats will be popular for food and grocery retailing.
While Tier 2 and 3 cities will find themselves embracing
hypermarkets particularly in highly attractive catchment areas more out of

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an urge to experience modernized shopping premises. Franchising will also
take its first strides in this sector blurring the boundaries between
organized and unorganized grocery traders.
Specialty products and private labels will both grow Organic foods,
international foods, processed foods and wines will find its way in specialty
food shelves.
With retail houses like Future Group democratizing organized retailing in
India, the patronage for in-store retail brands commonly referred to as
private labels will continue to increase adding pressure on manufacturers’
brands. At the same time, specialty product categories such as organic
foods, international foods and processed foods are gaining impetus in the
Indian food retailing scene. Furthermore, particularly in more evolved metro
markets, hedonic products such as liquor and wines gain entry among day
to day groceries perhaps markers of the modern lifestyle.
Fashion and Apparel Retail
Competition from international brands and e commerce will
intensify
Indian youth particularly seem to get comfortable ordering online. Besides,
their craving for anything foreign is legendary. Hence, Brick and Mortar
apparel and fashion retailers will have to deal with competitive intrusion at
two levels; one being continued entry of foreign labels to the Indian fashion
landscape and secondly the evolving e-commerce space. Pricing for routine
wear and exclusivity in case of event-wears will emerge as key
differentiators in this sector. So, the coming year may witness most fashion
and apparel retailers will join the multi-channel bandwagon (web and
mobile spaces) to continue remain relevant to their target group.

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Retailers take their in-house fashion brands seriously
Profitability and patronage enjoyed by in-house fashion and apparel brands
will prompt retailers to set up exclusive showrooms for them. These stores
will assume compact formats with focus on deeper assortment and greater
space productivity. Celebrity endorsements and in-movie/event placements
may be sought to provide greater visibility and mileage to the in-house
fashion brands.
Brand Licensing will increase particularly in kids’ category
Retail chains will increasingly house licensed brands particularly in kids
category chiefly inspired by cartoons, animated characters and Bollywood
and star cricketers. This would include proprietary content from home-
grown and international production houses.
1.7 Online Retail in India
Introduction:
Many players were trying to revamp the structure of online shopping in
India, including the global leader eBay. But things conceptualized in 2010,
after increased competition in the market forcing better services and offers
from online retailers. Extensive use of advertisements and presence on
social media websites also helped these online shopping websites to gain
brand recognition. Today, the services have improved so much that online
marketers offer products at huge discounts, with delivery in 48 hours, along
with a no question asked return policy. All these factors along with
increasing penetration of internet, improved rate of literacy, introduction of
safe & secure technology, etc. have been able to drive the online retail
market in India.

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Insights from CRISIL research paper (February, 2014) and Online
report by ResearchandMarkets.Com:
According to ‘India Online Retail Market Forecast & Opportunities 2016’,
India will witness changing shopping trends in the next few years. India is
set to become the third largest nation of internet users in the next two
years itself. The online retail market in India is expected to grow
immensely, given the rising middle class in India, with growing disposable
income in hands and lesser availability of time to spend the same. ‘India
Online Retail Market Forecast & Opportunities 2016’ discusses the following
aspects related to online retail market in India:
Online retail heat altering brick & mortar models
In the last five years, online retail -- both direct and through marketplaces
– has had a helluva ride, going from nascence to critical mass. So much so,
today it has started to threaten the traditional brick-and-mortar retail.
Recognizing the danger, many physical retailers have started to establish or
beef up their online presence. CRISIL Research believes some of them, who
play to their strengths of physical reach and multi-location presence, will be
able to build successful and, more importantly, complementary, business
models –just as it happened in the US.
INDUSTRY SIZE
India’s online retail industry has grown at a swift pace in the last 5 years
from around Rs 15 billion revenues in 2007-08 to Rs 139 billion in 2012-13,
translating into a compounded annual growth rate (CAGR) of over 56 per
cent. The 9-fold growth came on the back of increasing internet penetration
and changing lifestyles, and was primarily driven by books, electronics and
apparel.

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In terms of size, India’s online retail industry is very small compared with
both organized and overall (organized + unorganized) retail in the country.
This speaks volumes of its potential. We expect the industry’s revenues to
more than double to around 18 per cent of organized retail by 2016 from
around 8 per cent in 2013. Yet, its share of the overall retail (organized +
unorganized) pie will be just over 1 per cent. That compares with 9-10% in
the US and UK, and around 4-5% in China.
Impact on business of traditional retailers evident
Over the past 4-5 years, competition from online retailers such as Flipkart
(in books, music and electronics), Myntra and Jabong (in apparel) has eaten
into the revenues of physical retailers. Specifically, competition in the last
three years has been intense compelling many to go online even as their
net store additions slowed.
Impact maximum in books, music & electronics segment
The impact of online retail is most evident in segments where the product
specifications are standard and differentiation low, such as books, music
and electronics. Unable to match the huge discounts offered by online
retailers, traditional booksellers and music stores are either shuttering
outlets or folding up. For example, PlanetM, a part of Videocon-owned Next
Retail, has been closing stores since 2012. Between 2011 and 2013, it shut
over 100. As of March 2013, it had 85 open. As a part of this restructuring,
PlanetM has adopted a kiosk-based model for expansion which saves lease
rentals. Even in segments such as apparel, e-commerce companies have
become extremely aggressive offering discounts throughout the year, and
conducting shopping festivals repeatedly to play the volume game. This is
difficult for a physical retailer because of the added costs of lease rentals
and higher inventory. If that were not enough, the exponential growth of
online retailers has got them the attention of venture capitalists and private
equity players, affording relatively easier access to capital.

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Traditional retailers being forced to move online
To stay in the game, traditional retailers have been working on their
internet strategy. For instance, Shoppers Stop, which started its online
store in 2008, has boosted presence and improved features and user
interface to bring its online visage on a par with leading e-commerce
websites. The company is also trying to leverage its physical network by
giving customers the option to return products at its stores. Apart from
Shoppers Stop, Croma has an online store with options such as store pickup
and cash on delivery. Even manufacturers of retail products such as Titan
Industries (watches, jewellery, eyewear, etc) and Aditya Birla Nuvo
(apparel - Allen Solly, Louis Philippe, Peter England, etc) have set up
beachheads in cyberspace. Going ahead, we believe more and more
traditional retailers will board the online bandwagon.
CONCLUSION
Ample proof traditional retailers can compete well online What we are
witnessing in India today played out in the US about a decade-and-a-half
back. That was when today’s big daddy’s such as eBay and Amazon
debuted. In the next 4-5 years, by the turn of the century, they had
become big enough to pose a threat to traditional retailers such as Wal-
Mart, forcing them to come up with online strategies of their own. Today,
after nearly a decade since the seismic shift began, some traditional
retailers boast of a large online presence.
Similarly, physical retailers in India will have to establish their presence
online quickly. And, with the right strategies, they can even compete
effectively. For instance, to tackle the queue problem at its stores, Wal-Mart
allows customers to shop online and opt for either home delivery or store
pick-up. Today, Wal-Mart is among the top 5 online retailers in the US with
estimated revenues of USD 10 billion in 2013 from the online segment
alone.

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Case study analysis of one successful and one failed
retail business in India
1.8 Pantaloons – A Success Story in Organized Retail
Retail plays a major role in increasing circulation and sales for all kinds of
consumer goods and services. Countries like USA, U.K. and China are
successful examples of the same. Consumer retail is the second-largest
industry in the United States, both by the number of establishments and by
the number of employees. Wal-Mart, the world’s largest retailer, is also the
world’s largest employer. It has become the most successful retail brand in
the world due to its ability to leverage size, market segmentation, and its
efficacy in assuming market dominance. Wal-Mart heads the Fortune
magazine list of top 500 companies in the world.
Retail Scenario in India:
In India over 94% of the retail sector consists of traditional mom-and-pop
stores and street-vendors. With no large players, infrastructure being far
from adequate and a tiny part of the population being able to afford it, ,
Indian retail never attracted large business houses and majorly focused on
niche product segments and luxury goods.. This was till they realized that
retail in India is USD $353 billionindustry [BMI India Retail Report 2010]
growing at a CAGR of 10% and contributing more than 25% to the
country’s GDP. Today it might seem implausible that this important sector
of the country’s economy had been overlooked by corporate giants.
However they cannot be squarely blamed too.
Indian retail has traditionally been an unorganized sector, where retailers
lacked the means as well as the will to develop or expand. Retail could also
never enjoy the support of the Indian consumer, who is famous for being
miserly and treated shopping as a form of leisure than a necessary evil,
thus enjoying the thrill of discovering bargains and discount deals on his
own. Small gains, lack of infrastructure, an unattractive Indian consumer
and absence of regulation never provided opportunities for retail giants to
capitalize. Meanwhile, the Government preferred to remain silent while the
unorganized retail sector provided a meagre standard of living to millions in

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the country. Poverty plagued a majority of the population and the corporate
giants preferred to spend their resources in areas like power and telecom
where large-scale opportunities were abundant. Today the retail industry
has witnessed a remarkable transformation.
The New Story
The country’s towering economic growth of around 8% has resulted in
major shifts in the Indian economic class, with higher incomes leading to
the growth of the Indian middle-class. This middle-class is aware of the
standards of living in other countries, thanks to exposure through the tools
of Globalization – the Media & the Internet. They have decided to thus
adopt a “Spending” approach to improve their standard of living rather than
the traditional “Saving” approach. The currently estimated value of
organized Indian retail’s target population is larger than that of the entire
United States. Voted the most attractive retail destination in the world for
two years in a row, India is expected to witness 10% growth in its retail
sector over the next few years (Source: “Retail in India – Getting Organized
to drive growth.” CII-A.T. Kearney, Nov. 2006, Assocham Press Release).
Recognizing the short-term and long-term growth of retail in India, a
number of domestic business giants have entered the retail industry. We
focus on the factors that have led to the success of Kishore Biyani’s
Pantaloons Retail.
Pantaloons’ Story
Pantaloons’ success and continuous growth in the Indian organized Retail
market can be attributed to a number of factors, some of which have been
derived from the strategies of large retailers in the west, while others are
completely tailor-made for the Indian market. What is evident at the outset
is that Biyani has foreseen and understood the Indian retail roadmap better
than anyone else.
Pantaloons’ major advantage over its competitors in the retail sector has
been its unique understanding of the Indian organized retail market with all
its quirks, shortcomings and challenges. By creating a retail business from

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the ground-up and expanding rapidly, Pantaloons has followed a Wal-Mart-
like
Pattern of growth. However, unlike Wal-Mart, it decided to experiment with
as many retail formats, product-mixes and brands as was possible in order
to gain maximum knowledge about the uncertain Indian mindset. In fact,
newer entrants in the organized retail market would learn the ways of the
unique Indian organized retail sector as well as find a way to combat
Pantaloons’ dominant market share in almost all forms of organized retail a
daunting task.
What did it do Right?
The Retail Experiment – Multiple Formats, Multiple Brands
Pantaloons has experimented with every retail format possible. Most of their
experiments have proven to be successful and Pantaloons continues to
experiment while expanding existing ventures. However, the real reward of
these experiments is the knowledge and experience gained- This was most
elusive in a previously untouched and unknown organized retail sector. This
is an example of Pantaloons adapting itself to the Indian market rather than
attempting to copy a Wal-Mart. The experimentation process did not end
with testing different store formats alone: Pantaloons is also experimenting
with a variety of products. From men’s wear the company has moved on to
introduce furniture, sportswear, kitchen appliances, food, electronics and
children’s apparel. Again, it seems to know what works and what doesn’t in
the Indian market, something that would not have been this apparent even
1 decade ago.
Pantaloons has also introduced a number of private brands. For example, it
has experimented with launching clothing lines based on famous Bollywood
blockbusters. Within the brand retailing space, Pantaloons has also tied up
with some of India’s most popular brands like Gini and Jony to sell them at
their stores. Rather than attempt to compete with existing popular brands
the company has decided to partner with them and leverage them in the
ambiguous Indian market. These brands have achieved success and a loyal

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fan following; Pantaloons’ move has brought in more customers and then
they could retain.
The competitors do have the opportunity to learn from the experiences of
India’s largest retailer, but the experience that comes with managing these
diverse retail formats in the Indian scenario is something that new entrants
will have to learn on their own. Due to the pace at which Pantaloons had
moved, it has made several sectors of organized retail out of anybody’s
reach.
The Right Joint Ventures at the Right Time
In accordance with its experimentation policy Pantaloons has formed key
joint ventures with a number of popular names like Staples and Starbucks.
With its first-mover advantage, it actively shut doors for the competition by
snapping up major brands before others could get to them.
Versatile Retailing
Rather than expand as a menswear retailer alone, Pantaloons’ policy of
comprehensive experimentation has given it an important advantage – a
versatile retail presence. Consumers see Pantaloons as an exclusive brand
retailer, discount retailer, specialty retailer and food retailer: all at once.
One of the reasons for this versatility is that the brand name has not been
forced on, or even associated with the different products and stores other
than the original menswear line. Instead, each store and product has been
given its own identity and presence. Pantaloons is essentially an organized
retailer in the guise of a large number and variety of unorganized retailers.
This again represents the company’s unique understanding of the Indian
scenario – consumers often feel threatened in a monopolistic environment,
and are thus allowed to choose between multiple brands, all of which
essentially belong to the same parent!
Strengthening Back End Operations: Supply-Chain
A robust Supply chain serves as the backbone of a successful retail chain in
the long-run. Although the company ignored these aspects in initial phases
due to the inadequacies in infrastructure, it rightly favoured

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experimentation over organization. But to continue to grow at the pace it
had acquired in the first few years, it needed to pay attention to its sourcing
network, transportation system and other logistics. What Pantaloons is and
will always have to improvise on is the absence of basic infrastructure like
transportation and regulation. The pace of expansion of the retail industry is
likely to outstrip that of development of the country’s infrastructure.
Pantaloons will have to be
Innovative in deciding as to how it compensates for these inadequacies
while efficiently managing its supply chain.
Money: The Ultimate Differentiator
Pantaloons has the upper hand as compared to most potential foreign and
domestic competitors. However the same characteristics that have made it
an exclusive and versatile retailer can prove to be a disadvantage. Much of
Pantaloons’ competition comes from either retail ventures of other large
Indian industrial houses (Reliance Retail, Birla’s retail venture) or foreign
retail giants (Wal-Mart). In other words, Pantaloons’ competition is rich,
very rich. While the competition may not have made inroads into the Indian
market as thoroughly as Pantaloons, it still has enough money to
compensate for this shortcoming.
Summary
Through a carefully executed policy of comprehensive multi-format
experimentation, Pantaloons has managed to understand and take
advantage of the compressed evolution of the organized Indian retail
industry (mentioned earlier) to become the dominant player. As far as
industry knowledge, experience and skill are concerned, Pantaloons with its
dream team is looking in good shape. Now it is facing stiff competition that
is financially better-equipped. How it takes advantage of its existing
resources, accesses additional capital and competes with its competitors in
a race to develop an efficient supply-chain will determine the future of the
company. While the task is daunting, Pantaloons has more leeway and an
enormous head-start compared to anyone else.

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1.9 Subhiksha Retail Store
BACKGROUND
It was an era of software industry booming in the Silicon Valley, Retail
Industry was striving hard to achieve the industry status. The retailers who
made their presence were Raymond, Bata that were limited to a few
locations and took long to practically arrive at a retail format. The retail
sector was the second largest employer after agriculture with a value of 11
lakh crores. The Retail Market potential was good with an estimated growth
rate of 35% in the organized retail which accounted for Rs 14,000 crores.
Of all retail activity, food and grocery retailing accounted for 55%.
There was a new phase in the retail scenario with more and more players
joining the sector in different formats like malls, supermarkets, department
stores, discount stores and new invented looks of bookshops, furnishing
stores and chemist shops. Shopper’s Stop opened its first outlet in Mumbai,
1998. In 2004 retail began to scale up and more growth was expected in
the future. It was an era of fast growing middle class with more than ever
disposable income, a positive economic outlook and all time high foreign
exchange reserve.
THE RISE OF SUBHIKSHA
Subhiksha Trading Services started in 1997 was a supermarket chain,
founded by Subramanian, IIT and IIM-A graduate. Subhiksha started at
Thiruvanmyur, followed by 49 branches across different parts of Chennai.
By the end of 2008, Subhiksha had a pan India presence with stores across
Indian states such as Delhi, UP, Punjab, Haryana, Gujarat, Karnataka, AP,
Maharashtra and Tamil Nadu. It even opened specialized mobile shops
called Subhiksha Mobile wherein mobiles were sold at a discounted rate.
VISION - To deliver consistently better value and savings to all consumers
on each and every item that they need in their daily lives, 365 days a year,
without any compromise on quality of goods purchased.
BOOMING INDUSTRY - New stores were added on a regular basis. There
was presence of over 13 million retail outlets in the country. Indian

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Retailing Industry was estimated to be $286 billion in 2004, and only about
1.6% share of this market was organized sector .The organized sector was
expected to grow to almost Rs. 30,000 crores by 2005 representing 6% of
total retail market, and top six cities will account for 66% of the total
organized retailing. Based on GDP growth rate of 6-7% per annum, the
retail industry expected to be $300 billion by the year 2010. About 90%
FMCG sales occur through the kirana stores while the retail chains account
for about Rs. 7500 crores. Subhiksha saw a great opportunity in this area
and entered into groceries.
“Our expansion is timed at a stage when the Indian retail industry is seeing
a huge upswing with an exponential rise in retail investment”, says
Subramanian.
The year 2008 saw the up rise of retail chains across India with Bata India
Limited, Shoppers Stop, Crossword chain of bookstores, Spencer’s. The
year also beginning of many retail players such as Westside, Lifestyle, and
Pantaloons.
STRATEGY OPERATION –
1) Subhiksha had a central purchasing system to eliminate multiplicity of
billings, which would occur if the stores were to make independent
purchases.
2) It bought directly from distributors who sold at only a small margin
above the mill prices and from around 150 manufacturing companies
3) It had three separate godowns for stocking pharmacy products,
unbranded groceries and branded FMCGs.
4) It had ten tempo vehicles to supply its stores once a day.
5) All the stores were connected via Intranet to facilitate inventory
planning.
6) It needed to integrate backwards into the supply chain, cut out
middleman and offer better prices to consumers.

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FINANCE -
Huge quantity of purchase helped Subhiksha to cut costs by bargaining
discounts.
1) Initially, it resorted to cash purchase to avail maximum discounts.
2) FMCG companies on realizing the customer potential increased credit
lines to it.
3) In order to cut cost, along with bagging discounts on national brands it
went a step further and aggressively promoted its private label.
4) By the end of 2004, around 25% of the company sales came from
private labels.
MARKETING –
Brand Image: Subhiksha was portrayed as a trustworthy and reliable store
that cared for the customer and offered the best price for products and thus
valuing customer’s money. It was aimed at being perceived as trusted
source of household needs, providing high convenience and accessibility.
Brand Positioning: The unique proposition was that of value delivery unlike
the neighborhood stores offering personalized service and small scale
operations. The competitors lacked the technology robustness and failed to
work on economies of scale. Subhiksha worked towards the image of a
relationship builder than profiteers.
ADVERTISING –
initially only print advertisements and mailers were used to promote its
services
the communication through the advertisement was to position it as a
retail store brand, the logo was shown prominently for brand visibility
he premises that small amounts saved
today could mean a better life tomorrow.

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with its emphatic punch lines like Morcha against Kharcha, Bachat Mera
Adhikar, and Subhiksha Mera Abhiman.
PRODUCT MIX –
Subhiksha had a wide range of FMCG products in its store – rice, dal, sugar,
oil, butter, toiletries (like Lifebuoy, Colgate etc.), jam, tea, coffee and
cosmetics (Ponds, Lakme etc.) & many more.
PRICING –
Subhiksha considered pricing of its products as a USP. It offered all goods
at discounted prices similar to the Every Day low pricing (EDLP) founded by
Walmart. Unlike other stores, the low prices at Subhiksha were not limited
to a few goods or for a few specific days. Customers can get the same
discounted prices on all items, on all days irrespective of whether they
make a small or big purchase. Most importantly, the discount and customer
savings at Subhiksha was comparatively higher than to those offered by
other small and big retailers.
FALL OF SUBHIKSHA
The end of 2008 marked the closure of the most talk about retail stores
Subhiksha. It was on the verge of bankruptcy. Subhiksha failed to pay its
employees, supplies and landlords for quite many months in 2008. To add
to its woes, its biggest investors Iventure (Venture Capital Arm of ICICI,
India’s largest private bank) and Zash Investment (Azim Premji’s
investment company) who had invested INR 230 crore did not extend any
help.
REASONS FOR FAILURE
PRODUCT MIX –
Subhiksha’s foray into drug retailing was challenging with its benefits in the
future. The general medical stores opposed this initiative since they were

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insecure about their own sales. Drugs usually have margin of 17-20% but
Subhiksha sold drugs for a mere 7% margin.
HUMAN RESOURCE –
banking, financial services, pharmaceutical, and FMCG industries.
OPERATIONAL ISSUES –
lower prices, Subhiksha concentrated on direct
procurement to avoid intermediaries.
during the initial phase, the chain managed procurement per-store basis
wherein the manager would replenish stocks at the end of each working day
through cash
as the chain went on an expansion spree, it had established 14 central
purchase centers across the country and goods were sent to all the stores.
INFORMATION TECHNOLOGY –
management.
in the year 2007, Subhiksha took a corrective step of implementing SAP
Enterprise resource Planning (ERP) software but the project got stalled
because the company ran into deep trouble.
the plans to integrate all its stores via wireless communication to achieve
operational efficiency was also shelved due to lack of funds.
MARKETING –
with the growth in the number of SKUs, the chain moved to Do It
Yourself format from no touch format
with the new format it was competing with the emerging supermarkets
More, Reliance Fresh

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parking space did not consider it fit to be called a discount supermarket nor
a proper supermarket.
FINANCE –
It was in financial trouble right from the beginning:
ing its first phase of expansion the first round of funding of
INR 15 crore from I-ventures was received
ient capital backup with debt to equity
ratio being high.
Subhiksha became the largest retail chain with 1480 stores stretched in 110
cities across the country.
he company’s turnover with a continuous rise
from INR 330 crore in 2005-2006 to INR 2,305 crore in 2007-2008 to a
projected INR 4000 crore in 2008-09.
employees for over 6 months.
anks came to the rescue because of the economic downturn
personnel responsible left with no protection left for the various stores and
warehouses leaving around 600 of Subhiksha stores ransacked.

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Case study analysis of one successful and one failed
online business in India
1.10 FLIPKART.COM
ABSTRACT:
E-Retailing is a very new format for Indians in 2007 where in an E-
Commerce giant has been born by the name FLIPKART. Started with an
initial capital of 4 lakhs, now its turnover is about Rs. 4500 crores. Like the
big game player in this field Amazon, the Flipkart also started its journey
selling books online and it kept diversifying its reach by adding apparel,
electronics, music etc. into its cart. Indians who are basically hesitant to
pay before buying with options like Net Banking, Debit or Credit Card
Payments it came up with the most impressive way to attract Indian
consumers with the concept of COD (Cash on Delivery). This also covers the
changes made with the time into the business model and various marketing
strategies implemented which lead to success. This case study involves in
knowing the working of Flipkart and its Success reasons.
INTRODUCTION:
E-Commerce in India. India is one of the fastest growing & emerging
economies of the world, having a very huge consumer base & a big mass
connected to Internet (approx. 100 million). The E-business trend have
been catching up in the country with the increasing rates of local &
domestic firms using the E-business model to do business which is very
different from the traditional way of doing business in India, it has led to an
interesting trend in the market for the online shopping starting right from
ordering food, grocery, vegetables, fruits, taxis, electronics & so on.
Internet users in India have gone up from 50 million in 2007 to 300 million
in 2014. There is an opportunity in itself to connect the prospects of 1.24
billion to the internet. Investment banks believe India is on way to
becoming one of the largest internet markets in the world. Morgan Stanley
expects the size of the Indian internet market to rise from $11 billion in
2013 to $137 billion by 2020.

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About Flipkart:
Flipkart came into existence in the year 2007, with the aim of selling books
to all those who have internet access. Founded by Sachin Bansal & Binny
Bansal in Bangalore, Karnataka in 2007, both alumni of the Indian Institute
of Technology Delhi. (See Exhibit 1)
Before starting with their own venture, they worked for Amazon.com
already a giant in Online Retail by that time. Starting with the concept of
selling books online, which was a part of strategy used to gain the trust of
target audience, where in which books can be easily brought from the
publishers which can be easily packaged and delivered. With this strategy
working very well and improving its product line extension with electronics,
apparels, healthcare and personal products, shoes, toys etc.
Started from 2 employees the company now has an employee strength of
4500. Flipkart started with a consignment model, but due to the delays
occurred, it started to open its own inventories as it started to get
investments. In 2014, company has 15000 employees.
Initially funded by Bansal’s themselves with 4 lakhs, Flipkart since then has
raised two rounds of funding from venture capitalists like Accel India (2009)
and Tiger Global Management (2010). (See Exhibit 2a and 2b)
BUSINESS MODEL:
Flipkart started with Consignment Model (Procurement Based - On Demand)
, transitioned to Warehouse Model (Inventory Led) to Marketplace Model
today, where third-party merchants sell goods to shoppers through Flip
kart’s site.
Consignment Model (Procurement Based - On Demand):
Initially the order needs to be registered, then Flipkart used to get the order
from the publishers and then deliver to the consumers. In this way there
used to be a delay in the order processing, which made the consumers to
wait for a long duration to get the product received.

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Warehouse Model (Inventory Led):
As the future went on, due to the investments in Flipkart they bought
warehouses and went into the Warehouse model where they used to stock
the goods. Thus in this way the order time got reduced to a very healthy
duration.
Marketplace Model:
The company realized the threat of foreign companies entering India like
Amazon. So, like amazon and ebay, flipkart also decided to implement
marketplace model. In this business model, flipkart will no longer be the
sole seller (Retail) of various products. It welcomes large number of sellers
to sell their product on well-established platform with solid logistics
backbone. In this model, flipkart’s role will be to provide logistics service to
the sellers who wish to sell through their website.
Currently, more than 80 percent of the sales on Flipkart are made by WS
Retail, which was set up by Flipkart founders Sachin Bansal and Binny
Bansal in 2009 specifically so the company would have a marketplace
structure — a necessity because Flipkart has foreign investors and Indian
law doesn’t allow foreign investment in ecommerce companies that sell
directly to customers.
MARKETING STRATEGY:
• Flipkart has been mostly marketed by word of mouth advertising.
• Flipkart very wisely used SEO (Search Engine Optimization) and Google
Ad-words as the marketing tools to have a far reach in the online world.
Flipkart.com official Face book page has close to 9 lac 'likes'.
• Flipkart First: (See Exhibit 3)
With Flipkart First, the company is mainly providing better logistics services.
Flipkart First is aimed at rewarding registered shoppers, which the company
claims are about 18 million for the portal, as well as getting new ones on
board.

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Flipkart customers can avail a bunch of exclusive benefits and priority
service features including free shipping for all orders, free in-a-day
guarantee delivery, same-day-guarantee delivery at 50 per cent discount
(Rs 70), and a 60-day replacement policy.
• Big Billion Day: (See Exhibit 4)
“The greatest sale ever”- Rs 600 crore worth of sales. 1.5 million shoppers
• TV Advertisement: Flipkart had launched a series of 3 ads with the tag
line - "No Kidding No worries". Kids were used to create the adverts to send
out the message that if a kid can do it you can also do it. The
advertisement shows the coolness of the brand.(See Exhibit 5)
• App Sale: “Big App Shopping Days” Campaign (See Exhibit 6)
Flipkart initiated the sale to promote its app across various platforms.
• Print Ads: Full front Page ads in leading newspapers like The Times of
India.(See Exhibit 7)
STRENGTH
•Brand
•Supply Chain Management
•Ads and Promotion
•Strategic Acquisitions
•Own online payment gateway solution Pay zippy
WEAKNESS
•Investor driven organization
•Focus on expanding customer base rather than pulling profits
•Penetration in Rural Areas

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OPPORTUNITIES
•Growth in E-Tail
•Fastest Internet traffic growth
•Physical Retail Stores
THREATS
•Competitors like Amazon.in
•Customer Loyalty
•Economic downturns
•Price Wars
FACTORS THAT LED FOR FLIPKART SUCCESS:
1. Amazing Speed of Service (Home Delivery) never seen in India.
The experience of service delivery for online retail had been very bad for
customers in India. It usually took more than 10 business days for a
shipment to arrive at the destination (Sometime even more). Flipkart
changed the game of e-commerce in India by started delivering products
within 2-5 business days. This never seen service took fancy of the
customers and built a trust in the brand.
2. Cash On Delivery payment option, 30 Day Replacement Policy, Free
Shipping, Discounted Prices and Deals. In India people a very small
population (approx. 1.5 % )has credit/debit cards and the amongst those
who have it are wary of using them for making payments online due to lack
of trust and internet frauds. The Cash on delivery option was the prime
reason for the customer to make orders on Flipkart. The customer is
satisfied to make payment in cash only after receiving the actual product.
Besides this the 30 Day Replacement Policy, first of its kind in the E-
commerce space in India further boosted the trust of the customer in

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Flipkart. Adding to it due to bulk buying Flipkart offered many products at
discounted prices and ran special attractive deals.
3. Simple and Intuitive GUI for shopping. Easy Navigation and filter search.
Their website is great, easy to use, easy to browse through the products,
add products to wish list or to a cart, get product reviews and opinions, pre-
order products, make payments using different methods, in short hassle-
free and convenient.
4. Increasing Disbursable income of youth, Increasing Internet Penetration
in India:
With growing economy especially in the service sector which generates
employment for the youth adding to their Disbursable income, coupled with
the increasing internet penetration helped Flipkart cruise in the Online
Retail.
5. First Mover Advantage in Online Retailing in India.
Although not the first mover but Flipkart was the first one to run the online
retail show very professionally in India. Their Service Delivery, Call Centre
Services, Product Guarantee, Replacement Policies etc. built a trust in the
Customer. It helped Flipkart in retaining its customer base. Around 70% of
the customers are repeat customers i.e. they shop at various point during a
year.
FAILURE STORY OF AN ONLINE STORE
1.11 YEBHI.COM
ABSTRACT:
Started in August 2009 Yebhi.com is the company which started with the
name www.bigshoebazaar.com from Big Shoe Bazaar India Pvt Ltd. The
success in footwear category made Yebhi to expand into other categories
like Apparels, Accessories, Bags, Jewellery and Mobiles.

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INTRODUCTION:
Started by Manmohan Agarwal, Ex CEO Vishal Retail, the etailer grew from
strength to strength to become the fastest growing company in lifestyle
category in India. The enormous success that BigShoeBazaar witnessed
when it first stepped into the footwear category inspired the company to
explore its capabilities into newer segments like clothing, accessories, bags,
jewellery and mobile phones. Yebhi.com was founded by the quartet of
Manmohan Agarwal, Danish Ahmed Abdullah, Rajul Jain and Nitin Agarwal.
Its Business Model is “First Buy & Sell Later”. The company first buys the
goods in bulk according to the latest trends and stores them in the
warehouse (a 1 lakh sqft in Gurgaon ). This in turn enhanced the credibility
of Yebhi in the market and helped it to maintain high quality standards and
a perfect fulfilment ratio. Thus, Yebhi.com possesses the hallmark of quality
and the latest products. In terms of variety also, Yebhi.com stands apart.
The e-commerce company substantiates its niche by following a four-step
operational cycle—identifying the latest trends & demands of the products,
buying those products, ensuring the quality check and finally selling them.
MARKETING STRATEGY:
• Yebhi.com is working on Inventory model.
• Yebhi has adopted mass marketing strategy and offering every kind of
product
• 40% of customers visiting the site are women, so mostly they deal with
softline products.
• They are primarily focusing on digital media through search marketing
and banner ads, but not on a large scale.
FACTORS FOR THE FAILURE:
1. Inconsistency:
Company’s failure to its inability to raise fresh capital in the face of
increasing competition and its constant tinkering with the business

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STRENGTH
•Unique Products
•Good Technology
WEAKNESS
•High Debt Burden
•Weak Online Presence
•Poor Customer Service
•Weak Supply Chain
OPPORTUNITIES
•Have to come up with more funds to proceed further
THREATS
•Competitors like Amazon.in, Flipkart model. “There were 300
employees in March and now it is less than 100. Everything looks uncertain
and there have been issues over late payments to sellers and even
employees. Several sellers have de-listed themselves from the site. We
have not got any fresh inventory in the last few months,” says an
employee.
2. Fund Crunch: More problems cropped up after co-founders Nikhil
Agarwal and Rahul Jain quit over differences with Manmohan Agarwal in
January 2015. Soon after, the company witnessed several high profile exits,
including Chief Business Officer Nikhil Rungta, who had joined the start-up
from Google India.
3. Negativity: Besides, its tie-up with railway ticketing portal IRCTC to sell
fashion failed as consumers went to IRCTC for booking tickets and not with
the intention to shop.
4. Strong Competition: Yebhi didn’t take into account the vibrations of
Amazon’s arrival in India on the market and was unable to ramp up its

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offerings at the same speed and level as its competitors did, which led to
change its model too many times thereby confusing the customers.
5. Lack of Advertisement: Now a day’s most of the investments in E-
Retailing goes to acquire new customers through complete marketing
campaigns and innovative ideas. But Yebhi.com has not advertised in the
last 10-12 months. Alexa.com, which provides ranking for ecommerce
companies globally, says Yebhi’s ranking (in daily traffic) slipped to below
5,000 in August from 2000 in June 2014.
NEGATIVE REVIEWS ON YEBHI.COM:
COMPARISION: YEBHI FLIPKART No separate mobile app for Yebhi.com
Mobile app is much user friendly than desktop version Not much care taken
while packaging Packaging is given utmost importance Employees are being
removed from job Employee opportunities are increasing
2. Introduction
2.1 Banking Industry in INDIA
The Indian banking sector consists of 26 public sector banks, 20 private
sector banks and 43 foreign banks along with 61 regional rural banks and
more than 90,000 credit cooperatives.
Indicators 2011 2012 2013
Number of
Commercials
Banks
163 169 151
Number of
Branches
94,019 102,377 109,811
Population
per Banks
(in
thousands)
13 13 12

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The largest bank, and the oldest still in existence, is the State Bank of
India. The three banks were merged in 1921 to form the Imperial Bank of
India, which upon India's independence, became the State Bank of India in
1955. For many years the presidency banks had acted as quasi-central
banks, as did their successors, until the Reserve Bank of India was
established in 1935, under the Reserve Bank of India Act, 1934.
In 1969 the Indian government nationalised 14 major private banks. In
1980, 6 more private banks were nationalised. These nationalised banks are
the majority of lenders in the Indian economy. They dominate the banking
sector because of their large size and widespread networks.
The Indian banking sector is broadly classified into scheduled banks and
non-scheduled banks. The scheduled banks are those which are included
under the 2nd Schedule of the Reserve Bank of India Act, 1934. The
scheduled banks are further classified into: nationalised banks; State Bank
of India and its associates; Regional Rural Banks (RRBs); foreign banks;
and other Indian private sector banks. The term commercial banks refers to
both scheduled and non-scheduled commercial banks which are regulated
under the Banking Regulation Act,. 1949
Indian Ecommerce and Banking Industry
Introduction
The eCommerce sector has seen unprecedented growth in 2014. The
growth was driven by rapid technology adoption led by the increasing use of
devices such as smartphones and tablets, and access to the internet
through broadband, 3G, etc, which led to an increased online consumer
base. Furthermore, favoured demographics and a growing internet user
base helped aid this growth. In terms of highlights, the growth shown by
homegrown players such as Flipkart and Snapdeal and the huge investor
interest around these companies displayed the immense potential of the
market. With the entry of eCommerce behemoths such as Amazon and
Alibaba, the competition is expected to further intensify. Both these

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international players come with deep pockets and the patience to drive the
Indian eCommerce market. Also, their strong domain knowledge and best
practices from their international experience give them an additional edge.
Additionally, these companies have been part of markets where they have
seen the eCommerce market evolve and are aware of the challenges and
strategies to address issues thereof. Indian companies realise this, and are
therefore aiming to continue their focus on expanding sellers and selection
on their platforms, innovating on multiple customer touch points, and
providing seamless and rapid delivery services in order to compete with the
international entities. Competition is expected to continue, with these
eCommerce companies experimenting with different ways to attract
customers and increase online traffic.
The Indian government’s ambitious Digital India project and the
modernisation of India Post will also affect the eCommerce sector. The
Digital India project aims to offer a one-stop shop for government services
that will have the mobile phone as the backbone of its delivery mechanism.
The programme will give a strong boost to the eCommerce market as
bringing the internet and broadband to remote corners of the country will
give rise to an increase in trade and efficient warehousing and will also
present a potentially huge market for goods to be sold. For India Post, the
government is keen to develop its distribution channel and other
eCommerce related services as a major revenue model going ahead,
especially when India Post transacted business worth 280 crore INR in the
cash-on-delivery (CoD) segment for firms such as Flipkart, Snapdeal and
Amazon. Both these projects will have significant impact on increasing the
reach of eCommerce players to generally non-serviceable areas, thereby
boosting growth.
India’s overall retail opportunity is substantial, and coupled with a
demographic dividend (young population, rising standards of living and
upwardly mobile middle class) and rising internet penetration, strong
growth in eCommerce is expected. From an investment perspective, the
market is a primarily minority stake market, with maximum traction in
early-stage deals. Such early stage funding will help companies develop a
strong foundation to start from. With such strong market prospects and an

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equally upbeat investor community, we look forward to many more
eCommerce companies from India entering the coveted billion-dollar club.
Industry on an upturn
In 2013, Asia-Pacific emerged as the strongest business-toconsumer (B2C)
eCommerce region in the world with sales of around 567.3 billion USD, a
growth of 45% over 2012, ranking ahead of Europe (482.3 billion USD) and
North America (452.4 billion USD). The top three were followed by Latin
America, and the Middle East and North Africa (MENA) region, according to
Ecommerce Europe1 . Globally, B2C eCommerce sales increased by 24%
over 2012. This reflects the huge untapped potential of eCommerce by
retail companies, both in their country of origin and across borders.
eCommerce or electronic commerce, deals with the buying and selling of
goods and services, or the transmitting of funds or data, over an electronic
platform, mainly the internet. These business transactions are categorised
into either business-to-business (B2B), business-to-consumer (B2C),
consumer-to-consumer (C2C), consumer-to-business (C2B) or the recently
evolved business-to-business-to-consumer (B2B2C). eCommerce processes
are conducted using applications, such as email, fax, online catalogues and
shopping carts, electronic data interchange (EDI), file transfer protocol and
web services and e-newsletters to subscribers. eTravel is the most popular
form of eCommerce, followed by eTail which essentially means selling of
retail goods on the internet conducted by the B2C category.
According to Ecommerce Europe, country-wise, the US, UK and China
together account for 57% of the world’s total B2C eCommerce sales in
2013, with China having total sales of 328.4 billion USD. As against this,
India had sales of only 10.7 billion USD, 3.3% of that of China in 2013 with
fifth position in AsiaPacific. This is despite the fact that India enjoys high
demographic dividends just like China. India’s internet penetration with
total e-households at 46 million against China’s 207 million is one of the
reasons behind India’s poor B2C sales growth.

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Indian Banking
The optimism about Indian economic growth portends well for Indian banks.
There are, however, challenges in retaining profitability and growth in the
next decade. The industry has to live up to high expectations from several
quarters. This report highlights ten major trends that will shape Indian
banking over next decade. It identifies two critical and complex challenges
thrown at the industry for which solution has to be found with urgency. The
report outlines potential solutions and articulates key imperatives for
government and regulation. The ten major trends to watch out for are:
1. Retail banking will be immensely benefited from the Indian demographic
dividend. Mortgages to grow fast and will cross Rs 40 trillion by 2020.
2. Rapid accumulation of wealth in rich households will drive wealth
management to 10X size.
3. “The Next Billion” consumer segment will emerge as the largest in
numbers and will accentuate the demand for low cost banking solutions.
4. Branches and ATMs will need to grow 2X and 5X respectively to serve the
huge addition to bankable population. Low cost branch network with smaller
sized branches will be adopted.
5. Mobile banking will come of age with widespread access to internet on
mobile.
6. Banks will adopt CRM and data warehousing in a major way to reduce
customer acquisition costs and improve risk management.
7. Margins will see downward pressure both on retail and corporate banking
spurring banks to generate more fees and improve operating efficiency.
8. Banks will discover the importance of the SME segment for profitability
and growth and new models to serve SME segment profitably will be found.
9. Investment banking will grow 10X, driven by demand from corporate for
transaction support and capital market access.

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10. Infrastructure debt will surpass Rs 45 trillion — half of which will be on
bank’s books. It will touch the ALM limits of banks and will require a
significant upgrade of banks’ risk management systems.
Indian Banking 2020: Opportunities and Challenges
Banks in India will be ending the last year of this decade on a high note. A
spectacular growth rate coupled with an increase in profitability has led to
an impressive performance.
Starting at well above 10 percent in the early 2000s, the gross NPA ratio is
currently below 3 percent. The cost to income ratio fell from well above 60
percent to below 45 percent. The Net Interest Margins (NIM) hovered
around 3 percent with only a slight dip in the last 2 years as illustrated in
Exhibit 1b. Considering the growth prospects of the Indian economy over
the coming decade, the banking industry rightfully looks forward to a
decade full of opportunities

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Financial Inclusion
The future of democratic polity and social harmony of India rests on the
premise of inclusive growth. Financial inclusion is a crucial driver for such
growth. The political leadership is looking at the banking industry to deliver
on this promise over the next few years. Already, additional competition is
planned in the form of new licenses for private sector banks in the hope
that this will lead to innovative business models for inclusive banking. This
expectation will strengthen. Delay in solving the issue could lead to the
banking revenue pool being opened up to non-banks to find more creative
answers.
Restoring the Public Sector
Acquiring and retaining talent is the most critical challenge facing the
banking industry, especially for the Public Sector, Units (PSU) where the
situation is most urgent. A four decade–long legacy shaped by the
constraints of state ownership, and short tenures of top management has

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created a precarious instability PSU banks’ Human Resource (HR). The
diminishing people advantage of the public sector banks has to be restored
with urgency. This crisis has reached a tipping point, and the
competitiveness of the entire sector hangs in the balance. Most importantly
without addressing its HR issues, the public sector cannot rise to the
challenge of financial inclusion in any meaningful manner.
Definition
Kotler(1994) “Consumer behaviour is the study of how people buy, what
they buy, when they buy and why they buy.”
Solomon(1995) Consumer is the study “of the processes involved when
individuals or groups select, purchase, use, or dispose of products, services,
ideas, or experiences to satisfy needs and desires.”
2.2 Objectives
 To understand the modern trend of consumer banking practices and is
there any co-relation between online & offline services.
 To analyze the problems involved in banking transaction.
 To analyze the usage pattern of mostly used net banking services.
The research questions, which emanate from above objectives are as:
1. Do you have a bank account?
2. If yes, which bank you are using?
3. How long you have been using this account?
4. What you prefer for banking activities?
5. What kind of services do you prefer offline?
6. What kind of services do you prefer online?
7. How many times you visit ATM in a month?
8. How often do you visit bank branch in a month?
9. For which specific surveys do you visit your bank branch?
10. Which online service do you use often?
11. How safe do you think online banking services are?

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12. Do you own Debit card/ Credit card?
2.3 Limits of the Report
Area covered Tier1, Tier2, and Tier3
Sample size 360
While interaction we felt that since it was relevant to bank most of them
were hesitating to reveal their experience with us thus not giving the exact
details. Giving their exact details and for us to relate with those details
were quite difficult.
2.4 Methods of Enquiry
Mixed Questionnaire – whereby direct in person survey
Research Design
The present research is designed to study certain important consumer
behavior in their banking practices i.e., online, offline or both.
They are compared on the basis of the sub cities they belong and their
preferences of banking.
Hypothesis testing
H1: Customer preference of online banking is more in tier1 cities compared
to tier2 and tier3.
H2: Perception about online banking for any customer has positive impact.

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Tools
Questionnaire depicting (Online, Offline and Both methods) employed by
people.
Procedure
Data collected from 360 people belonging to Tier1, Tier2, Tier3 sub cities.
Voluntary participation, importance of sincere responses were stressed.
Initially participants filled personal data sheet. Later, were given clear
instructions on how to answer.
Clarified doubts to ensure everyone understood procedure.
No time limit imposed.
Administration done carefully.
2.5 Proposed Development
 Development of E-banking/ Digital banking
 Opening new bank branches in rural area
 Convenient services for people like deposit from home
 “Adhar Jan Dhan” schemes
3. Methodology
In order to address the above questions an exploratory study was
conducted. The idea was to probe and get deeper insight into consumer
behaviour of online, offline and both consumer banking.
3.1 Collection of Data
Literature Survey: Internet revolution is global phenomenon and going
by the current growth statistics, India expects a spurt in the Internet

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penetration in coming years particularly in the electronic commerce. It
is an obvious notion that electronic (internet) banking and payments
are likely to advance more or less in tandem with e-commerce.
Researches indicate that internet banking has a significant impact on the
business models of banks, securities trading firms, brokerage houses,
insurance companies etc. Internet banking has also attracted the attention
of, regulators and lawmakers in the developing nations since the late
1990s. Internet banking is a cause of concern to majority of the offline
banks who should be ready for an unprecedented competition from
the non-traditional banking institutions that offer banking and financial
services over the Internet. Although some of the traditional banks have
started offering their services on line, it is only an extension of their offline
services. Internet banking has now started motivating customers to
park their funds with the online banks, which has a substantially
impact on the deposit base of the brick and mortar banks.
The use of technology in banking has direct relationship with the
profitability. Cetris paribus, investment in electronic banking increase
the profit margin of banks by reducing costs and increase in non-
interest income, which will increases the ROA and ROE. Cost-
effectiveness in delivery of services directly implies comparatively high
consumer satisfaction and a consequent change in the revenue model
for the banks. Adoption of the internet mode of banking would result
in increased consumer awareness, attracts the entry of global majors in
the market and would lead to the emergence of open standards in the
banking industry. The integration of the banking services with e-
commerce and emergence of e-cash would positively affect the efficiency
scores of the banks.
However, Internet banking is a mixed blessing in the form of
increased risk, the level of confidence reposed by the consumers and the
problem of blending it with the physical system. Internet banking has
brought about a new orientation to risks like settlement risk, international
technology transfer risk, crime or fraud risk, regulatory avoidance risk,
taxation avoidance risk, and competition risk. Basel II recommendation on
operational risk also supports this hypothesis. In India, some banks like

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HDFC and ICICI have introduced payment gateways running on secure
systems having firewalls against hacking. Convenience, safety and cost
effectiveness are the jargons in the spectrum of online banking.
Questionnaire
Questionnaires are very cost effective when compared to face-to-face
interviews. This is especially true for studies involving large sample sizes
and large geographic areas. Written questionnaires become even more cost
effective as the number of research questions increases. They are easy to
analyze. Data entry and tabulation for nearly all surveys can be easily done
with many computer software packages.
Questionnaires are familiar to most people. Nearly everyone has had some
experience completing questionnaires and they generally do not make
people apprehensive. Reducing bias there is uniform question presentation
and no middle-man bias. The researcher's own opinions will not influence
the respondent to answer questions in a certain manner. There are no
verbal or visual clues to influence the respondent. They are less intrusive
than telephone or face-to-face surveys.
Survey
Surveys are easy to develop, especially when using the advanced survey
software solutions available today. Many researchers are tempted to do
much of their data collection online; however, it is not always the preferred
mode of data collection, especially if respondents are in hard-to-reach
areas. Whether a researcher uses an online survey, mobile survey, paper
survey, or a combination of all modes, the mode should depend on the type
of study and the demographics of respondents.
Online surveys and mobile surveys tend to be the most cost-effective
modes of survey research, yet they may not reach those respondents that
can only respond using alternate modes. Results of online surveys and
mobile surveys may suffer and differ greatly if important respondents are
left out of the research. Hard-to-reach respondents may be easier to reach

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using more traditional methods such as paper surveys or face-to-face
interviews.
Advanced survey software solutions have multi-mode capabilities for online
surveys, mobile surveys, email surveys, paper surveys, kiosk surveys, and
more, giving researchers the ability to survey even the hardest-to reach
consumers, and analyze data from all survey modes collectively.
The ability to reach respondents is one challenge of surveys. However,
surveys have several advantages and disadvantages. They are as follows:
Advantages of Survey
• Relatively easy to administer
• Can be developed in less time
• Cost-effective, but cost depends on survey mode.
• Can be administered remotely via online, mobile devices, mail etc.
• Conducted remotely can reduce or prevent geographical dependence.
• Numerous questions can be asked about a subject
• With survey software, advanced statistical techniques can be utilized
to analyze survey data to determine validity, reliability, and statistical
significance, including the ability to analyze multiple variables
• A broad range of data can be collected
• Standardized surveys are relatively free from several types of errors.
4. Research Findings
1) In Tier1 Cities, it is observed that the preferences of people are in
descending order i.e, highest towards (both online and offline) banking
methods then offline and then online banking methods.
2) In Tier 2 Cities, the same trend is observed in their preferences towards
banking methods.

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3) In Tier 3 Cities, it is observed that the preferences of people are in
descending order i.e, highest towards offline method then (both online and
offline), and then towards offline banking methods.
4.1 Result and Findings
The awareness level of private sector Indian banks is the highest followed
by the foreign banks. This is mainly due to the reason that private sector
Indian banks are relatively new and they have positioned themselves as
online banks from the very inception. Also, the various consumer groups do
not perceive the public sector banks as online banks. However, the banks
feel that their market perception is likely to change soon once they put on
intensive advertising. Banks proposing the Initial Public Offer (IPOs) of
securities in near future can think of simultaneously positioning themselves
as the new generation banks.
4.2 Consumer Behavior
EXHIBIT-1,2 Usage Patterns A significant variation exists between the
various banks for the frequency of usage (F= 7.503) with high value for
Indian private banks followed by multinational banks. Interviews conducted
at banks revealed that the use of Internet banking is mainly
attributable to day-to-day transactions, which is further confirmed by
the questionnaire responses. Gender wise usage of the Internet banking
reflects a polarization towards males. These results are obvious because the
conventional, brick and mortar banking is also dominated by the male
users. This implies a good scope for the Indian banks to capitalize the
opportunity and focus on females.
Results reveal that a significant portion of the frequent (1-5 times a
month) internet banking users (37.8%) is a graduate followed by
postgraduates who use Internet banking not more than 10 times a month.
Interestingly, the professionals’ category is not the frequent user. After
combining the categories of professionals and post graduates, it is
established that they are the second grade users of internet banking
though not using beyond 1-10 times a month. The study shows that

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the income groups 2 and 3 {Less than Rs.15000 and Between Rs.15000-
30000} are frequent users of the Internet banking.
EXIHBIT-3 reveals that the e-banking services of foreign banks and some
flag public sector banks are used primarily for daily transactions and
private banks like HDFC, BOP ICICI are lagging. Similar results are also
shown by research studies on Nigeria. Another major use of the e-banking
is account information. It is well known that account information has been
for many years a major area of concerns from the point of view of customer
services.
The expected level of performance and the actual performance of the
conventional banking system shows a huge gap. The least mean scores of
performance for parameters like accuracy, confidentiality, safety and
empathy indicate significant dissonance between expectations and
performance. However, trust is interestingly found to be a major area of
concern. Lesser variances are obtained for speed and customization. Also,
the computed value for F-ratio is significant for all parameters except
confidentiality.
Conclusions derived are-
(i) Consumers feel that Internet banking is easier compared to
conventional banking
(ii) Conventional banking lacks speed especially in case of public
sector banks and
(iii) Ratings on various parameters are comparatively higher in case
of frequent users and high-income groups.
The use and resulting profits of the Internet banking depends upon
the brand positioning, level of services offered and consumers
targeted. It can be concluded that from the consumer’s perspective,
apart from speed and convenience, there are certain other factor like
trust, safety and confidentiality are of paramount importance, which
unless focused cannot maximize value to the customer, at least, in Indian
context.

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5. Discussion
5.1 Problem formulation
Tier 1 cities have both private sector and public sector bank functioning.
The primary aim is to understand how the internet banking services are
different from traditional banking services in terms of accessibility,
technological awareness and time and their preferences among in different
city (tier2, tier3).
5.2 Management problem
1. Internet technology holds the necessity for customers banking
services.
2. Customer preferences on accessing net banking services.
5.3 Research problem
1. To determine the customer preference on online and offline services.
2. Evaluate the usage of customer online banking services.
3. To evaluate the online banking penetration among different age group.
4. To determine the effect of parameters on banking preferences.

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6. Conclusion
It can be concluded that internet banking in India is only at its primitive
stage dominated by the Indian private and foreign banks. The use of
Internet banking is confined to a few consumer segments. The risks
associated with internet banking are many, which the banks have to model
using sophisticated systems and extensive use of technology. The legal
framework as its exits requires an updating to streamline and handle
the issues associated with Internet banking. The functional model can
be used to prioritize perceptual variable concerning consumer behavior
so that value to the consumer can be maximized. The banks can focus
on strategic consumer groups to maximize its revenues from internet
banking. The experiences of the global economies suggest that banks
cannot avoid the internet banking phenomenon, but to gain a
competitive advantage, they must structure their business models to
suit to Indian conditions.
7. Recommendations
 Bank of the future will need to understand the Tech-Savvy Gen-Y
customers and design products accordingly – e.g. BASEL3
 Focusing on building trust (F=38.932) along with safety and
confidentiality.
 Use of data analytics tools to gain the insights from existing
customers’ data to increase business and customer loyalty.
 Partner with multiple agencies to reach target audience (women as
well men)
 Use of iOS and android platform to design better, faster and
convenient delivery channels.

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8. Exhibits
Exhibit-1
Exhibit-2

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Exhibit-3
Exhibit-4

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Exhibit-5

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9. Graphs
It can be observed from the above graph that, the
frequency of people of TIER2 cities of using banking
services is highest and that of Tier3 cities is lowest.

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It can be observed from the graph that the preference of
people is highest towards both online and offline banking
services.

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Similar trend can be observed from the graph that in the
banking behaviors of men and women belonging to the TIER1,
TIER2 and TIER3 cities.

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It is observed from the graph that the people belonging to the
age 21-26 years have highest frequency of using banking
services and the people belonging to the age of 29-35 years
the lowest.

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It is observed from the graph that the preference of people is in
descending order i.e., highest towards both online and offline then
towards offline and then lowest for online services.

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.
It can be observed from the graph that cities have frequencies in
descending order highest frequency for TIER 1 cities then for TIER3 and
lowest for TIER 2 cities.

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It can be observed that similar trend for preferences is
observed in online and both banking services.
1) In both TIER 1 city has the preference is highest of all by
a larger margin.
2) In offline, the offline banking preference is lowest in TIER2
city and highest in TIER3 city.

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It can be observed from the graph that there is varied trend in the
perceptions of people belonging to the various age groups.
Whether online banking is safe to what extent;

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It can be observed from the graph that there are varied perceptions about
online banking services; amongst people belonging to the various TIER
cities.

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It is observed from the graph that the almost similar trend is observed in
the perceptions towards online banking services of people belonging to
various occupations.
Only the retired or students are unaware about the e banking services.

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It can be observed from the graph that the is varied trend in
the perceptions of people about the online banking services
belonging to the various regions.

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It can be observed from the graph that in TIER1 and TIER2 cities the
both online and offline preference is the highest and in TIER3 city for
offline.

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It can be observed from the graph that similar trend in preferences is
observed in online and both i.e., higher count for unmarried and lower for
married.
In offline though the preference of married is higher than that of
unmarried.

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It is observed from the graph that, similar trends are seen in 1-4,6-10, greater
than 15 times.
In 11-15 times, the age group of 20 -28yrs has greatest count then decreasing
for 29-35 yrs and then least for greater than 35 yrs.

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It is observed that in TIER 1 cities the preference is highest for government
bank and lowest for local and none.
In TIER2 city also highest preference is for government banks but lowest is
observed for foreign banks.
In TIER3 cities also highest preference is for government banks but lowest for
none only.

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It is observed from the
graph that the perceptions
of people highly vary in all
the categories of banking
services.

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Descriptive
Preference
N Mean Std.
Deviation
Std.
Error
95% Confidence
Interval for Mean
Minimum
Lower
Bound
Upper Bound
tier1 157 2.39 .758 .060 2.28 2.51 1
tier2 84 2.20 .788 .086 2.03 2.37 1
tier3 118 2.15 .564 .052 2.05 2.26 1
Total 359 2.27 .715 .038 2.20 2.34 1
ANOVA
Preference
Sum of
Squares
Df Mean
Square
F Sig.
Between
Groups
4.461 2 2.231 4.453 .012
Within
Groups
178.330 356 .501
Total 182.791 358
At 95 %significance level, value comes out to be .012 that is less than 0.05, it
means accept the hypothesis H1.

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Descriptive
Perception
N Mean Std.
Deviation
Std.
Error
95% Confidence
Interval for Mean
Lower
Bound
Upper
Bound
21-28 yrs 157 1.90 .826 .066 1.77 2.03
29-35 yrs 85 1.91 .781 .085 1.74 2.07
greater than
35 yrs
117 2.15 .958 .089 1.97 2.32
Total 359 1.98 .867 .046 1.89 2.07
Perception
Sum of
Squares
Df Mean
Square
F Sig.
Between
Groups
4.717 2 2.359 3.179 .043
Within
Groups
264.146 356 .742
Total 268.864 358
At 95 %significance level, value comes out to be .012 that is less than 0.05, it
means accept the hypothesis H2.

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Boston Consultant Group, Indian Banking 2020
PricewaterhouseCoopers (pwc), ecommerce in India
International Journal of Engineering Research and General Science