Consumer RGIPT MBA Perception 2012-14 of Piped Natural Gas

PROJECT REPORT TOPIC: CONSUMER PERCEPTION OF PNG RESEARCH METHODOLOGY METHOD AND MARKETING PROJECT REPORT UNDER GUIDANCE OF DR. KAVITA SRIVASTAVA AND PROF. S. MISHRA

SUBMITTED BY BISWAJIT PANDA (05) GAURAV GUPTA (09) VINAY KAMBOJ (20 )

OUR COLLABRATORS Local: SECTOR A 56 SECTOR B 56 SECTOR 18

Advisory Board: DR. KAVITA SRIVASTAVA RGIPT NOIDA PROF. S. MISHRA RGIPT NOIDA PROF. SANJAY KAR RGIPT NOIDA

ABSTRACT:
This REPORT aims to provide a detailed yet non-exhaustive overview of the Indian Consumer Perception of Piped Natural Gas. It focuses on consumer perception of PNG over LPG.

CONTENTS
1.

INTRODUCTION: Background The energy scene in the 21st century is going to see a major shift. Very soon, oil and gas will see its finiteness. It is high time that we realize this factor and work towards the fuel of the future.

Dr. A P J Abdul Kalam Former President of India, Address at Energy Technology Conclave Technology for Sustainability

RESEARCH MODEL AND HYPOTHESIS DEVELOPMENT Research Model This research wishes to understand persons behavioral intention to use the PNG. Due to the many external variables that cannot be completely taken into consideration, this research adopts TAM and other research techniques as its theory base. These theories have been proved and studied, applied by many experts and scholars, who all consider that Behavioral Intention to Use can be used as prediction indexes for future use. Therefore, judging from the documentations above, persons behavioral intention to use the RET can be effectively predicted. And thats the reason why this research focuses on exploring this. The infrastructure of this research is shown as Figure 1. The external variables that this research model takes into consideration include gender, marriage, age, occupation, education, and income. And this research model hypothesizes that these factors affect not only the attitude toward to use (perceived usefulness, perceived ease of use and compatibility), but also the acceptance of innovation and subjective norm can affect persons behavioral intention to use PNG. Research Hypothesis Attitudes are formed through learning, but they are affected by gender, age, social classes, personalities, ways of lives, values, families, relatives, social and economic factors. Zhous research on peoples behavior of using electronic communication technology has made a discovery that on the differences of cognition degree among different groups, theres a significant difference of perceived usefulness and perceived ease of use between users and non-users. And there are some slight differences on personality variables i.e. the interviewees from different population statistics. Among them highly educated and younger age groups have better understanding on perceived usefulness and perceived ease of use. Yus research discovered that people who have received college education or above can absorb information of new energy rapidly and can accept solar power technology. Conclude all other research results above, this study draws further hypothesis as follows:

H1: External variables will affect persons attitude toward to use the PNG. H2: External variables will affect persons acceptance of innovation. H3: Attitude toward to use will affect persons behavioral intention to use the PNG. H4: Acceptance of innovation will positively affect persons behavioral intention to use the PNG. H5: Subjective norm will positively affect persons intention of using PNG.

H6: AFFECT PERCEIVED USEFULLNESS.

BACKGROUND NATURAL GAS

Natural Gas can be produced from fossil Natural Gas reserves (oil fields, gas fields & coalfields), biogas and gas hydrates. A wide use of Natural Gas has made it a very important commodity in the energy market. Natural Gas is used in power generation, domestic fuel, transportation fuel, fertilizer, aviation, hydrogen production and petrochemicals.

Current Scenario of Natural Gas in India

India is the worlds seventh largest energy producer, accounting for 2.49% of the worlds total annual energy production. It is the fifth largest energy consumer, accounting for about3.45% of total energy consumption in 2012, which has been increasing by an average of 4.8% percent a year since 1990. The share of commercial energy in total primary energy consumption increased from 59.7% in 1980-81 to 79.3% in 2011- 12. Indias GDP has grown at more than 6-6.5% during the last few years, and is expected to grow minimum at the rate of 7.5-9% in the coming few years. The growth has taken place despite the huge deficit in energy infrastructure and infrastructure. Even today, half of the countrys population does not have access to electricity or any other form of commercial energy, and still use non-commercial fuels such as firewood, crop residues end during cakes as a primary source of energy for cooking in over two-thirds of households.

Major Entities Involved in piped Natural Gas in India:

Mahanagar Gas Limited (MGL) is one of Indias leading Natural Gas distribution companies. Established in 1995, MGL is a joint venture between GAIL (India) Ltd., the BG Group, (U.K) and the Government of Maharashtra. GAIL (India) Limited, a Navratna company, is a leader in the area of Gas Processing, City Gas Distribution & Exploration in India and Abroad. GAIL has made an all-round contribution to countrys economy by its countrywide presence of Pipelines, Plants & Marketing network. BG Group (UK) is a leading player in the Global energy market. BG Group is a dynamic growing business with operation in 20 countries over five continents. The BG Group has remarkable experience and expertise in all the areas of energy sector, particularly natural gas. The expertise & rich experience of both out established partners coupled with support from Government of Maharashtra gives MGL an edge to provide world-class service. Over the past decade, MGL has to its credit the distinction of pioneering the natural gas distribution network in Mumbai and its adjacent areas.

CONSUMPTION VIEW (As Piped Natural Gas)

Consumption View
Natural gas has emerged as the most preferred fuel due to its inherent environmentally benign nature, greater efficiency and cost effectiveness. According to the Ministry of Petroleum and Natural Gas, gas use in India amounted to 59 billion cubic meters in FY 2012/113, up from 43billion cubic meters in FY 2011/12; energy use amounted to 61% compared to 39% used for non-energy purposes. Before the start of Krishna-Godavari in April 2009, consumption was supply constrained and demand for gas could easily have been 30 billion cubic meters higher. Indeed, it is important to make a clear distinction

between potential demand and actual consumption as these numbers widely differ. In 2007, unmet demand was estimated at 35 billion cubic meters.

AS PIPED NATURAL GAS Natural gas is a versatile source of energy, which can be used by different sectors. Heating and electricity generation have been the main traditional uses. Increasing environmental concerns may lead to a greater use of natural gas in transportation. Basic uses of natural gas may be illustrated as below.

Residential users as Piped Natural Gas

Residential applications are the most commonly known use of natural gas. It can be used for cooking, washing and drying, water warming, heating and air conditioning. Domestic appliances are increasingly improved in order to use natural gas more economically and safely. Operating costs of natural gas equipment are generally lower than those of other energy sources.

Commercial users as Piped Natural Gas Main commercial users of natural gas are food service providers, hotels, healthcare
facilities or office buildings. Commercial applications include cooling (space conditioning and refrigeration), cooking or heating. ADVANTAGES OF PNG OVER LPG: Advantages of piped gas 1) Uninterrupted and continuous supply with no need to book cylinders periodically Late last year and earlier this year, LPG cylinder supply in states such as Kerala, Maharashtra, Tamil Nadu, Andhra Pradesh, Maharashtra, Manipur and West Bengal were disrupted. Reasons included labour problems in bottling plants, severe cold and fog which disrupted transport, and 'excessive booking' during festivals.

2)Unmatched convenience The domestic consumers have to take upon themselves the trying task of booking an LPG cylinder refill, time and again. Then starts the wait for the deliveryman to deliver the cylinder. Switching over to PNG renders this entire exercise unnecessary. PNG also eliminates the tedious routine of checking LPG refill cylinder for any suspected leakage, or it being underweight, at the time of delivery. Moreover, the user is spared the inconvenience of connecting and disconnecting the LPG cylinder when out of gas. Precious space, occupied by LPG cylinders is also saved.

3) Simpler supply chain 4) It is cheaper than LPG: 22% price advantage over LPG Cost of LPG: Rs 24.4 per kg IGL's PNG selling price: Rs 18.9 per kg

5) It doesn't require subsidy Subsidy for LPG: Rs 16,071 crore Subsidy for piped gas: 0

6) Safety The combustible mixture of natural gas and air does not ignite if the mixture is leaner than 5% and richer than 15% of the air-fuel ratio required for ignition. This narrow inflammability range makes PNG one of the safest fuels) Natural gas is lighter than air. Therefore, in case of a leakage, it just rises and disperses into thin air given adequate ventilation. But LPG being heavier will settle at the bottom near the floor surface. A large quantity of LPG is stored in liquefied form in a cylinder. With PNG, it is safer since PNG installation inside your premises contains only a limited quantity of natural gas at low pressure i.e. 21 millibar (mbar).

On leakage, LPG expands 250 times, which is not the case with PNG. Supply in PNG can be switched off through appliance valve (inside the kitchen) and isolation valve (outside kitchen premises), which fully cuts off the gas supply.

7) Environment friendly Natural gas is one of the cleanest burning fossil fuels, and helps improve the quality of air, especially when used in place of other more polluting energy sources. Its combustion results in virtually no atmospheric emissions of sulphur dioxide (SO2), and far lower emissions of carbon monoxide (CO), reactive hydrocarbons and carbon dioxide, than combustion of other fossil fuels. In fact, when natural gas burns completely, it gives out carbon dioxide and water vapour. These are the very components that we exhale!

8) A versatile fuel Natural gas is being used predominantly as a versatile fuel in many major cities catering to domestic and commercial applications, as a cooking fuel, for water heating, space heating, air conditioning, etc.

9) Lower maintenance cost With PNG, soot or ash accumulation and greasy spillages are absent from your appliance. Maintenance costs are, thus, driven down.

RESEARCH METHODOLOGIES ADOPTED\

There are many ways to get information. The most common research methods are: literature searches, talking with people, focus groups, personal interviews, telephone surveys, mail surveys, email surveys, and internet surveys. A literature search involves reviewing all readily available materials. These materials can include internal company information, relevant trade publications, newspapers, magazines, annual reports, company literature, on-line data bases, and any other published materials. It is a very inexpensive method of gathering information, although it often does not yield timely information. Literature searches over the web are the fastest, while library literature searches can take between one and eight weeks.

Talking with people is a good way to get information during the initial stages of a research project. It can be used to gather information that is not publicly available, or that is too new to be found in the literature. Examples might include meetings with prospects, customers, suppliers, and other types of business conversations at trade shows, seminars, and association meetings. Although often valuable, the information has questionable validity because it is highly subjective and might not be representative of the population. A focus group is used as a preliminary research technique to explore peoples ideas and attitudes. It is often used to test new approaches (such as products or advertising), and to discover customer concerns. A group of 6 to 20 people meet in a conference-room-like setting with a trained moderator. The room usually contains a one-way mirror for viewing, including audio and video capabilities. The moderator leads the group's discussion and keeps the focus on the areas you want to explore. Focus groups can be conducted within a couple of weeks and cost between two and three thousand dollars. Their disadvantage is that the sample is small and may not be representative of the population in general. Personal interviews are a way to get in-depth and comprehensive information. They involve one person interviewing another person for personal or detailed information. Personal interviews are very expensive because of the one-to-one nature of the interview ($50+ per interview). Typically, an interviewer will ask questions from a written questionnaire and record the answers verbatim. Sometimes, the questionnaire is simply a list of topics that the research wants to discuss with an industry expert. Personal interviews (because of their expense) are generally used only when subjects are not likely to respond to other survey methods. Telephone surveys are the fastest method of gathering information from a relatively large sample (100-400 respondents). The interviewer follows a prepared script that is essentially the same as a written questionnaire. However, unlike a mail survey, the telephone survey allows the opportunity for some opinion probing. Telephone surveys generally last less than ten minutes. Typical costs are between four and six thousand dollars, and they can be completed in two to four weeks. Mail surveys are a cost effective method of gathering information. They are ideal for large sample sizes, or when the sample comes from a wide geographic area. They cost a little less than telephone interviews, however, they take over twice as long to complete (eight to twelve weeks). Because there is no interviewer, there is no possibility of interviewer bias. The main disadvantage is the inability to probe respondents for more detailed information.

Email and internet surveys are relatively new and little is known about the effect of sampling bias in internet surveys. While it is clearly the most cost effective and fastest method of distributing a survey, the demographic profile of the internet user does not represent the general population, although this is changing. Before doing an email or internet survey, carefully consider the effect that this bias might have on the results.

Questionnaire Research Flow Chart

NON COMPARATIVE SCALING TECHNIQUES

The type of scaling which does not compare the object against another object or some standard. Rather, the rater uses whatever standard seems most appropriate to him or her.

1. Continuous rating scale: the respondents rate the objects by placing a mark at the appropriate position on a line that runs from one extreme of the criterion variable to the other. The form of the continuous scale varies considerably depending on the imagination of the researcher. Their use in marketing has been limited because they are not as reliable as itemized scales, the scoring process is cumbersome, and they provide little additional information. 2. Itemized rating scale: the respondents are provided with scales having numbers and/or brief descriptions associated with each category. The respondents are required to select one of the specified categories that best describes the object being rated. TYPES OF ITEMIZED RATING SCALES Likert scale: the respondents are required to indicate a degree of agreement or disagreement with each of a series of statements related to the stimulus objects. The Likert scale is often used in marketing. It is easy to construct and administer, it is easy for respondents to complete, and it is suitable for mail, telephone, and personal surveys. Semantic differential scale: is a seven-point rating scale with end points associated with bipolar labels that have semantic meaning. Respondents are required to rate objects on a number of itemized, seven-point rating scales bounded at each end by one of two bipolar adjectives. This scale is popular in marketing and has been used in image studies, promotion strategy, and new product development studies. Staple scale: is a unipolar rating scale with ten categories numbered from -5 to +5, without a neutral point. Respondents are asked to indicate how accurately or inaccurately each term describes the object by selecting an appropriate numerical response category. Though easier to construct than the Semantic Differential, while giving the same results, the Staple scale has not been widely applied in marketing.

The Importance of a Target Audience of Consumers

Identifying a target audience of consumers is among the most crucial elements for a new business operator to consider. Without knowing your target market, or whether an audience even exists, you can't realistically expect your business venture to survive. Business owners who learn how to identify target audiences of consumers stand a better chance of convincing lenders to support them. Learning to distinguish between different audiences makes it easier to determine what segments of consumers truly support your business and whether they are going to become more than one-purchase customers. Clear Focus Adopting a general approach -- assuming your customers will come essentially equally from all segments or demographics -- is no longer enough to support a new business, because the marketplace has become too differentiated. In courting potential customers, owners must consider age, gender, lifestyle and technological sophistication, according to Entrepreneur magazine's Small Business Encyclopedia. Attempting to serve every possible niche is a route to failure. Identifying a target audience provides a clear focus of whom your business will serve and why those consumers need your goods or services. Determining this information also keeps a target audience at a manageable level. Prioritizing Resources Target marketing helps businesses evaluate which segments of their audiences are most likely to buy their products, and prioritize resources accordingly. With consumers' help, however, companies can determine which foreign audiences are worth targeting. For example, Google's volunteer network has helped the company become the world's most translated for-profit website, with 148 languages and counting. This relationship, in turn, enables Google to learn what aspects of their products or services matter most to customers. Precision Planning Once you determine your business's target audience, there is no end to how precisely you can further pinpoint your audience's needs and wants. One method is generational marketing, which defines consumers by age, demographic and economic, social and psychological factors, according to Entrepreneur. This technique has been used since the 1980s to gain a clearer picture of consumer behavior. Another option is studying people who share common characteristics or experiences. This method is known as cohort marketing. Companies using this approach hope to learn why people behave differently even when they are similar in age.

Relevance to Lenders Target audience data is important to a business plan, which is the key document that lenders use to determine which ventures they want to support, the U.S. Small Business Administration notes in an overview on its website. Business plans include key details such as a business loan applicant's anticipated business target market, its projected total annual sales and its growth potential. Target audience data shows the applicant's knowledge of his industry and whether his projections for success are supported by meaningful and measurable data. The Importance of a Target Audience of Consumers Identifying a target audience of consumers is among the most crucial elements for a new business operator to consider. Without knowing your target market, or whether an audience even exists, you can't realistically expect your business venture to survive. Business owners who learn how to identify target audiences of consumers stand a better chance of convincing lenders to support them. Learning to distinguish between different audiences makes it easier to determine what segments of consumers truly support your business and whether they are going to become more than one-purchase customers.

NON RESPONSE BIAS

Many studies have attempted to determine if there is a difference between respondents and non respondents. Some researchers have reported that people who respond to surveys answer questions differently than those who do not. Others have found that late responders answer differently than early responders, and that the differences may be due to the different levels of interest in the subject matter. One researcher, who examined a volunteer organization, reported that those more actively involved in the organization were more likely to respond. Demographic characteristics of non respondents have been investigated by many researchers. Most studies have found that nonresponse is associated with low education. However, one researcher reported that demographic characteristics such as age, education, and employment status were the same for respondents and nonrespondents. Another study found that non respondents were more often single males. Most researchers view nonresponse bias as a continuum, ranging from fast responders to slow responders (with non responders defining the end of the continuum). In fact, one study used extrapolation to estimate the magnitude of bias created by nonresponse. Another group of researchers argue that nonresponse should not be viewed as a continuum, and that late respondents do not provide a suitable basis for estimating the characteristics of non respondents.

SAMPLING FRAME Basically, a sampling frame is a complete list of all the members of the population that we wish to study. To give an example, if we wish to study the underlying factors that cause patients to be admitted into hospital following an acute asthmatic attack in a given area (your population), then you would need to know the names of all the people in that area who have been admitted into hospital for this reason. From a list of these names, you can then randomly select an appropriate number as representatives of the population (your sample) whom you can invite to take part in the research. If we do not have such a sampling frame, then we are restricted to less satisfactory forms of samples which cannot be randomly selected because not all individuals within that population will have the same probability of being selected for the sample.

SAMPLING TECHNIQUES n order to answer a particular research question, the researcher needs to investigate a particular area or group, to which the conclusions from the research will apply. The former may comprise a geographical location such as a city, an industry (for example the clothing industry), an organization/group of organizations such as a particular firm/type of firm, a particular group of people defined by occupation (e.g. student, manager etc.), consumption of a particular product or service (e.g. users of a shopping mall, new library system etc.), gender etc. This group is termed the research population. The unit of analysis is the level at which the data is aggregated: for example, it could be a study of individuals as in a study of women managers, of dyads, as in a study of mentor/mentee relationships, of groups (as in studies of departments in an organization), of organizations, or of industries. Unless the research population is very small, we need to study a subset of it, which needs to be general enough to be applicable to the whole. This is known as a sample, and the selection of components of the sample that will give a representative view of the whole is known as sampling technique. It is from this sample that you will collect your data.

In order to draw up a sample, you need first to identify the total number of people in the research population. This information may be available in a telephone directory, a list of company members, or a list of companies in the area. It is known as a sampling frame.

TYPES OF SAMPLING PROBAB;ITY AND NON-PROBLALITY SAMPLING Sampling methods are classified as either probability or nonprobability. In probability samples, each member of the population has a known non-zero probability of being selected. Probability methods include random sampling, systematic sampling, and stratified sampling. In nonprobability sampling, members are selected from the population in some nonrandom manner. These include convenience sampling, judgment sampling, quota sampling, and snowball sampling. The advantage of probability sampling is that sampling error can be calculated. Sampling error is the degree to which a sample might differ from the population. When inferring to the population, results are reported plus or minus the sampling error. In nonprobability sampling, the degree to which the sample differs from the population remains unknown.

Random sampling is the purest form of probability sampling. Each member of the population has an equal and known chance of being selected. When there are very large populations, it is often difficult or impossible to identify every member of the population, so the pool of available subjects becomes biased.

Systematic sampling is often used instead of random sampling. It is also called an Nth name selection technique. After the required sample size has been calculated, every Nth record is selected from a list of population members. As long as the list does not contain any hidden order, this sampling method is as good as the random sampling method. Its only advantage over the random sampling technique is simplicity. Systematic sampling is frequently used to select a specified number of records from a computer file.

Stratified sampling is commonly used probability method that is superior to random sampling because it reduces sampling error. A stratum is a subset of the population that share at least one common characteristic. Examples of stratums might be males and

females, or managers and non-managers. The researcher first identifies the relevant stratums and their actual representation in the population. Random sampling is then used to select a sufficient number of subjects from each stratum. "Sufficient" refers to a sample size large enough for us to be reasonably confident that the stratum represents the population. Stratified sampling is often used when one or more of the stratums in the population have a low incidence relative to the other stratums.

Convenience sampling is used in exploratory research where the researcher is interested in getting an inexpensive approximation of the truth. As the name implies, the sample is selected because they are convenient. This nonprobability method is often used during preliminary research efforts to get a gross estimate of the results, without incurring the cost or time required to select a random sample.

Judgment sampling is a common nonprobability method. The researcher selects the sample based on judgment. This is usually and extension of convenience sampling. For example, a researcher may decide to draw the entire sample from one "representative" city, even though the population includes all cities. When using this method, the researcher must be confident that the chosen sample is truly representative of the entire population.

Quota sampling is the nonprobability equivalent of stratified sampling. Like stratified sampling, the researcher first identifies the stratums and their proportions as they are represented in the population. Then convenience or judgment sampling is used to select the required number of subjects from each stratum. This differs from stratified sampling, where the stratums are filled by random sampling.

Snowball sampling is a special nonprobability method used when the desired sample characteristic is rare. It may be extremely difficult or cost prohibitive to locate respondents in these situations. Snowball sampling relies on referrals from initial subjects to generate additional subjects. While this technique can dramatically lower search costs, it comes at the expense of introducing bias because the technique itself reduces the likelihood that the sample will represent a good cross section from the population.

TECHNOLOGY ACCEPTANCE MODEL (TAM)

One of the well-known models related to technology acceptance and use is the technology acceptance model (TAM), originally proposed by Davis in 1986. TAM has proven to be a theoretical model in helping to explain and predict user behavior of information technology (Legris, Ingham, & Collerette, 2003). TAM is considered an influential extension of theory of reasoned action (TRA), according to Ajzen and Fishbein (1980). Davis (1989) and Davis, Bagozzi, and Warshaw (1989) proposed TAM to explain why a user accepts or rejects information technology by adapting TRA. TAM provides a basis with which one traces how external variables influence belief, attitude, and intention to use. Two cognitive beliefs are posited by TAM: perceived usefulness and perceived ease of use. According to TAM, ones actual use of a technology system is influenced directly or indirectly by the users behavioral intentions, attitude, perceived usefulness of the system, and perceived ease of the system. TAM also proposes that external factors affect intention and actual use through mediated effects on perceived usefulness and perceived ease of use.

Figure 1. Original technology acceptance model (TAM)

The Technology Acceptance Model (TAM) is an theory that models how users come to accept and use a technology. The model suggests that when users are presented with a new technology, a number of factors influence their decision about how and when they will use it, notably:

Perceived usefulness (PU) - This was defined by Fred Davis as "the degree to which a person believes that using a particular system would enhance his or her job performance". Perceived ease-of-use (PEOU) - Davis defined this as "the degree to which a person believes that using a particular system would be free from effort"

DATA ANALYSIS TECHNIQUES