You are on page 1of 118

Sales Promotion Schemes Project Report MBA

One of the most difficult marketing decisions facing companies is how much to spend on promotional John Wanamaker, the departmental - store magazine, said, "I know that half of my advertising is wasted but I don't know which half." Thus it is not surprising that industries and companies vary considerably in how much they spend on promotion. Promotional expenditures might amount to 30-50% of sales in case in cosmetics industry and only 10-20% in the industrial equipment industry. Within a industry, a low and high spending companies can be found. How do companies decide on their promotion budget? There are mainly four methods of sales promotion : Affordable Method : Many companies set the promotion budget at what they think the company can afford. One executive explained this method as follows : "Why, its simple. First I go upstairs to the controller and how much they can afford to give us this year. He says a million and half. Later, the boss comes to me and asks how much
Advertising Effectiveness Project Report Internal Customer Satisfaction Project Report

we should spend and I say Oh about a million and half." It is a method which is uncertain one and makes long term planning difficult. Percentage of Sales Method : Many companies set their promotion expenditures at a specified percentage of sales. Accordingly the sales is set on the basis of sales. In this a specified sales percentage is decided for the promotional budget Advantages of this method : First, its use means that promotional budget vary with what a company can afford. Second, it encourages the management to think in terms of the relationship among promotion costs, selling price, and profit per unit, Third, it encourages the competitive stability to the extent that competing firms spend approximately the same % of their sales on promotion. Inspite of the advantages, the % sales method has little to justify it. Its reasoning is circular : It views sales as the determiner of the promotion rather than as a result. It leads to budget setting by availability of funds rather than by marketing opportunities. Competitive Parity Method :

Some companies set their promotional budget to achieve share-of-voice parity with other competitors. Two arguments are made in support of competitive parity method. One is that the competitors expenditure represents the collective wisdom of the industry. The other is that maintaining a competitive parity helps prevent promotional wars. Neither argument is valid. There are no grounds for believing that competition knows better what should be spent on promotion. Objective and Task Method : The objective & task method calls upon marketers to develop their promotion budgets by defining their specific objectives, determining the task that must be performed to achieve these objectives, and estimating the cost of performing these tasks. Deciding on the promotion mix : Companies face the task of distributing the total promotion budget over the five promotional tools : Advertising Sales Promotion Public Relations and Publicity Sales Force Direct Marketing. Whatever method a company adopt for promoting its product it must be from above mentioned method.

What is Sales Promotion ?

Promotion is the final element in the marketing mix. After the nature of product is decided, its price fixed and the methods of distribution decided, the manufactures has to take effective steps in meeting the consumers in the markets. In the present consumer oriented markets it is the duty of manufacturers to know what is required by the consumer. It is also their duty to make the customers know where, when how and at what prices. The products would be available.

Meaning of Promotion

The term promotion is the term and includes mainly three type of sales activity : 1. Mass impersonal selling methods (Advertising). 2. Face to face personal selling (Salesman ship). 3. Activities other than personal selling and advertising such as point of purchase display (P.O.P.) show and exhibitions, demonstrations and other non securing selling efforts. This form of activity is called Sales Promotion. There are two type of promotion blends :1. Pull Blend. 2. Push Blend. Both of these are closely related to the channel of Distribution. 1. A pull blend is one in which mass impersonal, sales efforts are given the greatest emphasis. The purpose of pull blend to pre-sell to the final consumers. So that they demand the product at the retail level of distribution. The firm adopting this strategy

would spend more on advertising and sales promotion rather than in personal selling. These efforts pull down the product from the manufacturer. 2. A push blend emphasizes personal selling. Naturally firms adopting this method develop a strong sales force at both the distributor and the dealer level. This method would tends to push the product through the channel of distribution.

Promotion and Selling

The term promotion is very often used as a synonym for selling. But selling is a narrow term which includes only transfer of title or personal selling. Promotion on the other hand is broader in its outlook and includes a variety of activities used ultimately for increasing sales volume.

Promotion and Sales Promotion

Similarly the terms sales promotion can not be taken to mean what is commonly does. Sales promotion, is only a part of the promotion. Basically promotion is an "exercise" in information persecution and influence. Promotion has come to mean the over all co-ordination of advertising selling, publicity and public relations. Promotion is a helping function designed to make all other marketing activities more effective and efficient. But sales promotion as such helps only the selling activity still, there exit same difference of opinion on the real connection of the term sales promotion.

Acc. to A.H.R. Delons :"Sales promotion means any step that are taken for the purpose of obtaining or increasing sales".

Acc. to W.Q. Kelly Opines :"Muddled misused misunderstood that is sales promotion Acc. to him the field of sales promotion as a marketing activity is still vaguely defined and organized.

Sales Promotion and Advertising

There is no universally accepted distribution between these two terms. To same advertising includes all forms of mass media communication directed towards influencing the end consumer. Sales promotion on the other hand, includes the form of mass communication directed towards information and influencing the channel of distribution (e.g. distributors, retailers etc.). Hence a price of product literature distributed by retailers in sales promotion. These sales promotion merges on one side in to advertising and on the other in to personal salesman ship. It is concerned with the dissemination of information to whole salers, retailers, customers (both actual and potential, and to the salesman). Sales promotion is concerned with the creation. Application and dissemination of material and techniques that supplement advertising and personal selling. Sales promotion makes use of direct mail, catalogues, trade shows, sales contests, premiums, samples, windows displays and other aids. Its purpose is to increase the desire of salesman, distributors and dealers to sell a certain brand to make consumers more eager to buy that brand. Personal selling and advertising do include prospects to make these decisions. Sale promotion provides an extra stimulus.

Objective of Sales Promotion

1. To increase sales directly by publicity through media which are complementary to press and poster advertising. 2. To disseminate information through sales man dealers etc. So as to insure the product getting in to satisfactory use by the ultimate consumer. 3. To attract new consumer.

4. To face the competition effectively. 5. To help salesman in selling more to the retailers and consumers. 6. To check seasonal decline in sales. Generally speaking sales promotion involves rendering the following services:(a) Services to dealers. (b) Services to own salesman. (c) Special publicity.

Sales Promotional at different levels 1. Sales promotion at Dealers Level :It may include various schemes some of which are discussed here. (i) Advertising Materials :The advertising material prepared by the company such as store signs, banners, shelf signs, board etc. are distributed to sub dealer for display purposes this is in fact a method of advertising. (ii) Store Demonstration :In the promises of the whole saler or the retailer the products sales personnel will conduct special demonstration for the companies product. A personal demonstration is good to introduce a new product at its peculiar advantage can be high lightened and the consumers doubt clear. It can be used to restimulate an old product. A good demonstration with a great dealer of action will draw heavy crowds in to the store and will attract attention to the product. (iii) Special Display and Shows :-

These are in seasonal in character but could be arranged in an elaborate manner and for all the products of an company. Usually these are arranged along with trade fair and exhibition. Besides effecting sales these shows impress the companys name generally on the public.

Sales promotion at consumers level The various schemes of sale promotion at Consumers Level may include. 1. Coupons (A Chit of Stated Value) :These are given directly to the consumer these coupons are in most cases kept inside the package. The consumers many receive a price reduction of the stated values of the coupon at the time of purchase. The retailer receives reimbursement for the value of the coupon form the manufacturer. Coupons act as a short run stimulus to the sale of the product, since they are directly tied with the purchase of the item. They encourage the retailer to stock the product. What is important is that a coupon offer does not spoil the named price of the brand nor does it un pair the margin of the dealers. But it is not easy to measure the effectiveness of a coupon offer. One over knows how many customer would have bought the product without the incentive. It is also difficult to find out how many customers were held after the coupon offer expired. 2. Price-off-offer (Also known as bargain offer price packs) :This offer is intended to stimulate the sales during a slump season. In this method the customer is offered a reduction from the printed price list. It is also used when a substitute for competing product enters the market. Many experts on sales promotion fed that Off Schemes are among the weaker and less desirable methods of promotion. These can be trade resentment particularly when

the retailer raises the price to retain his margin. Secondly that is not conductive to building up brand loyalty. Consumers may simply shift to the products that offer this scheme. 3. Samples :In the hope of converting a prospect into a customer a sample (Some quantity of the product) may be given. This helps the consumer to verify the real quality of the product. Various pair manufacturing companies offer this method. For developing brand loyalty this method is quite useful. Sampling is a fast method of demand creation because one knows the result as soon as the consumer has had time to use the sample and buy the brand. Disadvantage of Sampler :Offering sample in quit expensive. There is the cost of producing samples. The distribution costs are also high. Sample have to be mailed to potential customers or to be distributed through retail shops. There are also problems when the real product does not resemble the sample supplied. 4. Money Refund Offer :An offer usually stated on the package is that manufacturers will return with in a stated period part or all of the purchasers money if he is not completely satisfied with the product. 5. Trading Stamps :A premium in the form of stamps is given by the sellers to consumers while selling goods. The number and value of stamp that the buyer receives depends on the values

of the purchase. These stamps are redeemable through premium catalogues at the stamp redemption centres. 6. Buy-Back Allowance : This an allowance following a previous trade deal not offer a certain amount of money for new purchases based on the quantity of purchases on the first trade deal. It extends the life of a trade deal and helps to prevent part deal sales decline. It greatly strengthens the buyers motivation to co-operate on the first deal. 7. Premium :There are various forms of premiums provided by the manufacturer as sales promotional devices :(a) Coupons are supplied for effecting price reductions. (b) Factory in pack premium these are popular in the case of Body food and Tin food items, Spoons, Cups, Measuring, Glass etc. and such other items are packed with the product in the box itself. Factory in pack premium are particularly goods for product meant for children. The Binaca Toothpaste packs contain animal shape toys. These are very attractive and qutie popular among the children. (c) Self Liquidating Premiums :The cost of the premium is collected from the buyer himself. But when the buyers pays for it he has to pay only a considerably low price for the premium. This is possible for the manufacturer purchases the items in bulk at a premium and his cost per unit as is substantially low.

Other Steps by Manufacturer for Promoting Sales Dealers can be helps in different ways :1. Communicating Market News :Often this service is reciprocal the manufacturer may acquaint his dealer with the fact relating to his production and prices while the dealer may familiarize him in return with the information bearing on charges in the consumer's demand, their like and dislike complaints and criticism, substitutes etc. 2. Inviting to Sales Conference and Convention :The gestures of regard and respect pave the way for better relation and co-operation. 3. Offering Reasonable Terms of Sale :Of all the forms of encouragement, the monetary incentive evokes immediate response. Hence every producer must offer the most responsible terms of sale such as longer periods of credit and higher rates of descants. 4. Supplying suitable packages and useful things. 5. By taking the return back. 6. By furnishing them with sales literature and display materials.

Aggressive Selling Meaning :-

Goods are produced for market. Manufacturers have to make efforts to sell all they produce. When the manufacturers uses various sales efforts to obtain increased sales volume for his product it is called aggressive selling or offensive selling. The sales efforts which a manufacturer makes to retain his customers i.e. to protect his already established market against against his competitors is termed as defensive selling. In contrast to this aggressive selling is concerned with the sales efforts made with the express objective of selling more by expanding the market for the product of the selling firm. Aggressive Selling and Defensive Selling :Aggressive selling is based on the answer to the question how much does the firm gain (in term of sales with profit) by using this method defensive selling is based on consideration as to how much the firm will lose if it does not use this method increase of sales can be obtained from two sources:1. New customers if the market is expending. 2. From the competitors i.e. those consumers who were purchasing similar product of competiting firms, if the market for the product is static. Acc. to H. Whitehead :"In case of an expanding market all the firm may stand to gain by following the methods of aggressive selling but if the market is static manufacturer of a new market will have to be much more aggressive to capture the established market of competitors". When Aggressive selling is resorted ? Usually manufacturer of a new product has to do aggressive selling :-

1. When the product has been improved. 2. When the manufacturers product is supervisor in quality to the product of the established competitor. 3. When the total market for the product or line of product to expanding. 4. If the manufacturers share of the market is comparatively small. 5. If the manufacturer has unused production capacity with heavy investment in plant and equipment he will like to develop the demand for his product rapidly so that demand for his product is equal to the optimum production capacity of his plant ; and 6. When primary demand for a product must be created and provision must be made in the channel of distribution to educate consumers regarding the new product and to instruct them in its use. Method of Aggressive Selling :Sales promotion efforts use for aggressive selling may be divided in two classes. 1. Trade Promotion. 2. Consumer Promotion. 1. Trade Promotion :Under trade promotion methods special incentives are offered to the trader to buy products of the firm. Such incentive may take one or more of the following firm :(a) Cash Allowance :-

A definite percentage of discount is allowed on the purchase of given unit of a product. (b) Extra Product :Instead of giving any cash allowance extra product is given with each unit of product ordered. For instance if a box normally contains 20 Cakes of Soap, special box contains 25 cakes may be made and sold at the same price as that of the box of 20 cakes. (c) Gifts :Various gifts are awarded in return for an order of a particular magnitude.

2. Consumer Promotion :Under consumer promotion method special incentives are offered to the consumers to buy the firms product. The more prominent amongst such incentives are as following. (a) Coupons :A coupon of a giving value is sent to the consumer. By presenting this coupon to the retailer consumers can purchase a particular product mentioned on the coupon at a reduced price. The retailer sells the products mentioned. In the coupon to such consumer (consumers presenting the coupons) under and agreement with the manufacturer at a price lower than the user retail price. Thus the consumer get the benefit of reduced price to the extent of the value of the coupons. (b) Self Liquidating Offers :-

Under this system, the firm offers an article at an attracting price if the consumer send a given sum of money accompanied by a given number of box tops from the packages of a particular product the benefit to the consumer is that he receives the articles at a bargain price. (c) Bargain Packs :Under this system a product is sold at a reduced price for a short period Bargain pack method encourages new consumers to try the product. It is also helpful in obtaining large displays in the shops. (d) Sampling :The method involves giving the product or a small quantity of the product to a consumer free with the hope that the customer will be favourable impressed with its actual use and will eventually become a regular purchaser of the product. A firm selling new product or an extensively improved product finds this methods useful. Also a firm whose market is hold by competitors whose free sampling almost expensive. The above mentioned methods may be reinforced by adopting. (i) Direct method of selling through. (ii) Offer of door to door selling. (iii) Hire purchase and installment payment methods of selling and by forming combination. Other Methods of Aggressive Selling :-

(i) Employment of Missionary Salesman also known as Promotional Salesman. These salesman call upon retailers and aggressively promote a product. (ii) Instead of using wholesalers, the firm may develop its own sales force to call directly on retailers. (iii) The firm may follow a compromise method by employing a manufacturers agent and giving him a large enough commission to encourage him to sell product intensively and aggressively. (iv) New territory exploitation sales promotion has a particularly important role in developing the companys product in new territories. (v) Increment and promotions. (vi) Letters to dealer and Customer. In fact, an ingenious sales manager can devise any number of incentives schemes for promoting the sales volume. Data Collection :There are two main sources for collecting data. These are :1. Primary Data. 2. Secondary Data. 1. Primary Data : It is the data that is collected for the first time. It is fresh and the originally collected by the surveyor. In this Project - Sales Promotion Schemes, the researcher contacted 250 customers and situated on the various points of the Sonepat, Panipat, Karnal & nearby areas.

The response were collected personally by the reasearch through a structural questionnaire, consisting of 20 questions. 2. Secondary Data : Secondary data is the one which is collected by the some one else and already used in some or the other form. Here the secondary data used was the theoretical aspects of promotional tools and the statistical method made use of. Sample :A sample of 250 customers was chosen from Sonepat, Panipat, Karnal & nearby areas. The sample chosen was fully on the basis of convince of the researcher. It was a non-probability sample. Analysis and interpretation :The total data was presented in simple tables, graphs and percentage method was used for interpretation. Limitation :Due to time and money constrains the present study was confined only to a sample of 250 customers and that too of Sonepat, Panipat, Karnal & nearby areas.

Name : Age : 18-30 30-40 Above 40 Profession : Income : 3000-5000 5000-7500 7500-10000 10000-15000 Above 15000 1. Have you heard about the brand Grasim/Grasim Suiting? Yes No 2. Have you ever seen the Advertisement of Grasim ?

Yes No 3. Where did you saw the Advertisement On T.V. In Magazine Hoarding Others 4. Does it provides the sufficient information about the product you needed ? Yes No Partially 5. Can you recall the content of Grasim Advertisement ? Yes No Partially 6. What do you think about the consistency of Grasims advertisement ? Excellent Good Average Poor 7. Which channel do you watch most frequently ? DD1 DD2 Zee T.V. Sony Star Plus Zee News Others 8. Have you ever heard about "Mr. India" "Mr. International" Contest organised by Grasim ? Yes No 9. Do you found these events as are effective advertisement medium ? Yes No Partially 10. What type of advertisement do you like the most ? Personality Symbol Musical Fantasy Life Style 11. Which other advertisement can you recall ? Raymonds Siyaram Vimal OCM Mayur Dinesh Grasim Digzam 12. Which advertisement is most consistent ?

Raymonds Siyaram Vimal OCM Mayur Dinesh Grasim Digzam 13. Which brand in the fabric is the most frequently advertised on T.V. ? Raymonds Siyaram Vimal OCM Mayur Dinesh Grasim Digzam 14. Have you purchased Grasim Product ? Yes No 15. Have you satisfied with the product ? Fully Satisfied Partially Satisfied Dissatisfied 16. Do you know the new product launched by Grasim viz. coolers, WWF, SUMO ? Yes No 17. Do you recommend the product to others if you are satisfied with it ? Frequently Occasionally When asked Never 18. Which Media do you like is the most efficient for advertising fabric ? Electronic Print Outdoor Mail Word of mouth 19. Do you feel good when you see the advertisement of the brand which you have purchased ? Yes No 20. What time of the day do you feel the best for the advertisement on TV ? Morning Mid-day Evening Late night




1.0.1 Success of every business enterprise depends on its human resource. Money, material and machines are inert factors; but man with his ability to feel, think, conscience and plan is the most valuable resource. At the same time human elements are most difficult to be inspired, controlled and motivated. The upcoming competition in India, will demand high motivational level of its employees. 1.0.2 Growth of an enterprise is vital for the economic development of the country. This is possible only by maintaining the enthusiasm and motivation of the employees, which is vital for carrying out the operations in most efficient manner. The most successful companies, all over the world have designed their business policies to achieve higher productivity by using potentiality and strength of people. 1.0.3 The basic aim of human policies is the genuine concern for the people. Proper design of human policies is based on the higher responsibilities, personal and positive approach in the total perspective of organisational interest. The world's best companies have established their strength with their people. The employees identify themselves with the company they are working for. This also help in building up their spirit, morale and espirit-de-cops which becomes strength of the company. The culture of excellence thus nurtured contribute to growth with stability and continuous improvement in productivity. 1.0.4 Finding the right man for the job and developing him into a valuable resource is an indispensable requirement of every organisation. Human resources are capable of enlargement i.e. capable of providing an output that is greater than the sum of the inputs. Proper recruitment helps the line managers to work most effectively in accomplishing the primary objective of the enterprise. In order to harness the human energies in the service or organisational goals, every manager is expected to pay proper attention to recruitment, selection, training, development activities in an organisation. Proper promotional avenues must also be created so as to motivate employees to peak performance. Thus, personnel functions such as manpower planning recruitment, selection and training, when carried out properly, would enable the organisation to hire and retain the services of the best brains in the market. 1.0.5 The human resource management is very crucial in respect of information technology services than other manufacturing or marketing enterprises. The IT services are technical in

nature and at every stage the human touch is involved. Hence it is well motivated and devoted manpower which is very much essential for the success of IT industry. 1.1 ROLE OF HR MANAGERS 1.1.1. And Some industry commentators call the Human Resources function the last bastion of bureaucracy. Traditionally, the role of the Human Resource professional in many organizations has been to serve as the systematizing, policing arm of executive management. In this role, the HR professional served executive agendas well, but was frequently viewed as a road block by much of the rest of the organization. While some need for this role occasionally remains you would no want every manager putting his own spin on a sexual harassment policy, as an examplemuch of the HR role is transforming itself. The role of the HR manager must parallel the needs of his changing organization. Successful organizations are becoming more adaptable, resilient, quick to change direction, and customer-centered. Within this environment, the HR professional, who is considered necessary by line managers, is a strategic partner, an employee sponsor or advocate, and a change mentor. 1.1.2 Strategic Partner:-In todays organizations, to guarantee their viability and ability to contribute, HR managers need to think of themselves as strategic partners. In this role, the HR person contributes to the development of and the accomplishment of the organization-wide business plan and objectives. The HR business objectives are established to support the attainment of the overall plan and objectives. The tactical HR representative is deeply knowledgeable about the design of work systems in which people succeed and contribute. This strategic partnership impacts HR services such as the design of work positions, hiring; reward, recognition, and strategic pay; performance development and appraisal systems; career and succession planning; and employee development. 1.1.3 Employee Advocate:-As an employee sponsor or advocate, the HR manager plays an integral role in organizational success via his knowledge about and advocacy of people. This advocacy includes expertise in how to create a work environment in which people will choose to be motivated, contributing, and happy. Fostering effective methods of goal setting, communication, and empowerment through responsibility build employee ownership of the enterprise. The HR professional helps establish the organizational culture and climate in which people have the competency, concern, and commitment to serve customers well. In this role, the HR manager provides employee development opportunities, employee assistance programs, gain sharing and profit-sharing strategies, organization development interventions, due process approaches to problem solving, and regularly scheduled communication opportunities. 1.1.5 Change Champion:-The constant evaluation of the effectiveness of the organization results in the need for the HR professional to frequently champion change. Both knowledge about and the ability to execute successful change strategies make the HR professional exceptionally valued. Knowing how to link change to the strategic needs of the organization will minimize employee dissatisfaction and resistance to change. The HR professional contributes to the organization by constantly assessing the effectiveness of the HR function. He also sponsors change in other departments and in work practices. To promote the overall success of his organization, he champions the identification of the organizational mission, vision, values, goals,

and action plans. Finally, he helps determine the measures that will tell his organization how well it is succeeding in all of this. 1.2 LEADERSHIP AND EMPLOYEE INVOLVEMENT. 1.2.1 The main role of leadership was seen as creating a participatory process for employee involvement, to build collective wisdom. Control has given way to collaboration and the old paradigm of promoting competition and motivating through incentives shifted to creating co-operation and oneness amongst people. This is a marked shift to build effective teams. Research shows that six out of every 10 employees like to work in teams. 87 per cent of all Fortune 500 companies use parallel teams and about 100 per cent of all companies use project teams. 1.2.2 Story telling and appreciative enquiry are emerging as a new dimension in positive motivation. Finding out what's wrong seems to be the trend. In Walt Disney, telling success stories is one of the important methods used to remind people of greatness and goodness of the organisation. Leaders in Disney concentrate on quality, values and involvement. Speaking in the plenary sessions, Tom Peters said, " We have transitioned from an asset-based economy to a talent-based economy. The new definition of lay-off is untalented go talented stay. Leaders must realise that talent is equal to brand". His new theory is EVP which means "Employee Value Proposition". 1.2.3 Rosabeth Moss Kanter said, " Human beings are good raw material, they become assets when you train them to increase their knowledge and skills". She added that only a few organisations really train people to make them a success. Seconding this, Mr Peters pointed out how most organisations are not serious about developing people. They spend on an average 26.3 hours per person per year on training. A surgeon, a pilot or an athlete on the other hand spends 10-15 times more on training. 1.2.4 He also stated that the HRD department should be renamed TDFD (Talent Development Fanatic Department) and wealth for this new regime will flow from innovation, not organisation. Quoting Gary Hamel he said, only those employees will succeed who are "certified radical". Only those companies will succeed who create a cause, not a business. Leaders according to him are living individuals, whom people can smell, feel and touch. Their passion for work must be infectious. 1.2.5 Another aspect of leadership if the decision to introduce fun in the work place. Research shows that this reduces absenteeism and builds stronger, deeper and longer lasting relationships. It appears out of every 100 Fortune companies in the last decade, 69 are dead and only 31 are alive. In a Forbes Magazine study of around 100 companies from '17 to '87, only 39 companies were found to survive. Management of Change:-Research proves that many change models don't consider the human experience during change. The overriding concern seems to be to downsize. It was found that most change processes go through four fundamental stages.

People try to resist or deny change They adapt, participate in the change

They attempt to add value The culmination or formation of a new status-quo

1.2.6 A number of presentations revealed that leaders who initiate change must do so with one foot in the future and the other planted in past values. Forgetting tradition must can devalue existing strengths. The success of a change process depends on the skill of the facilitator to create a participatory process to enlist the support of people and address the issue of grief. 1.2.7 E-Learning :- Organisations like Ford Motor, Hewlett Packard, Intel and IBM are using elearning to increase the knowledge of their people. Companies like Fordstar even manage time differences between countries while conducting virtual class rooms, chats, demos, presentations to communicate new concepts, product details, core values, issues of governance and corporate communities. 1.2.8 CEO's are talking to their people about new ideas and enlisting their support through forums and message boards. This is changing the way people behave and work. The advantages of e-learning are many: It is self-paced, flexible, less expensive, modular and has a huge reach. 1.2.9 Universities like Cornell, MIT, Stanford, etc, have started emphasizing e-learning to attract a worldwide audience. Web-centric universities are becoming the order of the day. William Taylor, editor and managing partner of the Fast Pace magazine, said, "There is no going back from back from dotcoms". He was of the opinion that there is a merger taking place between computers and human beings. 1.3 INNOVATIVE PRACTICES IN HR 1.3.1 The Innovative Practices in Human Resources study uncovered 12 practices that are reducing HR costs and improving service quality to employees. Key findings from this research included the need for HR managers to streamline processes, lower overhead costs, and enable their departments to advance from transactional organizations to strategic partners in the business. 1.3.2 Practices and technologies include:

Internet and intranet employee services Strategic human resources Centralized HR departments and call centers 360-degree performance appraisals HRIS systems Employee self-service Voice response systems (VRUs) Resume scanning and Internet recruitment Kiosks Automated time and attendance systems Team policies and development Outsourcing

Business process reengineering (BPR)

1.4 LINKING PAY TO PERFORMANCE 1.4.1 Most Human Resource professionals are familiar with the concept of strategy. There is much more concentration and focus today on the strategic outcomes of human resource activity than ever before. The area of compensation is no exception. 1.4.2 Pay for performance systems are becoming more and more popular as senior managers reach beyond the use of compensation systems to deliver pay. There is far more interest in more closely linking the reward mechanisms to the achievement of corporate objectives. Motivation for superior performance is the goal. 1,4.3 In experience, most organizations will profess to a "pay-for-performance" philosophy as a keystone of their compensation system. Such a system requires solid grounding in a clear and documented link between performance and salary increases. Unfortunately, the link between individual performance and pay is frequently nonexistent - "merit" pay is a hollow concept in this regard. 1.4.4 A merit system demands that managers be willing to make distinctions in merit increases based on performance. However, several factors get in the way of this happening. First, the annual salary change is usually a small percentage. Giving the better performer 2% more than the cost of living has little motivation or recognition attached to it. Similarly giving the poor performers 2% less than the cost of living increase is not that much of a penalty. So many managers don't make that distinction - it is too much hassle. So everybody gets the same increase. 1.4.5 Second, most performance appraisal systems are after-the-fact appraisals. In other words, at appraisal time, which is usually toward the end of the year, managers are required to evaluate the performance of their staff. It means sitting down and trying to reconstruct what each staff member did, capturing it in a non-threatening way, communicating the evaluation without a fuss and finally, making a merit increase recommendation. Sound like a familiar pattern? It is a process that repeats itself year after year. 1.4.6 The end result is usually a lot of avoidance behavior. Managers avoid the appraisal process like the plague. Although employees profess to want to "know where they stand" they often take issue with the appraisal. Besides, they don't listen to the evaluation, they wait until the penny literally "drops". "What is my rating and how much do I get?" is a constant theme in merit systems where salary decisions are tied so closely with the appraisal process. 1.4.7 You might well ask is there any way out of this mess? The answer is fortunately yes. Organizations that are the best and want to separate themselves from the rest, are turning away from the merit system and toward an annual incentive system, particularly for middle and upper

management positions but increasingly for teams and individuals lower down in the organization as well. 1.4.8 They are adopting a system of annual incentive bonuses linked directly to the achievement of corporate and individual objectives in three specific areas. The areas are corporate revenues and gains, cost containment and behavioral changes. The first two areas are quantitative and the third area, which is gaining in importance, is qualitative in nature, and has a great deal to do with building managerial and individual competence. 1.4.9 Why Is This Transition Occurring? :-Well, there are many challenges facing businesses today and these challenges are driving them to find better ways of linking pay and performance to the achievement of corporate results.. 1.5 CHANGING JOB DESIGN IN IT COMMUNITY 1.5.1 The California State University (CSU) system is being challenged to meet increasing demands for educational and administrative services through the innovative use of technology and human resource systems. Even though funding levels for higher education have been cut in recent years, public/taxpayer expectations and the demands for quality education, access, service, and accountability have grown. Technology initiatives within the CSU have resulted in significant advances and improved technical capabilities and efficiency. Human resource and organizational systems are also needed to capitalize on and thrive in this rapidly changing work environment. 1.5.2 In 1991, the CSU began a study to look at alternative work and job design approaches to meet these challenges. The study focused on the information technology community and how work processes and activities could be better organized to remove artificial barriers and improve organizational effectiveness, a process often associated with the term "reengineering." Secondly, the study focused on developing a job design approach that could adapt to changing skill requirements and that would promote the continuous acquisition of skills for knowledge-based employees in information technology. The goal of improved organizational effectiveness and an orientation towards reengineering and skills guided the development of the proposed job design approach. 1.5.3 This article begins by identifying several trends that led to the study, then describes the overall project within the context of an organizational effectiveness equation. A new job design approach that was proposed as a result of the study is presented, including a new classification structure and competency dimensions and measures for defining and evaluating positions. Finally, other supporting systems are described for an integrated human resources approach. The development phase of the project has been completed, and the CSU anticipates entering into negotiations with its employee representatives in the near future. 1.5.4 Three trends have had a direct impact on the development of a strategic job design approach for the information technology community at the CSU: (a) diversification and convergence of technology, increased demand for educational access and (b) changes in instructional delivery methods; and changing work place demands and priorities.

1.5.5 The technology demands within higher education lead to a complex and dynamic computing environment. Academic and administrative computing strategies tend to be at crosspurposes in terms of defining systems requirements. This has resulted in widely diverse systems and technology within and across the CSU's twenty campuses. Increasingly, however, campus systems are becoming more integrated, as data are shared across multiple platforms on a network "highway" that is linked to external information sources. Networking and desktop computing have removed traditional boundaries for information access, research, and decision-support purposes. Data, voice, and video technologies continue to be combined in more interactive and user-friendly formats. 1.5.6 In terms of educational trends, many institutions offer distance learning using various transmission media and are incorporating instructional technology into curriculum development. Students expect guaranteed access to technology and to research databases, and this access has become an issue of social responsibility.[1] Library and computing functions are becoming increasingly interdependent in "an infrastructure of scholarly communication" within higher education.[2] Workplace trends, as presented in Sustaining Excellence in the 21st Century: A Vision and Strategies for College and University Administration, well represent the outlook for the CSU. Two key issues are identified: (1) Economics. There is increasing pressure to constrain administrative costs within the "labor intensive cost structure" that exists in higher education. Reductions in staff are occurring at the same time as transaction volume and service expectations are growing. (2) Decentralization of responsibility. With fewer people and greater access to information, organizations are moving responsibility for decision-making downward to the point of service. Work organization is shifting away from job specialization and a task/procedure orientation, to more generalized job responsibilities focused on outcome and greater participation on crossfunctional teams (3) Another central workplace trend is the "earning and learning" environment described by the U.S. Department of Labor in its Secretary's Commission on Achieving Necessary Skills (SCANS) report. To quote Thomas P. Foley, Secretary of the Pennsylvania Department of Labor and Industry:"We've changed from the idea of "one skill, one job" to the reality of a range of skills that have to apply to a number of different kinds of professions. More to the point, workers must possess a skill that they continually upgrade just to keep pace in the professions they choose." (4) The influx of new technology and applications has created a demand for continual learning and adaptation. Due to the CSU's relatively stable workforce, maintaining skills to keep pace with changing technology was identified as a critical goal. Knowledge requirements are expanding to encompass a greater breadth of technologies and subject expertise, as well as including process-oriented capabilities such as communication and negotiation skills. 1.5.7 The implications of these technological , educational, and workplace trends point directly to the need to reengineer organizational structures, work design, and processes. Based on these trends and overall organizational goals, two key objectives were established for a new job design

approach for the CSU: flexibility and skill development. Fundamentally, each campus needs the flexibility to achieve its goals by distributing work assignments in a way that optimizes its available skill mix and promotes individual skill development and initiative.

1.6 OBJECTIVES OF STUDY 1.6.1 Following were the objectives of the study:1. To enlist emerging HR trends in Indian IT Industry 2. To review literature and research done in this area. 3. To find out lacking areas regarding the HRD in IT sector. 4. To measure the perceptions of IT sector employees in respect of application of HRD in their organisation. 5. To suggest the measures to fill the gaps and improve motivation level of employees and HR management in IT industry.

1.7 RESEARCH METHODOLOGY 1.7.1 The study was exploratory in nature. All published and unpublished available on the subject matter was consulted. Interview and discussions were held with the various executive/ Managers/ staff employed in IT sector. The HRD functions/ activities being undertaken in different IT organisations were also studied. Primary and secondary data available with these organisations was also used for this project study. 1.7.2 In order to measure the employees perceptions of emerging HR trends in different IT organisation, the survey was undertaken. The survey was based on structured questionnaire. The questionnaire was mainly based on objective type close-ended question, but few open ended questions were also included. 1.7.3 Firstly, the pilot survey on ten randomly selected respondents was undertaken. Then the questionnaire was modified accordingly, if desired. 1.7.4 The final questionnaire was administered in person to the extent possible and through mail if needed. The 100 respondents were selected among the executives and staff working in various IT organizations. The convenient random sampling technique was used for the selection of the respondents.

1.7.5 Finally, the results of the survey has been presented in Tabular form, analyzed and interpreted to meet the required needs of this project study and presented in Report for CHAPTER -2

2.0 2.0.1 HR IT SCENARIO The web is altering the HRD landscape beyond recognition. The key to corporate success in the fast changing information era is thinking on your knees. 2.0.2 What is this thinking on your knees? Normally as the HR person you know what the situation is and operate from there. A repositioning is required in your decision process with questions like why, how and when and not just what. At this point you operate on your knee i.e. with far more dynamism and with a lot more effectiveness than thinking on your feet. 2.0.3 The employees are like gypsies, on the move all the time. They camp at some location, enhance their skills, responsibility levels and move on. This is particularly true of the professional from Software Industry. Opportunities are plenty and the next job opening is only a mouse click away. The question is not about what else you can do to retain an employee but it is about making him productive, while he is with you. The value addition will then happen for both the employee as well as the employer resulting in a win-win situation. This means that the new strategy calls for the recognition that no employee is expected to be permanently with you. Normal tenure in any organisation is likely to be between two to three years.

2.1 2.1.1

INNOVATION IS THE KEY Information technology and Internet have changed several equations. Reaching

out to the world market place is no more the challenge in achieving corporate victories. Out thinking the competition at electronic speed is the key to winning corporate battles. The corporate success is sum total of entrepreneurship practiced by your staff. The key to employee longevity :-Todays most successful organisations recognize that to fuel growth and sustain a competitive advantage, they must make recruiting, hiring and retaining top talent, as the organisations major thrust area. Competent people deliver the rest dont matter. Successful business organisations have no choice but to promote the performers and let non-performers go. 2.1.2 Organisations recognize that that their ability to gather, manage, analyse, distribute information and transform themselves into a learning organisation will provide continuity and ensure for them their leadership role. Systematic organizational learning should be central corporate philosophy. Learning, must be obviously followed by changes, which may not necessarily be welcomed by veterans in the organisation. But change is the only Constant for guaranteed success. 2.1.3 Points to note: The following points are important and must be properly understood. People have a great deal of informational knowledge to contribute to the organisation. People are responsible


People desire opportunities to effect change, not just being expected to change. Organisations need to create awareness amongst their employees about their vision and then empower them to act on that vision.

Establishing a sense of urgency well ahead of the problem surfacing. Form inter-functional core group. Encourage the group to work together as a team. Plan and create short-term win targets reward employees and recognise achievers. Consolidate improvements through a knowledge base driven system and institutionalise proven new methodologies.


New Paradigms In HR Business plans must consider HR issues, focus and adapt.
Corporate goals must factor in individual career growth and personal growth must be tied to corporate growth and vice versa


Job responsibilities must facilitate personal development and learning should be institutionalized with well-established knowledge bases. Capturing experience and making it available corporate wide should be a permanent feature of an organizations.

2.2 2.2.1

WAR FOR TALENT The worlds most popular people resource base seems to be falling short of numbers to meet its own demands. With added pressures of migration and attrition, can Indias IT industry achieve its software and services revenue target of $87 billion by 2008?


Country: India. Population: 1 billion-plus. If that sounds like too many people, think again. Plug in English-speaking and low labor costs, and suddenly we can envision $50-billion software exports target by the end of this decade. Not

impossible, if we consider the scarcity of IT manpower across the world. Take a look at the US, already with a 10- million-strong IT workforce, which needs to fill 1.6 million new jobs in the next one year. 2.2.3 Japan is no different and estimates close to a million new jobs. Germany is looking for 20,000 IT specialists and Italy is seeking 15,000 additional manpower. Their choice destinationIndia. 2.2.4 Ironically, the country which has been such a popular people resource for the IT industry the world over, is struggling with numbers to meet its own demand. To meet the overall software and services (domestic and export) target of $87 billion by 2008, according to the Nasscom-McKinsey report, the country will require a minimum of 2.2 million knowledge workers for its domestic needs. This implies that the present strength, which stands at 12,00,000 (December 2004), has to increase about twice, not just in quantity but in quality as well. 2.2.5 According to industry estimates, majority of the demand for manpower will be in the area of IT-enabled services. While Nasscom puts the requirement at 11,00,000, MIT says IT-enabled services and e-business will need 12,70,000 workers by 2007. Experts insist that since this sector does not require very highly skilled manpower, we can easily meet this demand. "IT-enabled services is a wonderful opportunity for India and for such services you dont need highly skilled professionals. You just need smart graduates who can speak English, all you need to do is train them. For instance, in a call center, they need to be trained on accents and customer services,"
2.3 4 Rs of HR in IT Table 2.1





Signing bonus Finders Fee Alumni connections Non-techs Students Interns

Retention bonus Project pay Reduct FTE/same pay Telecommuting Externs

Job rotation Team assignments Skill inventories Competency development Certification

Broad job descriptions Flexible compensation programs Flexible jobs Positive problemsolving spirit

Job sharing Recognition programs


Denial (This is and long term) Misalignment (Ramping up/Ramping down) Timing Treating everyone the same Navigating the bureaucracy Demographics WHAT OTHERS ARE DOING Pooling recruitment efforts Increasing freedom at the dept level (on-the-spot hiring, broadbanding, etc.) Recruiting/retaining students Identifying tech skills in all jobs/people (Skill Inventories/assessment) Sharing staff RETENTION FACTORS


1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 2.3.4

Quality of boss Direction of department Exposure to new technologies Confidence in the company Job security Challenging work Location Access to capital resources Caliber of co-workers Empowerment Department leadership Ability to influence department success

TAKING THE LEAD See ourselves as problem-solvers Develop critical skills and competencies in ourselves, then others Build compensation around results not tasks; competencies, not seniority Involve everyone. Constantly align and balance resources to meet changing needs SEARCH FOR TOMORROW Attract, retain and reward the best performers (Encourage all to be the best) Increase flexibility Reduce fixed costs Reduce administrative effort (Simplify, simplify, simplify) Utilize the full range of individual talents THE CRISIS Shortage of IT workers




COMPETITION Compensation stock options, profit sharing, incentives Alternatives outsourcing



Recruiting sign on bonuses Relocation incentives Recruiters Reduced cycle time for hiring Campus/ job fairs / referrals/ internet

2.3.8 RETAINING 2.3.9 Work environment Communication forums Telecommuting Flexible staffing Exciting projects

PRACTICES Focus on value Financial and human value Commitment to core strategy Linkage between culture an system Multi dimension communication Stakeholders partnerships


Mutual support and collaboration ( teamwork) Risk and innovativeness Passion

DEVELOPING Internship programs Training programs Career development programs

2.3.11 2.3.12

LONG TERM SOLUTIONS Education, government, industry partnerships Curricula: technical skills and career skills ( teamwork and communication) KEY SUCCESS FACTORS

Understand people What they want Long term perspective Innovative Co ordinated approach Career development I




In the last few years, more and more companies around the world are looking towards India for outsourcing their software requirements. The changing business

environment is demanding new applications. In particular, the spread of clientserver computing in decentralised organisations involves the development of applications specific to a user's business. 2.4.2 Outsourcing is becoming a strategy for forward thinking IS managers. It is no longer just a means for reducing costs, but a tool for adding value to business. It enables organisations to concentrate on their core business, carry out business reengineering and provide information that is valid, timely and adequate to assist decision making at the management level and quality and cost control at the middle and lower levels. 2.4.3 As a result, outsourcing has gradually grown beyond the traditional idea of "having a third party running the data centre". It has come to mean, "any use of an outside contractor to replace or extend in-house resources". 2.4.4 Outsourcing is closely linked with corporate strategy, since it must support the organisation's major initiative in using IS. It should enhance and add value to the business. A rule of thumb to start and gain experience is, "if IS is low cost and of high value addition, keep it within the organisation, i.e. in-source. If IS is high cost and of low value addition, consider outsourcing". 2.4.5 In the past few years, whenever organisations around the world have outsourced to India, the Indian software companies have substantially helped to cut costs in software development projects or MIS environments, while maintaining high quality. Moreover, all these cost and quality advantages are coupled with the use of state-of-the-art technologies. 2.4.6 In 2004-05 more than US$ 2500 million worth of software development work was outsourced to India (The total software exports from India during the year

was US$ 4085 million). This was 56% higher than outsourcing orders in 2003-04. It is estimated that the quantum of outsourcing may jump to US$ 5 billion and reach as high as US$ 10 billion by 2010 A.D. CHAPTER - 3 HR PROBLEMS OF INDIAN IT PROFESSIONALS

3.0 3.0.1

OVERVIEW OF PROBLEMS The IT revolution is sweeping the world, particularly the western world in for nearly a decade now, creating enormous employment opportunities in this area. India joined the bandwagon well in time and smoothly though it is yet to entrench itself strongly in terms of corporate identity and significant share of global revenues in IT.


Our main contribution seems to be in the less glamorous areas of value addition, maintenance, Y2K, quality assurance and customisation of existing packages. The sudden eruption of opportunities in this area left no time for development of human resources in a planned manner and also software solutions which tended to be more ad hoc than being assured of quality.


With the enormous opportunities for employment, entrepreneurship with low capital investment and low gestation period for turning profitable, higher returns per employee and large return on investment/EPS, sustained encouragement from government, a very large number of organisations - large, medium, small - have been established. Correspondingly a large number of training establishments and

cyber cafes have come up, most of which are in the cities and towns to cash in on the enthusiasm of the urban middle class. 3.0.4 A number of higher level courses have also been started mainly through private organisations besides the existing government (State/Central), university and autonomous institutions. There are about 500 private engineering colleges besides IITs, RECs, universities, colleges offering courses such as MCA, M.Sc., M.E., and M.Tech. In view of the apparent demand that appears to be exaggerated, most of the programmes (barring a few by government institutions and IITs) are very expensive, almost beyond the reach of a middle-class student. Yet candidates and their parents strain themselves financially to pursue the courses hoping to get an attractive job (financially) which remains a mirage by and large. The problems are further compounded by a lack of proper teaching faculty in most colleges and franchises. 3.0.5 Except in well-established institutions, job-placements are poor. Even those trained in reputed institutions find their jobs monotonous, leading to depression. Jobs offered by the software industry have demonstrated the above factors as they are able to carry out the projects with persons of any background and levels of attainment, but with a few months training either prior to employment or a short training during probation. 3.0.6 Despite these deficiencies, students prefer software jobs mainly with an eye on the pay-package and urban locations. The employee- retention period even in good companies has been shrinking and is found to be three to six months. The companies also try to devise methods to make their employees almost captive with surety bonds, bank guarantees, employee's stock option (ESOP) and housing facilities, among others. The employees, for their part, resort to innovative

methods to wriggle out of their contracts. There does not appear to be any respectable ethics even among companies as well as the employees in this type of free for all market. To go abroad and become rich has become the motive of most of the employees even if the job does not offer any intellectual satisfaction. The manufacturing and hard-core engineering sector has also shrunk in terms of job opportunities and attractiveness. 3.0.7 Even those software professionals, who are offered good financial packages, spend their earnings on expensive lifestyles, vehicles, and credit card syndrome and find themselves disenchanted on all fronts including the intellectual front. It should also be a cause for concern to project beyond the present software boom as to what happens to all these if the opportunities decline. The scenario appears to be quite fluid with a predominant western bias in all the activities concerning software profession with scores of Indian boys getting lured and sucked into the vortices created by the opportunities in this area 3.1 3.1.1 MAIN PROBLEM AREAS The significant problem areas which may be contributing to the present scenario and can be addressed can be identified as given in the succeeding paragraphs. 3.1.2 Recruitment process :-Without going into the deficiencies of the present practices, the following suggestions are made to improve the process in terms of efficiency, availability of manpower and equity to all the aspirants irrespective of the fact where they got educated. The various steps of the proposed approach are as follows: i. Aptitude tests could be conducted by reputed institutes like IITs/ private organizations/HR agencies for prospective professionals preferably ``on-line'' like

GRE, GMAT etc. or physically at regular intervals and scores are given. If it is no on-line, the periodicity can be a month or two and the validity can be for an year or so which can also be fixed based on general agreement. ii. Based on scores and preferences of the candidates (career counselling), companies can ask for a video clip for subsequent interview if required. Interviews can also be conducted simultaneously either physically or over the phone or by video conference and selections completed. iii. Once selected and the candidate joins the organizations, all member organizations should adopt a code of conduct such that the candidates stays at least for a period of one year. iv. Small companies can form some kind of a cooperative society wherein software professionals' services can be tapped and steer clear and manpower shortage (less than critical mass levels). v. The selection can be conditional that he acquires certified skills in the required areas either through training in house or through approved training agencies and establishments. This will also avoid the unnecessary expenses for (which are high) the candidates, who are presently spending lot of money with a hope of employment. This will also ensure that there is a focus on proper training and optimal deployment of time, effort and finances. vi. The selection process can thus be continuous and commensurate with the requirements thus avoiding idle inventory. vii. There can be general norms of pay packages depending on the reputation of the companies (classifying them as A, B, C, D by any reputed management institute

like IIM etc.) with the ratio of maximum pay within reasonable and realistic limits. 3.1.2 Post employment care:- The companies/organizations should take adequate interest in the career development of the employee by suitable HRD approaches which should include the following: i. Opportunities for creative work in the first phase particularly for those who are bright, and have an aptitude and come with a good pedigree say from IITs. ii. Opportunities to lessen the monotony and improve interpersonal relationship and mixing and group activities. iii. iv. v. vi. Periodic rotation of the rolls and jobs if possible. Opportunities for retraining and upgrading the skills. Conducting effective career development programs regularly. Incentives like ESOP, lucrative assignments and challenging projects, opportunities of higher education. vii. Make the employee more versatile with wider perspective and flexible for easy deployment in areas needing strengthening. viii. 3.1.3 Encouraging simplicity and excellence. Advantages:- The suggested processes in 4 and 5 above can be expected to have the following significant advantages: i. Cost effective and efficient process.

ii. iii. iv. v.

Proper deployment of skills optimally. Idle employment can be minimized. Retention can be improved. Particularly useful for small firms which can also operate in the cooperative society mode.


The candidate's skills are moulded to suit the needs of the job and need not waste time, money and efforts.


Equitable opportunities to all aspirants irrespective of location, pedigree and background.

viii. ix.

Reduces the mushrooms of training shops with inadequate faculty. This may also give the manufacturing and core engineering sector jobs reasonable chance to attract willing and bright candidates.


The process is ideally suited for candidates to plan their careers with adequate preparation in core areas.


The process also enables a realistic assessments of needs and demands regularly and meeting them even at short notices.


The aptitude tests can become richer and more representative over a few years and as the question bank becomes larger and random on-line questioning can be introduced which is more objective like GRE, GMAT




These tests can be conducted at the end of 10+2 level or B.Sc. level also and train the candidate with or without stipend in courses where he could get admission for his degree. This will help in decreasing the pressure on engineering education as otherwise the skills acquired by the candidate at a great cost in branches other than computer sciences are wasted and lost for good if employed by the software industry.


It may be a good idea to have a National Test for Software Talent similar to science talent test which can be sponsored by NASSCOM and such other interested groups


The idea of forming a cooperative society by small firms may prove to be beneficial as the facilities and manpower can be shared optimally. While otherwise they may face the problems of lack of adequate manpower (below the critical mass level) because of less attractive pay and perks they are able to offer.


Renowned organizations like IITs, IIMs and MNCs, and can play a catalytic roll in streamlining the processes for an efficient HRD in this vital area of software manpower which is a national resource.




Employee Stock Ownership Plan(ESOP): is a defined contribution employee benefit plan that allows employees to become owners of stock in the company they work for.

4.0.2 1.

How does ESOP work? The ESOP operates through a trust, setup by the company, that accepts tax deductible contributions from the company to purchase company stock 2. The contributions made by the company are distributed to individual employee accounts within the trust. 3. The amount of stock each individual receives may vary according to pre-established formulas based on salary, service, or position. 4. The employees may cash out after vesting in the program or when they leave the company. The amount they may cash out may depend on the vesting requirements.


Stock Options: The right to purchase stock at a given price at some time in the future. Stock Options come in two types:


Incentive stock options (ISOs) in which the employee is able to defer taxation until the shares bought with the option are sold. The company does not receive a tax deduction for this type of option.


Nonqualified stock options (NSOs) in which the employee must pay income tax on the 'spread' between the value of the stock and the amount paid for the option. The company may receive a tax deduction on the 'spread'.


How do Stock options work? An option is created that specifies that the owner of the option may 'exercise' the 'right' to purchase a companys stock at a certain price (the 'grant' price) by a certain (expiration) date in the future. Usually the price of the option (the 'grant' price) is set to the market price of the stock at the time the option was sold. If the underlying stock increases in value, the option

becomes more valuable. If the underlying stock decreases below the 'grant' price or stays the same in value as the 'grant' price, then the option becomes worthless.


Merit Pay is an incentive plan implemented on an institutional wide basis to give all employees an equal opportunity for consideration, regardless of funding source. The merit increase program is implemented when funds are designated for that purpose by the institution's administration, dependent upon the availability of funds and other constraints. .


Advantages OF Merit Pay :Allows the employer to differentiate pay given to high performers. Allows a differentiation between individual and company performance. Allows the employer to satisfactorily reward an employee for accomplishing a task that might not be repeated (such as implementation of new systems).


Gainsharing is a technique that compensates workers based on improvements in the company's productivity.


How does Gainsharing work? A Company shares productivity gains with the workforce. Workers voluntarily participate in management to accept

responsibility for major reforms. This type of pay is based on factors directly under a workers control (i.e., productivity or costs). Gains are measured and distributions are made frequently through a predetermined formula. Because this

pay is only implemented when gains are achieved, gainsharing plans do not adversely affect company costs. 4.3.2

What are the 'Gains' that are measured?

Increases in production with equal or less effort. Equal levels of production with less effort.


What are examples of Gainsharing formulas?

Calculate gain in hours: The actual hours worked minus the expected hours (for the given level of output) equals the gain in hours.


Profit Sharing is an incentive based compensation program to award employees a percentage of the company's profits.


How does Profit sharing work? The company contributes a portion of its pretax profits to a pool that will be distributed among eligible employees. The amount distributed to each employee may be weighted by the employee's base salary so that employees with higher base salaries receive a slightly higher amount of the shared pool of profits. Generally this is done on an annual basis


How to Choose an Employee Stock Plan for Your Company:-Many companies we encounter have a pretty good idea of what kind of employee ownership plan they want to use, usually based on specific needs and goals. However, sometimes they might be better served by another kind of stock plan. And yet others say they'd like to have an employee ownership plan, but they're not

sure what it might be. This article will start you down the path to choosing and implementing the plan or plans best suited to your company.



4.5.1 Let us begin by quickly reviewing the main possibilities for broad-based employee ownership. A "broad-based" plan is one in which most or all employees can participate. 4.5.2 An employee stock ownership plan (ESOP) is a type of tax-qualified employee benefit plan in which most or all of the assets are invested in stock of the employer. Like profit sharing and 401(k) plans, which are governed by many of the same laws, an ESOP generally must include at least all full-time employees meeting certain age and service requirements. Employees do not actually buy shares in an ESOP. Instead, the company contributes its own shares to the plan, contributes cash to buy its own stock (often from an existing owner), or, most commonly, has the plan borrow money to buy stock, with the company repaying the loan. All of these uses have significant tax benefits for the company, the employees, and the sellers. Employees gradually vest in their accounts and receive their benefits when they leave the company (although there may be distributions prior to that). Over 8 million employees in over 11,000 companies, mostly closely held, participate in ESOPs. 4.5.3 A stock option plan grants employees the right to buy company stock at a specified price during a specified period once the option has vested. So if an employee gets an option on 100 shares at $10 and the stock price goes up to $20, the employee can "exercise" the option and buy those 100 shares at $10 each, sell

them on the market for $20 each, and pocket the difference. But if the stock price never rises above the option price, the employee will simply not exercise the option. Stock options can be given to as few or as few employees as you wish. Perhaps 7 to 10 million or more employees in thousands of companies, both public and private, presently hold stock options. 4.5.4 An employee stock purchase plan (ESPP) is a little like a stock option plan. It gives employees the chance to buy stock, usually through payroll deductions over a 3- to 27-month "offering period." The price is usually discounted up to 15% from the market price. Frequently, employees can choose to buy stock at a discount from the lower of the price either at the beginning or the end of the ESPP offering period, which can increase the discount still further. As with a stock option, after acquiring the stock the employee can sell it for a quick profit or hold onto it for awhile. Unlike stock options, the discounted price built into most ESPPs means that employees can profit even if the stock price has gone down since the grant date. Companies usually set up ESPPs as tax-qualified "Section 423" plans, which means that almost all full-time employees with 2 years or more of service must be allowed to participate (although in practice, many choose not to). Many millions of employees, almost always in public companies, are in ESPPs. 4.5.5 Section 401(k) plan is a retirement plan that, unlike an ESOP, is designed to provide the employee with a diversified portfolio of investments. Like an ESOP, however, a 401(k) plan is a tax-qualified plan that generally must include all fulltime employees meeting age and service requirements. The employees can choose among several or more choices for investments, and the company may make a matching contribution. Perhaps several million employees in a few thousand companies participate in plans with a heavy company stock component; company

stock may be an investment choice for the employees and/or the means by which the company makes matching contributions. 401(k) plans may be combined with ESOPs (these are called "KSOPs"), where the company match is an ESOP contribution. 4.6 EMPLOYEE OWNERSHIP : COMPANIES PAY LESS FOR WORKERS'

COMPENSATION COSTS 4.6.1 A study has found that employee ownership companies have lower workers' compensation insurance rates than comparable non-employee ownership firms. Leslie Hakala authored the study. She began the project as an NCEO research intern and completed it for a thesis requirement at Harvard University. The study was unable to ascribe a specific causal relationship between employee ownership and lower workers' compensation costs, but it did find that these costs declined as employee ownership plans matured.


Background:- In 1989, the last year for which we have data, U.S. employers spent over $48 billion on workers' compensation costs. These costs grew at 16.9% per year in the mid-1980s. Cost increases were partly attributable to increased benefits mandated by state workers' compensation insurance reforms. At the same time, as employer provided health care coverage has declined, more employees sought to cover health problems under workers' compensation. Many people believe there has been increased fraud as well.


Workers' compensation programs vary from state to state, but in most programs, insurers attempt to provide employers with an incentive to limit safety problems by developing an experience rating. The ratings compare an individual firm's experience with other firms of its type. If the rating is better than average, insurance premiums will be lower; if it is worse, they will go up.


In this study, we looked only at California firms. In California, employers are assigned a "manual rate," an insurance rate expressed as a percentage of every $100 of payroll. Rates are assigned to all companies based on their industry classification. These rates are then adjusted for companies with a premium above a certain level according to their actual experience. This means smaller and less risky firms are not assigned an experience modification rating. The experience modification rate is set for each year based on three years of past experience, excluding the most recent year (because data are generally not yet available). The experience modification rate is determined by looking at actual experience modified by a size weighting factor. For larger firms, the adjustment may be very small; for smaller firms, actual experience is given a lower weight because a single incident can skew results dramatically. This weighted experience rating now becomes the "experience modification" figure.


Theoretically, the average experience modification factor for any business classification should be 100%. A company with a good record would have a rating under 100%; a bad record would rate higher. These numbers are then multiplied by the manual rate to set the premium. In practice, the average rating is somewhat under 100.



4.7.1 Will I ever get to exercise my stock options? It's the one question haunting IT industry professionals sitting on piles of employee stock options. All those who happily grabbed at ESOP's issued by their companies last year, have now been left holding pieces of paper that are, in some cases, worth a fraction of the price at which employees brought into them. Except for a few who have benefitted from older schemes like Infosys 1994 scheme, the great ESOPs dream is turning out to be a nightmare. Last year, if you were

given ESOPs in an IT company, your friends, neighbours and everyone else went up like a blimp, companies issued ESOPs in cartloads. And employees brought into them, even at the higher prices that the grants came from. 4.7.2 According to a study carried out by Nasscom , there were more than 10,000 IT staff last year holding around 18 million ESOPs valued at roughly Rs 12,000 crore($3 billion) at February '00 prices. But all this was merely on paper. 4.7.3 A year later, the situation's something like this. Employees who were given ESOPs at the prices prevailing during the IT boom, had to sit back and watch their share prices hit the roof while they waited out the lock-in period. Now, they can exercise their options that is sell them, and pocket the difference between the exercise price at the time of the grant, and the current market price. It's resulted in a situation where employees have been left holding NIIT options which they would have to exercise at a price of Rs 1,593 or Silverline options, which they would have to exercise at a price of $25. At VisualSoft, for instance, all employees who were granted options have returned them to the company. Consequently, the company has terminated the ESOP scheme. 4.7.4 Theoretically, an employee who exercised his option now, would have to buy at the exercise price, sell at the current market price, and pay out the difference.


ESOPs HARDLY BENEFICIAL At the height of the IT euphoria in the markets, those employees saw their company's scrips scaling new heights, they could not benefit as the ESOP's had 1-2 year lock-in periods, and could not be sold. The lock-in period, also known as the vesting period in industry jargon, in the period during which the employee cannot convert his or her option into shares. To make matters worse, some companies has specified that the option had to be exercised, that is converted into shares, within a specified time frame

after the lockin period expired. For instance, this was one year in the case of Silverline, and 10 in the case of Aptech. Table 4.1 ESOP IN INDIAN CONTEXT Recent ESOPs No of Shares (Lakh) (Rs) NIIT Silverline Patni HCL Infosys SSI Wipro Infosys VisualSoft Polaris 18.1 10.0 5.5 30.2 1.5 3.5 19.6 0.2 8.5 Aug '04 Nov '04 Dec '04 Aug '04 Sep '04 Oct '04 Oct '04 Aug '04 Aug '04 1,593 425 245* 289 555 2,397 6,249 NA 480 (Yrs) 1 1.5-3.5 1 NA 3 1-2 5 1 5 (Rs) 162 41 54 72 164 1,485 3,532 116 120 Plan Exercise Plans Vesting Period Current Price



Employee stock purchase plans (ESPPs) include both tax-qualified "423 plans," which about 2,400 companies offer, and nonqualified plans, which about 1,500 companies offer. Our estimates are based on data from ShareData's Equity Compensation Trends in America (1991), Hewitt Associates' On Employee Stock Ownership (1996), Hewitt Associates' Survey Findings: Employee Stock Purchase Plans (1998), and the National Association for Stock Plan Professionals' Stock

Plan Design and Administration Survey (1998), especially the more recent studies. To estimate the number of employees covered under the plans, we took the total number of companies offering plans, multiplied those numbers by the average number of employees in the companies (13,207 for 423 plans and 17,790 for nonqualified plans), and multiplied that number by the average percentage of participation in the plans (34% for 423 plans and 17% for nonqualified ESPPs). Almost all companies with ESPPs are public. 4.9.2 Multiple Plans: Many companies offer multiple e plans, and many employees participate in more than one plan. For example, many ESPP participants are also in 401(k), stock option, or other equity compensation plans. Hence, the total number of participants in all these plans is definitely not the total of the numbers in the "Number of participants" column.



4.10.1. A 2000 study by Joseph Blasi and Douglas Kruse at Rutgers Univerity found that ESOP companies grow 2.3% to 2.4% faster than would have been expected without an ESOP for sales, employment, and sales per employee. The study looked at all ESOP plans set up between 1988 and 1994 for which data was available. A 1987 NCEO study of 45 ESOP and 225 non-ESOP companies found that companies that combine employee ownership with a participative management style grow 8% to 11% per year faster than they would otherwise have been expected to grow based on how they had performed before these plans. 4.10.2 Subsequent studies by the General Accounting Office and by academics in Washington State and New York found the same relationship. A 1999 study for Hewitt Associates by Hamid Mehran of Northwestern University found that the returns on assets for 382 publicly traded ESOP companies was 2.7% per year greater than what a model of their predicted performance would have been.


Studies on participative management alone find a small positive impact on performance, but not nearly enough to explain the synergy between ownership and participation these other studies have found.




HR management gets best out of its employees to meet the organisation's goals. And employees are the best judge of the HR policies of any organisations. IT sector is fastly growing industry in India and HR requirements of Indian IT Industry are quit different from traditional industrial sectors.., A major

characteristic of modern socio-economic development has been the increasingly dominant role of service sector .and IT belongs to service sector. So, its HR needs must also be properly identified.. 5.0.2 Indian IT sector is contributing a large in employment and foreign exchange. A developing country like India can ill afford continued conflict ridden; rigid and litigation oriented Industrial Relations. What employees perceive about the emerging HR trends of the IT organisations has been measured.


To measure the success and failures of emerging HR trends of Indian IT Industry a structured questionnaire was designed for this purpose. The questionnaire included both open ended and close ended questions. The questionnaire used is placed at Appendix "I". The procedure adopted for data collection was

interview with the employees randomly selected from IT organisations to the extent possible and also through mail. . The responses given by the respondents were recorded on the questionnaire. The views expressed by the respondents has been analysed in the succeeding paragraphs. About 100 respondents were selected by convenient random sampling technique.


The main features of the employees randomly selected sex-wise, education-wise and type of functions wise has been provided here in the succeeding paras. The 54 per cent of the respondents were Male and 46 per cent of the respondents were Female


IT industry requires higher level of education standards, both non-technical and technical. The education qualification wise distribution of the employees who agreed for responding to our questionnaire has been given below in Table 5.1.

Table 5.1 RESPONDENTS PROFILE - EDUCATION-WISE (%age) Respondents' Qualification Percentage Of Respondents

Non-Tech Graduate and Below Non-Tech Post Graduate B.Tech/ BCA etc. M.Tech/MCA Etc. TOTAL

11% 23% 34% 32% 100%

In the similar fashion the job wise profile of the respondents has also been compiled and the same is tabulated below in the Figure 5.2. As per Figure the IT industry is dominated by the software professionals And next computer hardware and marketing services of IT are sharing the other half. Only 13 percent are working in HR and Personnel Management area. Hence, the HR needs of IT industry must look after the software professionals at priority.




Through the Question No.2 of the questionnaire the respondents were asked to comment whether the HR needs of Indian IT industry are different from traditional HR Management systems. It was a direct question in Yes/NO/No comments format and IT professionals selected for survey were asked to tick one of the choices as mentioned. The responses have been tabulated in Table 5.3. The majority of respondents (69%) view that HR needs of IT industry are different from old economy sector and HR managers in IT industry has to keep this into mind. Being highly educated employees are very sensitive in pride and behaviour.

TABLE-5.3 Emerging HR TRENDS OF INDIAN IT INDUSTRY ARE DIFFERENT (%age) Respondents' Observation Yes No Can not say TOTAL Percentage Of Respondents 69% 23% 08% 100%



The IT industry has been devising newer compensation methods like Profit Sharing/ Stock Options etc. to increase employee welfare and retentively. Whether these new compensation techniques are positively effecting or not

was the key point in our next question. As per Figure-5.4, 46% of the employees opined that newer compensation methods has a positive effect in IT industry while 19% said that it has a negative effect on employee welfare. 26% view that it has no major effect and 9 percent has replied in CAN NOT SAY. . In the initial stages when IT Industry was sunrise it was mostly welcomed by the employees and when IT industry share prices has gone down. It has a negative effect..


5.4.1 In has been found that in many organisations the management ignores the employees welfare for their profit sake and does not give proper attention towards employees career and prospects. What is the state of affairs in IT Industry in India was quizzed from our valued learned respondents. The respondents views are given below Table 5.5. The results are mixed one. While 48% of the respondents' replied in negative and 43% gave a positive reply. So, there is a profit motive operating more than employees proper welfare management in Indian IT Industry.


Respondents' Observation Yes No No comments TOTAL

Percentage Of Respondents 43% 48% 09% 100%




The respondents responses to the status of grievances handling mechanism was through an indirect approach. In the Question No. 5 of the questionnaire the respondents were to comment upon the positive hypothesis that grievance handling is done properly in the IT organisation. The five choices provided were strongly agree, agree, no comments, disagree and strongly disagree. The data collected is given below in Table-5.6. TABLE - 5.6

GRIEVANCE HANDLING IN INDIAN IT INDUSTRY IS PROPER (%age) Respondents' Observation Strongly Agree Agree Percentage Of Respondents 12% 39%

No Comments Disagree Strongly Disagree TOTAL


14% 26% 09% 100%

Only 12 respondents strongly agree to the statement and similarly a small number of 9 respondents strongly disagreed with this. Only 14 percent have nothing to comment. 39 percent agree that The grievance handling IN Indian IT industry is done properly and remaining 26 percent disagree with it.



Whether top management awareness about working conditions of the employees and state of working conditions in the organisation was measured through next question. Table-5.7 shows the response. 65% of the respondents view that the top management's are not aware or little aware about the employees working conditions in the IT organisations Only 6 percent vouched that top

management is very well aware about the nature of working conditions and 18 percent say "Much Aware".

Table 5.7 TOP MANAGEMENT AWARENESS (%age) Respondents' Observation Not at all aware Percentage Of Respondents 20%

Very little aware Some what aware Much aware Very much aware TOTAL

45% 11% 18% 06% 100%




Cordial employee employer relationship is very essential in the upcoming highly competitive economy. The state of employee employer relationship in Indian IT Industry was measured through the next question. The state of employee-employer relationship is not very encouraging.

Table 5.8 STATE OF EMPLOYEE EMPLOYER RELATIONSHIP IN IT INDUSTRY (%age) Respondents Grading Excellent Very Good Satisfactory Poor Percentage Of Respondents 14% 44% 28% 14%



58 percent of the respondents has graded it very good and above. While 42 percent consider it satisfactory and below. The employment of modern technology requires more positive and effective relationship between management and the employees. Indian IT Industry has very effective employee employer relationship.




The most of the employees of IT sector are highly educated and sensitive in nature.
Moreover, the opportunities outside are very attractive, Whether Indian IT Industry is able to retain its employees was the next opinion query from the randomly selected IT industry employees. Their opinions in this regard are presented below in "YES/NO/NO COMMENTS" format in the Figure 5.9.


61% of the employees view that Indian IT companies are unable to retain its employees due to most attractive avenues outside. Only 23% viewed that they are able to retain the employees.




As has been observed in general and also concluded in previous paras that the IT sector employees in India are very quickly jumping the employment. So, what the employers has to do for retaining its professionals was asked from the

respondents. Few suggestions were listed and one column was open ended to express their any other suggestion. The Table 5.10 list outs all the suggestions. I

TABLE- 5.10

SUGGESTIONS FOR INCREASE RETENTIVITY IN INDIAN IT INDUSTRY Respondents' Suggestions Increase wages to international levels Increase foreign postings Increase profit sharing More promotions Others TOTAL Percentage Of Respondents 22% 36% 10% 11% 21% 100% (%age)
5.9.2 A 22% of the respondents has suggested to increase the wages to international level to increase employees retentively in Indian IT industry. 36% want more foreign postings, 10% suggest increase profit sharing and 11% suggested more promotions. 21% of the other suggestions included lateral induction from lower the institutes and better HR management.




"Existing Indian labour Laws/Rules are not strictly applicable to Indian IT Industry as IT sector employees are quite different from general factory workers and are well educated and trained. The separate Labour to whether as a Laws/Rules should be designed for IT Industry:. This hypothesis was presented to the respondents. They were to respond upto which extent they agree or disagree. The employees responses have been tabulated below in the Table 5.11. The comfortable majority of respondents (89%) strongly agree or agree with the hypothesis that Indian IT sector requires separate labour management system/ regulations. While only minority of 13% has given divergent views. Low

TABLE-5.11 INDIAN IT INDUSTRY REQUIRE SEPARATE LABOUR LAWS/ RULES (%age) Respondents' Observation Strongly Agree Agree No Comments Disagree Strongly Disagree TOTAL Percentage Of Respondents 57 % 32 % 02% 07% 02% 100%




Whether IT industry can afford old traditional trade union methods of agitations like Strike or Gherao etc. was also asked from the employees. The question was direct in nature of Yes or No. As has been listed in Figure 5.12 below, 67% of the respondents has given their reply in No and 28% answered in affirmative. 5% has ticked No Comments choice. So, it is concluded that old agitational techniques of trade unions are not desired in IT industry.




Whether excessive competition in Indian IT sector is harming the overall long term prospects of employees in this sector The respondents opinion is tabulated below in Table 5.13. The table above clearly indicates that excessive competition is observed as harmful to the employees prospects. . 53 percent of the respondents has replied in Yes to this question. While 35% has a negative viewpoint.

TABLE - 5.13 EXCESSIVE COMPETITION IS HARMING EMPLOYEES LONG TERM WELFARE (%age) Respondents' Observation Yes No Percentage Of Respondents 53% 35%

No Comments TOTAL

12% 100%

5.13 5.13.1


The respondents were asked to comment upon whether Indian IT Industry needs a trade union or management's are looking after the employees interest in the best possible manner. The Table 5.14 shows the responses in this regard.

Table 5.14 ROLE OF TRADE UNION IN IT INDUSTRY (%age) Respondents Grading No Trade Union Single Trade Union Multi Trade Union Only welfare association Total 5.13.2 Percentage Of Respondents 21% 13% 09% 57% 100%

The largest 57 percent of the respondents view that there should be only welfare association in Indian IT industry. 21% need no trade union and 13% like single trade union only.. 9 percent of the respondents opted for multi trade union.








5.14.1 In the end respondents were asked to give their overall assessment/ grading of
emerging HR trends in Indian IT Industry. The overall assessment on five point scales of excellent, very good, good, satisfactory and poor is tabulated below in the Table 5.15. 65% of the respondents were in positive grading of excellent, very good and good. While 35% gave a assessment of satisfactory and poor CHAPTER - 6 SUMMARY AND CONCLUSION



6.0.1 The era of skill-based workers has arrived but if India wants to truly move to the global arena, it has to spruce up its workforce. Small may be beautiful, but not in the IT industry. In the knowledge era and a skill-based economy, it has become imperative that human resources become one of the most essential ingredients of success. The growth of IT companies worldwide depends on its people and the intellectual capital it possesses. 6.0.2 Knowledge workers has become a buzzword in todays IT scenario. And if we look at the top software exporters, they have been growing phenomenally in workforce strength. To make it big in the global software market, India needs to increase its mass of knowledge workers. The establishment of Indian Institutes of Information Technology is definitely a step ahead in the right direction, but what the industry needs is experts in niche areas, in other words, persons with domain expertise. In the era of cutting-edge technologies, it is this skilled workforce that will make all the difference. 6.0.3 The total human resource strength of the IT industry as a whole stands at 425,609. A company-wise break-up of this figure reveals that nearly 525 companies constituting 35% of the IT industry employ an average of 58 persons each, 750 companies constituting 50% of the industry employ an average of 275 persons each, and 150 companies constituting 10% of the industry employ an average of 726 persons each. At least 40 companies have more than 1,000 employees, while some very big companies like TCS, Wipro, HCL and Infosys have staffs above 5,000 each.

6.0.4 Despite having abundant English-speaking skilled workforce, an acute shortage of skilled workforce will affect the countrys software exports in the long run, if remedial actions are not taken immediately. 6.0.5 Geometrical growth of Information Technology in the world as well as India, has created lot of revenues for government and number of avenues for employees. The introduction of computers has changed the way of life every where, including work places and our homes. The life has become quite fast and speed of provisioning of different services has also increased. But all this activities are being managed by number of well qualified professionals. They may be from computer hardware developers, software engineers or marketing managers. As the things are running fast, so they have to be managed fast. 6.0.6 These fastness of services and higher level of education/training standards are not easy to manage by the organisations concerned. As we already know that Human Resource Management of the organisation deals with the individuals putting their hardwork to meet the organisations goals. Managing people is the toughest element of any organisation than land, machinery or finances. Every human beings has its own degree of preferences, likings and attitude. So, HR managers has to take care of all these things in mind while dealing with the number of people working in the organisation. 6.0.7 Different type of employees/workers recruited for different level of working has to be managed in different styles. The hundreds years of organisational management experience has been converted into a standard personnel management and industry and service organisations are following these HR techniques for their organisational management. Due to availability of written down procedures and rules by the learned managers, it was felt that HR managing was not so typical. 6.0.8 But, emerging HR trends of Information Technology industry can not be managed properly by the old traditional HR techniques . As it is commonly known that man learns by experience. 50 years of introduction of computers has provided us the areas to be additionally addressed by the HR managers in IT sector. Indian IT industry is not an exception. Moreover, due to existence of old conservative .and protective labour laws it is not possible to meet the ever-growing international competition in the IT services. 6.0.9 Hence, the IT industry has been devising newer Personnel Management/ HR techniques which specifically meet the needs of IT industry. The main reason for this is high standards of education and professional training required for this industry. Secondly, there is excessive job demands for developed countries in this sector and high wage standards. So, HR managers mainly in developing countries like India find it very difficult to retain and recruit their manpower. HR managers worldwide has devised handsome compensation methods like Profit Sharing, Employee Stock Option Schemes ESOP etc. Though over the period few schemes has flopped like ESOP due to heavy fall in company share prices. 6.1 RESPONDENTS OBSERVATIONS

6.1.1 As given out in Chapter 1, the employees opinion survey regarding status of HR management in Indian IT Industry and success of emerging HR trends was conducted through the use of a structured questionnaire. The survey was conducted by randomly selecting 100 persons working in Indian IT Industry. The respondents observations in this respect are described in brief in the following paragraphs 6.1.2 The 54% of the were Male and 46 per cent of the respondents were Female. It was observed that IT industry is dominated by the software professionals (46%), computer hardware and marketing services of IT are sharing the other half. 6.1.3 The respondents were asked to comment whether the HR needs of Indian IT industry are different from traditional HR Management systems.. The majority of respondents (69%) view that HR needs of IT industry are different from old economy sector and HR managers in IT industry has to keep this into mind. 6.1.4 The IT industry has been devising newer compensation methods like Profit Sharing/ Stock Options etc. to increase employee welfare and receptivity. 46% of the employees opined that newer compensation methods has a positive effect in IT industry while 26% said that it has a negative effect on employee welfare. 6.1.5 As per 48% of the respondents IT organisation has more concern for profit motive than employees welfare. While 43% were not agree to this proposition 6.1.6 51 percent of the respondents strongly agree/agree to the statement that grievance are handled properly in the Indian IT industry. While 33% think otherwise. 6.1.7 Whether top management awareness about working conditions of the employees and state of working conditions in the IT organisations, 65% of the respondents view that the top management's are not aware or little aware about the employees working conditions in the IT organisations . Only 4 percent vouched that top management is very well aware about the nature of working conditions and 16 percent say "Much Aware". 6.1.8 Cordial employee employer relationship is very essential in the upcoming highly competitive economy. The state of employee employer relationship in Indian IT Industry was measured through the next question. The state of employee-employer relationship is very encouraging. 58 percent of the respondents has graded it very good and above. While 42 percent consider it satisfactory and below. 6.1.9 Whether Indian IT Industry is able to retain its employees was the a query from the randomly from IT industry employees. 61% of the employees view that Indian IT companies are unable to retain its employees due to most attractive avenues outside . 22% of the respondents has suggested to increase the wages to international level to increase employees retentivity in Indian IT industry. 36% want more foreign postings, 10% suggest increase profit sharing and 11% suggested more promotions. 21% of the other suggestions included lateral induction directly institutions and better HR management.

6.1.10 Existing Indian labour Laws/Rules are not strictly applicable to Indian IT Industry as IT sector employees are quite different from general factory workers and are well educated and trained. The separate Labour Laws/Rules should be designed for IT Industry:. This hypothesis was presented to the respondents. The majority of respondents (89%) strongly agree or agree with the hypothesis that Indian IT sector requires separate labour management system/ regulations. While only minority of 11% has given divergent views. Further, 67% of the respondents has opined that old agitational techniques of trade unions are not desired in IT industry. 6.1.11 Whether excessive competition in Indian IT sector is harming the overall long term prospects of employees in this sector . 53 percent of the respondents has replied in Yes to this question. While 35 percent has a negative viewpoint.. 6.1.9 The largest 57 percent of the respondents view that there should be only welfare association in Indian IT industry. 21% need no trade union and 13% like single trade union only.. 9 percent of the respondents opted for multi trade union. 6.1.10 In the end respondents were asked to give their overall assessment/ grading of emerging trends of Indian IT industry. The overall assessment on five point scales of excellent, very good, good, satisfactory and poor. 65% of the respondents were in positive grading of excellent, very good and good. While 35% gave a assessment of satisfactory and poor 6.2 CONCLUSION 6.2.1 Hence, it can be concluded that Emerging HR trends of Indian It industry are quite different from the old economy industry. India is considered one of Super Power in Information Technology and allied fields. Majority of world leaders in IT sector are outsourcing their requirements from Indian IT Industry and recruiting Indian IT professionals. Hence, the Indian Government must allow the Industry to meet international competition and desired environment in respect of Labour Laws and financial rules must be liberalized for this Indian IT Industry. Moreover, HR managers in Indian IT Industry must keep the sensitive nature of IT professionals and state of greater opportunities outside in mind for devising HR policies for their organisations China is also entering this area vigorously and Government of India must help Indian It industry to meet this challenge. APPENDIX "I" QUESTIONNAIRE FOR PROJECT STUDY ON EMERGING HR TRENDS IN INDIAN IT INDUSTRY Dear Sir/Madam,

I am a management student of Fore School of Management. As part of course I a undertaking this project study. I would a request you to kindly answer a few questions. This questionnaire gives you the opportunity to express your opinion regarding various aspects of emerging HR trends in Indian a new IT Sector. As a a you are all aware that Information Technology (IT) industry is achieving a great success in Indian employment context. As you are to a part of IT industry and must be observing that the HR trends of IT sector are quite different from the conventional old economy sectors. The results shall be submitted to the university in the report format for the usage of researchers and other concerned authorities. As is the case for entire study, no individual will be identified. Only group averages will be reported. Thanking You Date ..... Personal Profile of the Respondent 1. (a) Place of survey..................................

(b) Name............................................. (c) Address........................................... (d) Male/Female....................................... (e) Educational qualifications: (i) Non Tech Graduate or below (ii) Non-Tech Post-Graduate (iii) B.Tech/BCA etc. (iv) M.Tech/MCA/MBA (f) Your Nature of Job: (i) Computer Hardware (ii) Computer Software (iii) Marketing Services of IT (iv) HR/ Personnel management

2. Whether you feel that HR needs of Indian IT sector are different from old HR practices.(Please Tick) (i) Yes (ii) No (iii) Can Not Say 3. Whether new compensating methods being adopted by the various IT companies are positively effecting the employees welfare? (i) Positive Effect (ii) Negative Effect (iii) No Effect (iv) Can Not Say 4. "Indian IT sector companies has a positive attitude towards its employees and are not neglecting their welfare and prospects for their profit sake." Do you agree with the statement. (i) Yes (ii) No (iii) No Comments 5 "The grievances of the employees in Indian IT sectors are handled properly". To what extent do you with this statement. (i) Strongly Agree (ii) Agree (iii)No Comments (iv) Disagree (v) Strongly Disagree 6. How much do you think the top management of your organisation is aware of the working conditions of its employees? (i) Not at all aware

(ii) Very little aware (iii) Somewhat aware (iv) Much aware (v) Very much aware 7. What is the state of employee employer relationship in Your Organisation (i) Excellent (ii) Very Good (iii) Satisfactory (iv) Poor 8. The most of the employees of Indian IT sector or highly educated and sensitive in nature. Moreover, the opportunities outside are very attractive, Whether Indian IT Industry is able to retain its employees.(Please Tick) (i) Yes (ii) No (iii) Comments 9. What the HR managers of Indian IT sector should do to increase the retentivity rate of its employees (Please Tick) (i) Increase wages to international level ii) Increase foreign postings iii) Increase profit sharing (iv) More promotions (v) Any other(please specify) __________________________ 10. "Existing Indian labour Laws/Rules are not strictly applicable to Indian IT Industry as IT sector employees are quite different from general factory workers and are well educated and trained. The separate Labour Laws/Rules should be designed for IT Industry:. Do you agree with this proposition.

(i) Strongly Agree (ii) Agree iii) No Comments (iv) Disagree (v) Strongly Disagree 11. Whether old methods of employees association/trade union like strike or Gherao etc. are desirable in Indian IT Sector (Please Tick) (i) Yes (ii) No (iii) No Comments 12. In your view whether excessive competition in Indian IT sector is harming the overall long term prospects of employees in this sector. (i) Yes (ii) No (iii) No Comments 13. Whether do you feel there is any roll of trade union in the IT Industry? (i) No Trade Union (ii) Single Union (iii) Multi Union (iv) Only welfare association (iv) Can not say 14. Give your overall assessment of HR Management in Indian It Industry. (i) Excellent (ii) Very Good

(iii) Good (iii) Satisfactory (iv) Poor 15. Please give your comments and suggestions to bring further improvement in HR Management in Indian IT Industry. Thank You,

1. Burack, E.R. & Mc. Nicholos, T.J. Human Research Planning: Technology, Policy and & Change, The Comparative Administration Research Institute of the Centre for Business and Economic Research, College of Business Administration, Kent State University, 1973. 2. Coch, Lester and John R.P. French, "Overcoming Resistance to Change," Human relations, Vol. I, 1948, pp. 512-532.3. Douglas, Paul.H. & Aaron, Director. The Problem of Unemployment, Macmillan, N.Y. 1931. 3. Edwards, John, "Manpower Planning", John Wiley, New York..,1983 4. Gelden, P Stevan," Report Writing for Business and Industry", Business Communication Service. 5. Kothari, CR." research Methodology Methods and tech- niques", Wiley Eastern Limited. 6. Lawler III, Edward E., "Control Systems in Organizations," In Handbook of Industrial and Organizational Psychology, (Rand-Menally, 1976). 7. Mustafi, CK 1981. "Statistical Methods in Managerial Decisions, Macmillon New Delhi. 8. Pareek, U and T.V.Rao, 1981, "Designing and Managing Human Resource Systems", Oxford and IBH Publishing Co., New Delhi. 9. Ramaswamy, E.A. & Uma Ramaswam. "Industry and Labour", Oxford Press: New Delhi, 1981. 10. Rao, T.V. and Abraham, E.A.," A Survey of HRD Practices in Indian Industry, in Rao, T.V. and Pereira, D.F., Recent Experiences in HRD, New Delhi, Oxford & IBH, 1985.

11. Robertson, J. "Structure and Employment Prospects of the Service Industries", Department of Employment, Australia, 1982. 12. Shadecor George W, " Statistical Methods" The IOWA State University Press, AMES, IOWA, USA (6th edition) 13. Silvera, D.M., "Human Resource Development", 1988, The Indian Experience.Higher Education and IT: 14. Ehrmann, Stephen C. "Reaching Students, Reaching Resources: Using Technologies to Open the College." _Academic Computing_, April 1990, pp. 10-34. 15. Penrod,James I., and Michael G. Dolence"Concepts for engineering Higher Education." _CAUSE/EFFECT_, Summer 1991, 16. 5 Mark J. Wallace, Jr., "Rewards and Renewal: Competitive Advantage through Workforce Effectiveness," Paper presented at American Compensation Association National Conference, Anaheim, California, 1993. 17. Helen Murlis and David Fitt, "Job Evaluation in a Changing World," _Personnel Management, May 1991, pp. 39-43.

Project Report on Advertising Effectiveness

Project Report Advertising/Advertisement Effectiveness, What is Advertising, promotion of ideas, Basic Features of Advertising, goods advertised, Functions of Advertising, new product features, Promotion of sales, new product awareness, Consumer advertising, Comparative advertising Role of Advertising Effectiveness on Consumers, Most popular slogan, Sales of Coca Cola Cold drinks, Brands of Pepsi, Sales of Pepsi Cold drinks, effective media of advertisement Ad. Effectiveness, TV is most effective media of advertisement, advertisement effectiveness of cold drinks, making the advertisement, sale of cold drink, advertisement effect the consumers, Coca Cola, Pepsi, Fanta, Mirinda, Maaza, Pepsi, improvement in present advertisement

Project Report on Advertising Effectiveness The objectives of all business are to makes profits and a merchandising concern can do that by increasing its sales at remunerative prices. This is possible, if the product is widely polished to be audience the final consumers, channel members and

industrial users and through convincing arguments it is persuaded to buy it. Publicity makes a thing or an idea known to people. It is a general term indicating efforts at mass appeal. As personal stimulation of demand for a product service or business unit by planting commercially significant news about it in a published medium or obtaining favourable presentation of it upon video television or stage that is not paid for by the sponsor. On the other hand, advertising denotes a specific attempt to popularize a specific product or service at a certain cost. It is a method of publicity. It always intentional openly sponsored by the sponsor and involves certain cost and hence is paid for. It is a common form of non- personal communication about an organisation and or its products idea service etc. that is transmitted to a target audiences through a mass medium. In common parlance the term publicity and advertising are used synonymously. What is Advertising : The word advertising is derived from the Latin word viz, "advertero" "ad" meaning towards and "verto" meeting towards and "verto" meaning. "I turn" literally specific thing". Simply stated advertising is the art "says green." Advertising is a general term for and all forms of publicity, from the cry of the street boy selling newspapers to the most celebrate attention attracts device. The object always is to bring to public notice some articles or service, to create a demand to stimulate buying and in general to bring logethel the man with something to sell and the man who has means or desires to buy".

Advertising has been defined by different experts. Some of the quoted definition are : American marketing association has defined advertising as "any paid form of non personal presentation and promotion of ideas, goods or services by an identified sponsor. The medium used are print broad cast and direct. Stanton deserves that "Advertising consists of all the activities involved in presenting to a group a non- personal, oral or visual openly, sponsored message regarding a product, service, or idea. This message called an advertisement is disseminated through one or more media and is paid for by the identified sponsor. Advertising is any paid form of non personal paid of presentation of ideas goods or services by an identified sponsor. Advertising is a "non- personal paid message of commercial significance about a product, service or company made to a market by an identified sponsor. In developing an advertising programme, one must always start by identifying the market needs and buyer motives and must make five major decisions commonly referred as 5M (mission, money message, media and measurement) of advertising. Basic Features of Advertising On the basis of various definitions it has certain basic features such as : 1. It is a mass non-personal communication. 2. It is a matter of record. 3. It persuades buyers to purchase the goods advertised.

4. It is a mass paid communication. 5. The communication media is diverse such as print (newspapers and magazines) 6. It is also called printed salesmanship because information is spread by means of the written and printed work and pictures so that people may be induced to act upon it. Functions of Advertising For many firms advertising is the dominant element of the promotional mix particulars for those manufacturers who produce convenience goods such as detergent, non prescription drugs, cosmetics, soft drinks and grocery products. Advertising is also used extensively by maters of automobiles, home appliances, etc, to introduce new product and new product features its uses its attributes, pt availability etc.

Advertising can also help to convince potential buyers that a firms product or service is superior to competitors product in make in quality, in price etc. it can create brand image and reduce the likelihood of brand switching even when competitors lower their prices or offer some attractive incentives. Advertising is particularly effective in certain other spheres too such as : i) When consumer awareness of products or service is at a minimum. ii) When sales are increasing for all terms in an industry. iii) When a product is new and incorporates technological advance not strong and.

iv) When primary buying motive exists. It performance the following functions : i) Promotion of sales ii) Introduction of new product awareness. iii) Mass production facilitation iv) Carry out research v) Education of people. TYPES OF ADVERTISING Broadly speaking, advertising may be classified into two categories viz., product and institutional advertising.

a)Product Advertising The main purpose of such advertising is to inform and stimulate the market about the advertisers products of services and to sell these. Thus type of advertising usually promote specific, trended products in such a manner as to make the brands seam more desirable. It is used by business government organization and private nonbusiness organizations to promote the uses features, images and benefits of their services and products. Product advertising is sub-divided into direct action and indirect action advertising, Direct action product advertising wages the buyer to take action at once, ice he seeks a quick response to the advertisement which may be to

order the product by mail, or mailing a coupon, or he may promptly purchase in a retail store in response to prince reduction during clearance sale. Product advertising is sub-divided into direct & indirect action advertising & product advertising aims at informing persons about what a products is what it does, how it is used and where it can be purchased. On the other hand selective advertising is made to meet the selective demand for a particular brand or type is product. b)Institutional Advertising : It is designed to create a proper attitude towards the sellers to build company image or goodwill rather than to sell specific product or service. Its purpose is to create a frame of mind and to implant feeling favourable to the advertisers company. Its assignment is to make friends for the institution or organization. It is sub-divided into three categories : patronage, public, relations and public service institutional advertising. i) In patronage institutional advertising the manufacturer tells his prospects and customer about himself his policies and lives personnel. The appeals to the patronage motivation of buyers. If successful, he convince buyers that his operation entitles him to the money spent by them. ii) Public relations institutional advertising is used to create a favourable image of the firm among employees, stock-holders or the general public. iii) Public service institutional advertising wages public support. c)Other Types :

The other types are as follows : i) Consumer advertising ii) Comparative advertising iii) Reminder advertising iv) Reinforcement advertising ADVERTISING OBJECTIVES The long term objectives of advertising are broad and general, and concern the contribution advertising should make to the achievement of overall company objectives. Most companies regard advertisingly main objective as hat of proving support to personal selling and other forms of promotion. But advertising is a highly versatile communications tools and may therefore by used for achieving various short and long term objectives. Among these objectives are the following : 1. To do the entire selling job (as in mail order marketing). 2. To introduce a new product (by building brand awareness among potential buyers). 3. To force middlemen to handle the product (pull strategy). 4. To build brand preference 9by making it more difficult for middleman to sell substitutes). 5. To remind users to buy the product (retentive strategy).

6. To publicize some change in marketing strategy (e.g., a price change, a new model or an improvement in the product). 7. To provide rationalization (i.e. Socially acceptable excuses). 8. To combat or neutralize competitors advertising. 9. To improve the moral of dealers and/or sales people (by showing that the company is doing its share of promotion). 10. To acquaint buyers and prospects with the new uses of the product (to extend the PLC). BENEFITS The functions of advertisement, and that purpose its ethics, may be discussion below : 1. It leads to cheaper prices. "No advertiser could live in the highly competitive arena of modern business if his methods of selling were more costly than those of his rivals." 2. It acquaints the public with the features of the goods and advantages which buyers will enjoy. 3. It increases demand for commodities and this results in increased production. Advertising : a) Creates and stimulates demand opens and expands the markets; b) Creates goodwill which loads to an increase in sales volume;

c) Reduces marketing costs, particularly product selling costs. d) Satisfied consumer demands by placing in the market what he needs. 4. It reduces distribution expenses in as much as it plays the part of thousands of salesman at a home. Information on a mass scale relieves the necessity of expenditure on sales promotion staff, and quicker and wider distribution leads to diminishing of the distribution costs. 5. It ensures the consumers better quality of goods. A good name is the breath of the life to an advertiser. 6. By paying the way for large scale production and increased industrialization, advertising contributes its quota to the profit of the companies the prosperity of the shareholder the uplifts of the wage earners and the solution of he unemployment problem. 7. It raises the standard of living of the general public by impelling it to use to articles of modern types which may add to his material well being. "Modern advertising has made the luxuries of yesterday the necessities of today ..................... It is a positive creative force in business. It makes two blades of grass grow in the business world where one grew before. 8. It establishes the goodwill of the concern for the test articles produced by it and in course of time they sell like not cakes consumer search for satisfaction of their needs when they purchase goods what they want from its beauty, superiority, economy, comfort, approval, popularity, power, safety, convenience, sexual gratification and so on. The manufactures therefore tries to improve this goodwill and reputation by knowing the buyer behaviour.

To sum up it may be said that advertising aims at committing the producers, educating the consumer, supplementing the salesman converting the producer and the dealer to eliminate the competitor, but above all it is a link between the produce and the consumer. WHY & WHEN TO ADVERTISE Advertising as a tool to marketing not only reaches those who buy , but also those whose opinions or authority is counted for example a manufacturer of marble tiles and building boards advertises not only to people who intend to build houses but also to architect and engineers. While the manufacturers of pharmaceuticals products advertise to doctors as well as to the general public. At time it is necessary for a manufacturer or a concern to advertise things which it does not sell but which when sold stimulates the sales of its own product. There are concerns like electric heaters, iron etc. because the use of these increases the demand for their products. Advertising should be used only when it promises to bring good result more economically and efficiently as compared to other means of selling. There are goods for which much time and efforts are required in creating a demand by sending salesman to prospective buyers than by simply advertising them. In the early days of the cash register in America it was sold by specially trained salesman who called on the prospective users and had the difficult task of convincing them that they could no longer carry on with the old methods, and that they urgently needed a cash register. In our country certain publishers have found it less costly to sell their books by sending salesman from house to house among prospective buyers than to advertise them. In these two examples the cost of creating demand would be too high if attempted by advertising alone under such circumstances advertising is used to make the salesman acceptable to the people they call upon to increase the

confidence of the public in the house. Naturals when there are good profits competitors will be attracted and they should be kicked out as and when sufficient capital is available by advertising on a large scale. Immediate result may not justify the increased expenditure but it will no doubt secure future sales. DESIGNING ADVERTISING CAMPAIGN : An advertising is an organized series of advertising messages. It has been defined as "a planned, co-ordinate series of promotional efforts built around a central theme and designed to reach a specified goals." In other words, it is an orderly planned effort consisting of related but self contained and independent advertisements. The campaign may appear in one more media . it has single theme or keynote idea and a single objective or goal. Thus, "a unified theme of content provides psychological continuity throughout the campaign while visual and oral similarity provide physical continuity. In short run, all campaign want pre-determined psychological reaction in the long run, practically all campaigns have sales goal. The series of advertisements used in the campaign must be integrated with the sales promotional efforts and with the activities of the sales force. Campaign vary in length some may run only for a few days, other for weeks, yet other for a season or the entire year. Usually a range of 3 to 6 months includes many campaigns. Many factors influences campaign length such as competitors advertising media, policies, seasonal falls curves of the product involved, the size of the advertising funds, campaign objectives and the nature of the advertisers marketing programme.

OBJECTIVES OF CAMPAIGN The advertising campaign, especially those connected with the consumers aims at achieving these objectives : i) To announce a new product or improve product. ii) To hold consumers patronage against intensified campaign use. iii) To inform consumers about a new product use. iv) To teach consumers how to use product. v) To promote a contest or a premium offer. vi) To establish a new trade regional, and vii) To help solve a coca regional problem.

The institutional advertising campaign on the other hand, have these objectives. i) To create a corporate personality or image. ii) To build a company prestige. iii) To keep the company name before the public. iv) To emphasize company services and facilities. v) To enable company salesman to see top executive consistently when making sales calls, and

vi) To increase friendliness and goodwill towards the company. Developing the campaign programmes. The advertising campaigns are prepared by the advertising agencies, which work an behalf of their clients who manufacture product or service enterprises, which have services to sell. The word campaign is used because advertising agencies approach their task with a sum Blanca of military fanfare in which one frequently hears words like target audience logistics, zero in and tactics and strategy etc. The account executive co-ordinates the work in a campaign. The creation of an advertising campaign starts with an exploration of consumers habits and psychology in relation to the product. This requires the services of statistical trained in survey techniques and of others trained in social psychology. Statisticians select samples for survey which are done by trained interviewers who visits individuals, included in the sample and ask question to find out about their taste and habits. This enquiry often leads to a change in a familiar product. For instance bathing soap may come in several new colours or cigarette in a new packet or talcum powder in another size. Such interviews are often quite essential to find out the appeal of advertising message for a product that would be most effective with consumers. David Ogilvy describes a consumers survey to find out the most meaningful benefit in which women are interested when they buy a face cream. The largest preference as given to "Cleans deep into pores" followed in order of importance by prevent dryness, "is a complete beauty treatment, recommended by skin doctors" makes skin look younger' contains estrogenic hormones, pasteurized for purity,

prevent skin form aging, smooth our wrinkles ogilvy concludes, form this voting come one of Helena Rubinstein's most successful face creams. We christened it deep cleanser, thus, building the winning form into name of the product. After getting the data the account executive puts together the essential elements of his clients brief, interprets the research findings and draws up what he calls the "advertising strategy". STAGE IN ADVERTISING CAMPAIGN Several steps are required to developed an advertising campaign the number of stages and exact order in which they are carried out may vary according to an organisations resources, the nature of its product and the types of audiences to be reached. The major stages/step are : 1. Identifying and analyzing the advertising. 2. Defining advertising objects. 3. Creating the advertising platform. 4. Determining the advertising appropriation. 5. Selection media plan. 6. Creating the advertising message. 7. Evaluating the effectiveness of advertising. 8. Organizing of advertising campaign.

1.Identifying & Analyzing the Advertising target :

Under this step it is to decided as to whom is the firm trying to reach with the message. The advertising target is the group of people towards which advertisements are aimed at four this purpose complete information about the market target i.e. the location and geographical location of the people, the distribution of age, income, sex, educational level, and consumers attitudes regarding purchase and use both of the advertising product and competing products is needed with better knowledge of market target, effective advertising campaign can be developed on the other hand, if the advertising target is not properly identified and analyzed the campaign is does likely to be effective. 2.Determining the advertising objectives : The objectives of advertisement must be specifically and clearly defined in measurable terms such as "to communicate specific qualities about a particulars product to gain a certain degree of penetration in a definite audience of a given size during a given period of time", increase sales by a certain percentage or increase the firms market shares." The goals of advertising may be to : i) Create a favourable company image by acquainting the public with the services offered available to the employees and its achievements. ii) Create consumers or distributor awareness by encouraging requests providing information about the types of products sold; providing information about the benefits to be gained from use of the company's products or services; and indicating how product (or services) can be used;

iii) Encourage immediate sales by encouraging potential purchasers through special sales contests, getting recommendation of professional people about company's products etc. iv) It secures action by the reader through associating ideas, repetition of the same name in different contexts, immediate action appeal. 3.Creating the Advertising platform : An advertising platform consists of the basic issues or selling points that an advertiser wishes to include in the advertising campaign. A single advertisement in an advertising campaign may contain one or more issues in the platform. A motorcycle producers advertising platform should contain issues which are of importance to consumers filling and such issues also be those which the competitive product do not posses. 4. Determining the Advertising Appropriation: The advertising appropriation is the total amount of money which marketer allocates. For advertising for a specific time period. Determining the campaign budget involves estimating now much it will cost to achieve the campaigns objectives. If the campaign objectives are profit relating and stated quantitatively, then the amount of the campaign budget is determined by estimating the proposed campaigns effectiveness in attaining them. If campaigns object is to build a particular type of company image, then there is little basis for predicting either the campaigns effectiveness or determining the budget required. 5.Selecting the Media :

Media selection is an important since it costs time space and money various factors influence this selection, the most fundamental being the nature of the target market segment, the type of the product and the cost involved. The distinctive characteristics of various media are also important. Therefore management should focus its attention on media compatibility with advertising objectives. Media 1. i) Press Advertising or Print Newspapers City, Small town, Sundays, Daily, weekly, Fortnightly, and Form



annuals, English, vernacular or regional languages. ii) Magazines General or special, illustrated or otherwise, English, Hindi, Regional language. iii) Trade & Technical Journals, Industrial Circulated all over the country year books, commercial, directories, and among the industrialist telephone, Directories, references and business magnates.

books & annuals. 2. Direct Mail Circulars, catalogues, leaflets, brochures, booklets, folders, colanders, blotters, diaries & other printed material. 3. Outdoor or Traffic Poster and bills on walls, railways stations platforms

outside public buildings trains, buses. 4. Broadcast or radio and T.V. Spot, Sectional or national trade cost 5. Publicity Movie Slides and films non theatrical and documentary films metal plates and signs attaches to trees. 6. House to house Sampling , couponing, free gifts, rations. 7. Dealer aids Counter and widows display demonstration retailer goods. 8. Internet Today, Internet is a big spot for advertising. or the given by novelties, demonst-


So these are the media of the advertising campaign of the selecting of the media. 6.Creating the Advertising Messages : This is an important stage of advertising campaign. The contents of the message has to be very carefully drafted in the advertisement. Characteristics of person in the advertising target influence the message content and form. An advertisers must use words, symbols and illustration that are meaningful, familiar and attractive to those persons. The type of media also influence the content and form of the message.

7.Evaluating the Effectiveness of Advertising : The effectiveness of advertising is measured for a variety of reasons : a) To determine whether a campaign accomplished its advertising objects. b) To evaluate the relative effectiveness of several advertisements to ascertain which copy, illustrations or layout is best. c) To determine the strengths and weaknesses of various media and media plans. In other words, measuring advertising effectiveness is needed to determine whether proposed advertisement should be used and if they will be now they might be improved; and whether going campaign should be stopped, continued or changed. In accomplishing these purposes, pretests and post test are conducted. The former tests before exposing target consumers to advertisements and the letter after consumers have been exposed to advertisements and the letter after consumers have been exposed to advertisements. For an effective advertising programme, the advertising manager requires a basic understanding of the medium that is going to carry it. For effectively using advertising the management must test advertising to know which of the advertisement to know which of the advertisement have proved profitable and why as compared to othersOBJECTIVES OF THE

Following are the objectives of the study: 1. To know the most effective media of advertisement

2. 3.

To find out the reasons for liking the advertisement of cold drinks. To find out the most popular slogan of advertisement regarding cold drinks.

Research Methodology
Research is voyage from known to unknown Research is a procedure of logical and systematic application of the fundamentals of science to the general and overall questions of a study and scientific technique which provide precise tools, specific procedure and technical rather than philosophical means for getting and ordering the data prior to their logical analysis and manipulation. Different type of research designs is available depending upon the nature of research project, availability of able manpower and circumstances. Methodology 1. Research Design: The research design is the blueprint for the fulfillment of objectives and answering questions. It is a master plan specifying the method and procedures for collecting and analyzing needed information. o Descriptive Research is used in this study as the main aim is to describe characteristics of the phenomenon or a situation.

2. Data Collection Methods: The source of data includes primary and secondary data sources.

Primary Sources: Primary data has been collected directly from sample respondents through questionnaire and with the help of interview. Secondary Sources: Secondary data has been collected from standard textbooks, Newspapers, Magazines & Internet. 3. Research Instrument: Research instrument used for the primary data collection is Questionnaire. 4. Sample Design: Sample design is definite plan determine before any data is actually obtaining for a sample from a given population. The researcher must decide the way of selecting a sample. Samples can be either probability samples or non-probability samples. Sampling Technique: Convenience Sample Size: 50 Respondents. Area of Study: Yamuna Nagar. MARKET PROFILE (Coca Cola) Brands of Coca- Cola i) ii) iii) Coca Cola Thums-up Limca

iv) v) vi) vii)

Fanta Maaza Maaza Tetra Sprite

Flavours of the brand : i) ii) iii) iv) v) vi) Cola Lemon Soda Orange Mango Clear Lemon

Size of the Coca Cola cold drinks available in market i) ii) iii) iv) v) 200 ml Bottles (RGB Glasses) 300 ml Bottles (RGB Glasses) 500 ml Bottles (RGB Glasses) 1 Litre (PVC Bottles) 1.5 Litre (PVC Bottles)


2 Litre (PVC Bottles)

Sales of Coca Cola Cold drinks Coca Cola Cold drinks Coca Cola Fanta Thums-up Limca Maaza Tetra Sprite Maaza (Primary data) There is more consumption of Coca Cola and has 70% market share in the Yamunanagar city and Coca Cola is having maximum consumption and after that Thumps-up and after it Limca cold drink in the market and all the products has good sale but less than these. Brands of Pepsi i) ii) iii) Pepsi Cola Mirinda Lemon Mirinda Orange Weekly (in carets) 520 250 350 380 80 70 120 Monthly (in carets) 1840 1030 1350 1210 380 280 690 Yearly (in carets) 22400 12900 18500 16300 6200 5000 10000

iv) v)

Pepsi Soda Pepsi Apple

Flavours of the brand : i) ii) iii) iv) v) Cola Lemon Orange Soda Apple

Size of the Pepsi cold drinks available in market vi) vii) viii) ix) x) xi) 200 ml Bottles (RGB Glasses) 300 ml Bottles (RGB Glasses) 500 ml Bottles (500 pt. Bottles) 1 Litre (PVC Bottles) 1.5 Litre (PVC Bottles) 2 Litre (PVC Bottles)

Sales of Pepsi Cold drinks Pepsi Cold drinks Pepsi Mirinda Lemon Mirinda Orange Pepsi Soda Pepsi Apple Weekly (in carets) 430 390 245 126 120 Monthly (in carets) 1750 1180 1000 470 400 Yearly (in carets) 21600 15400 13600 6000 5000

(Primary Data)

The consumption of Pepsi cola, after this sale of Mirinda Lemon is there and after it Mirinda Orange is there and the market share is less of Pepsi in comparison of Coca Cola. TABLE 4.1 RESPONDENT'S CLASSIFICATION ACCORDING TO AGE Age (in years) 11-20 21-40 41-60 Total No. of respondents 22 25 3 50 Percentage 44 50 6 100

Table 4.1 shows that 44% of the respondents are in the age group of 11-20, 50% are in the age group of 21-40 and 6% are in the age group of 4160.

TABLE 4.2 RESPONDENT'S CLASSIFICATION ACCORDING TO SEX Sex Male Female Total No. of respondents 30 20 50 Percentage 60 40 100

Table 4.2 shows that 60% of the respondents are males and 40% of them are females TABLE 4.3 RESPONDENT'S CLASSIFICATION ACCORDING TO EDUCATIONAL QUALIFICATION Qualification Illiterate Below Matric Matric Graduate Post graduate Total No. of respondents 5 29 16 50 Percentage 10 58 32 100

Table 4.3 reveals that out of 50 respondents 5 are matriculate and 29 are Graduate and rest of them 16 are post graduate. TABLE 4.4 DRINKING OF COLD DRINK

Do you take cold drinks Yes No Total

No. of respondents 50 50

Percentage 100 100

Table 4.4 reveals that all the respondents are drinking cold drinks. TABLE 4.5 FREQUENCY OF TAKING COLD DRINKS HOW FREQUENTLY YOU DRINK Once a day Twice a day More than twice Not regular drunker Total 15 2 1 32 50 30 4 2 64 100 No. of respondents Percentage

Table 4.5 reveals that 30% of the respondents drink it once a day, 4% twice a day, 2% more than twice and 32% drink it no regularly. TABLE 4.6 NAME OF THE COLD DRINKS AVAILABLE IN MARKET Name of cold drinks Coca cola Pepsi Fanta No. of respondents Percentage -

Limca Mirinda Thums-up Canada dry Maaza Dew All of above Total

50 50

100 100

Table 4.6 reveals that all of the respondents are of the view that all the above mentioned cold drinks are available in the market. TABLE 4.7 PREFERENCE OF COLD DRINK Which cold drink you like most Coca cola Pepsi Fanta Limca Mirinda Thums-up Canada dry Maaza Dew Total 12 12 1 7 1 10 4 3 50 24 24 2 14 2 20 8 6 100 No. of respondents Percentage

Table 4.7 indicate that out of 50 respondents 12 like Coca cola, 12 like Pepsi, 7 like Limca, 1 like Fanta, 1 like Mirinda, 10 like Thums-up, 4 like Canada dry and 3 like Maaza. TABLE 4.8 FLAVOURS OF COLD DRINKS Flavours Cola Lemon Orange Mango Others Total No. of respondents 30 7 7 2 4 50 Percentage 60 14 14 4 8 100

Table 4.8 shows that out of 60% of the respondents like the cola flavour of cold drink, 14% like the Lemon flavour and same percentage of respondents like the orange flavour of cold drink.

TABLE 4.9 ADVERTISEMENT OF COLD DRINK Do you think advertisement of cold drink is required Yes No Total 48 2 50 96 4 100 No. of respondents Percentage

Table 4.9 indicate that 96% of the respondents are of the view that they have been the advertisement of the cold drink they like most while 4% shows that they dont have seen the advertisement they like most . TABLE 4.10 MEDIA OF ADVERTISEMENT THROUGH WHICH MEDIA YOU HAVE SEEN IT? TV Newspaper Magazine Other 46 2 1 1 92 4 2 2 No. of respondents Percentage




Table 4.10 reveals that 92% of the respondents are of opinion that they have seen the advertisement on TV while 4% are of the opinion that they have seen the advertisement through newspaper.

TABLE 4.11 NO. OF ADVERTISEMENT How many advertisements you seen are of the most likely cold drink by you 1 2 3 4 Total 11 14 11 14 50 22 28 22 28 100 No. of respondents Percentage

Table 4.11 shows that out of the 50 respondents 11 are of view that there is 1 type of advertisement and other says that there are more than one type. TABLE 4.12

SLOGAN OF COLD DRINK Slogan of cold drink which you like Taste the thunder Yara Da tashan Yeh dil mange more Jo chahe ho jaye, coca cola enjoy Total 50 100 12 14 16 8 24 28 32 16 No. of respondents Percentage

Table 4.12 shows that out of 50 respondents 12 like the slogan 'taste the thunder' ,14 like 'Yara da tashan', 16 like 'yeh dil mange more' and 8 like the slogan 'Jo chahe ho jaye coca cola enjoy'. TABLE 4.13 REASON FOR LIKING THE ADVERTISEMENT Why you like advertisement Its theme and making is appealable It has film stars Because of good music Other reasons Total 7 7 6 50 14 14 12 100 30 60 No. of respondents Percentage

Table 4.13 shows that majority of the respondents like the advertisement due to its theme while majority of the respondents like the advertisement due to its film stars and good music.

TABLE 4.14 EFFECT OF ADVERTISEMENT ON CONSUMPTION OF COLD DRINK Do you think ads. Effect the consumption of cold drink Yes No Cann't say Total 23 17 10 50 46 354 20 100 No. of respondents Percentage

Table 4.14 shows that 46% of the respondents are of the view that advertisement forced them to consume product more 34% of them has view that advertisement dont force them to consume the product while 20% of them cannot say anything about it. TABLE 4.15 BEST MEDIA OF ADVERTISEMENT Which Media Presently Is More Effectively TV Newspaper Magazine Others Total 50 50 100 100 No. of respondents Percentage

Table 4.15 reveals that 100% of the respondents are of the view that presently the TV is most effective media of advertisement. TABLE 4.16 NECESSITY OF ADVERTISEMENT DO YOU THINK THE ADVERTISEMENT IS NECESSARY FOR COLD DRINKS? Necessary Very necessary Cant say Total 14 34 2 50 28 68 4 100 No. of respondents Percentage

Table 4.16 shows that highest number of respondents are of the view that advertisement is very necessary for cold drinks while few respondents are of the view that advertisement is necessary. TABLE 4.17 EFFECTIVENESS OF EXPENDITURE INCURRED ON ADVERTISEMENT Does expenditure should be incurred on advertisement Yes No Cant say Total 43 2 5 50 86 4 10 100 No. of respondents Percentage

Table 4.17 shows that 86% of the respondents are of the view that the expenditure incurred on advertisement is effective in adding the profit while 4% denied the same and 10% did not reply.

TABLE 4.18 REASONS FOR DIFFERENCE OF ADVERTISEMENT EFFECTIVENESS WHICH REASON YOU FIND FOR THE DIFFERENCE OF ADVERTISEMENT EFFECTIVENESS Education Liking Standard of Living Level of Development Total 20 10 10 10 50 40 20 20 20 100 No. of respondents Percentage

Table 4.18 shows that 40% of the respondents say education is one of the main reason of Advertisement effectiveness while equal % of the respondents are in the favour of likings, standars of living and level of development


Table 4.19 shows that the majority of the respondents are of the view that the study of effectiveness contributes the improvement in present advertisement. TABLE 4.20 NECESSITY OF ADVERTISEMENT EFFECTIVENESS IS ADVERTISEMENT EFFECTIVENESS IS NECESSARY FOR COMPANY? Yes No Cant say Total 48 1 1 50 96 2 2 100 No. of respondents Percentage

Table 4.20 reveals that majority of the respondents say that the advertisement effectiveness is necessary while same did not replied. TABLE 4.21 USERS OF ADVERTISEMENT EFFECTIVENESS THE USE STUDY OF EFFECTIVENESS IS FOR WHOM? For company For employees For customers None of these Total 34 1 15 50 68 2 30 100 No. of respondents Percentage

Table 4.21 indicates that 68% of the respondents are of the view that the study of effectiveness is meant for company while 30% say that it is meant for customers.

The project relied mainly on the primary data. Consumer give very unclear picture. We have a limited time. The study is based on limited sample. It begin my first attempt to undertake such a study, thus the inexperience is also a obstacle to accomplish the project in a proper way. It was also difficult to get proper information from the people because they were indulging in some other activities.


In last you conclude that majority of the respondents said that TV is the most effective media for advertisement of cold drinks and the celebrities and the slogans in the advertisement effect the consumers. ADVERTISEMENT EFFECTIVENESS OF COLD DRINKS BACK GROUND INFORMATION I) II) III) IV) Name : Age : Qualification : 1. Literate 2. Illiterate if literate ? 1. Below Matric 3. Graduate Profession Address : : __________________________________ __________________________________

V) VI)

VII) Size of family 1). 2).

2. Matric 4. Post Graduate : __________________________________ __________________________________ __________________________________ __________________________________




Do you take cold drink ? a. Yes b. No How frequently you take cold drink ? a. Once a day b. Twice a day c. More than twice d. Not regular Which are the different cold drinks available in the market ? a. Coca Cola b. Pepsi c. Limca d. Fanta e. Thums-up f. Mirinda g. Limca h. Maaza i. Canada Dry j. All of these Which cold drink you like most ? a. Coca Cola b. Pepsi c. Limca d. Fanta e. Thums-up f. Mirinda g. Limca h. Maaza i. Canada Dry j. All of these Which flavour of cold drink you like most ? a. Cola b. Lemon c. Mango d. Orange

e. Other Have you seen the advertisement of cold drink you like most ? a. Yes b. No 7). Through which media you have seen it? a. T.V. b. News Paper c. Magazine d. Others 8). How many types of advertisement of you preferred brand of cold drink are there? a. 1 b. 2 c. 3 d. 4 9). Which slogan of cold drink you like most ? a. Taste the Thunder b. Yara Da Tashan c. Yeh Dil Mange More d. Jo chahe ho Jai COCA-COLA enjoy 10). Why do you like the advertisement ? a. Because it has film stars ? b. Because of Good music c. Its theme and making is appealable. d. Any other reason. 11). Do you think that advertisement has forced you to consume product more ? a. Yes b. No 12). Which media is presenting the advertisement is necessary for sale of cold drink ? a. T.V. b. News Paper c. Magazine d. Others 13). Do you think the advertisement is necessary for sale of cold drink ? a. Necessary b. Very Necessary c. Not Necessary d. Cant Say 14). The expenditure incurred on advertisement of cold drink is such effective that it adds to profit ? a. Yes b. No c. Cant Say 15) Which reason you find for the difference of advertisement effectiveness ? a. Education b. Likings c. Standard of Living d. Level of Development 16) Is the study of effectiveness would contribute to improvement in present advertisement ? a. Yes b. No c. Cant Say 17) Is advertisement effectiveness is necessary for company ? 6).

a. Yes b. No c. Cant Say 18) What do you think the use of study of effectiveness is for who? a. For Company b. For Employees c. For Customers d. None of these