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Topic A study of consumers perspectives towards credit card in banking sector

Submitted by: Name: Aman Sharma Section: Q1202 Roll No.: B43 Reg. No.:11200697

Submitted to: Name: Mr. Himanshu Sood Course Code: MGN504


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Topic Abstract Introduction Review of Literature Variables & Objective of Study

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Research Methodology References

A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the use. The demand for credit cards is growing over time. The total number of credit cards in the system is at around the 25 million mark. The credit card business has become increasingly popular in India, thereby providing considerable scope for further expansions as an extension of banking service to the public and its customer. Indian consumer are relying more the plastic card. The study attempts to find the spending pattern behaviour of the credit card holders and factor influencing the customers in selection of credit card. This study also enables to race out the problems faced by the credit card holders while using the credit cards.

The Indian payment card market is displaying tremendous potential both in terms of issue and usage of cards. Higher disposable incomes, exposure to new products and services, increased travel and growth of the entertainment sector has had an impact on the growth of the payment card industry. The growth in debit cards does not mean that the purchase through these cards is higher. Market forces indicate that debit cards are used more as ATM cards (to withdraw cash). While expenditure by credit cards is estimated at Rs.50, 000 crore, consumer spending by debit cards is only between Rs.500 crore to Rs.1, 000 crore. Acceptance is a major driver for the market and the opening up of newer categories such as transactions at petrol pumps and telephone payments through cards is resulting in new card subscribers. The potential is enormous. While the number of cards in the country is growing at 55 per cent, spending through cards is witnessing a growth of 35 per cent.

Credit Card
Origin of Credit Cards on February 28, 1950 A Diners club card, the first multiuse credit card was issued. This marked the beginning of the era of plastic money. Diners card was launched in the Indian market in 1960. The Central Bank of India was the first bank in the

country to introduce credit card system in August 1980, followed by several other banks. In India, both foreign and Indian banks are doing credit card business. A credit card is referred to as plastic money. Carrying lot of cash is cumbersome, risky and sometimes you run short when you most need it. A credit card is the smart solution to these problems. Most people associate credit card with a prestige and it also says that the customer have taken the onus of being responsible to be extended credit. Credit card therefore can be considered as a good substitute for cash or cheques.

Review of Literature
According to Author Sanjai K. Parahoo, (2012), In a fiercely competitive industry, credit card issuers need to develop a loyal customer base and motivate their card holders to use their cards at a sufficient level to assure profitability. The purpose of this article is to propose a consumer model of customer loyalty in the credit card industry. This study has identified involvement as an independent variable that provides stability and sustainability to the firm-customer relationship. Despite its pertinence, this customer characteristic that may be also used to segment customers has not been investigated in prior quantitative studies. According to Author Hanudin Amin, (2012), The purpose of this paper is to analyze the probability of Islamic credit card usage intention among Islamic banks' customers. Financial cost, knowledge of Islamic credit card, attitude, financial recommendation and demographic items were examined in order to determine whether these factors are influencing the Islamic credit card usage intention or not. According to Author Arpita Khare, Anhsuman Khare and Shveta Singh, (2012), The purpose of this paper is to understand the moderating influence of Multi-item List of Value (MILOV) on credit card attributes, age, and gender in credit use among Indian customers. The research examines the impact of lifestyle variables (convenience, use patterns, and status) on credit card use. According to Author Alex Wang, (2011), This research aims to probe the relevance of CSR by testing the relations among consumers' attitudes toward firms' advertising disclosures, attitudes toward CSR practices, perceived trust toward firms, attitudes toward firms, and behavioural intentions. This paper adds value to the existing literature on CSR and

promotes the effective management of socially responsible business through implementing more responsible advertising practices. According to Author Lili Wang, Wei luv and Lin jiang, (2011), The present research attempts to address what kinds of attitude variables influence individuals' debt behaviour. Although credit card debt has been extensively documented recently, the main focus is on the pure amount of debt. Little research is concerned with the source of credit card debt. This research tries to investigate how different attitude variables affect revolving credit card use and petty instalment use which are two main sources of credit card debt. It is generally accepted that attitude variables are one of the causes of credit card misuse. But there is no research to compare the differential effect of each factor in one model. The present research tries to use statistical method to find out the distinctive effect of each attitude factor. According to Author Thomas Foscht, Cesar Maloles and Swee Lin Chia and Swoboda, (2010), In this paper study seeks to explore the link between the choices of payment mode to customer satisfaction. It examines the Austrian market in relation to its choice and usage of debit cards versus credit cards and its impact on customer satisfaction and loyalty. Furthermore, the study aims to identify the key drivers of customer satisfaction for these two modes of electronic payment. According to Author Jamie Anderson, (2010), Mobile banking (M-banking) involves the use of a mobile phone or another mobile device to undertake financial transactions linked to a client's account. M-banking is one of the newest approaches to the provision of financial services through information communication technology (ICT), made possible by the widespread adoption of mobile phones even in low income countries. Emerging mobile banking (m-banking platforms) in developing markets enable two sided markets, bringing together mobile handset users with other mobile users and commercial partners. It is the argument of this paper that the emergence of m-banking platforms has the potential for spillover effects, and that these spill-over effects will require regulatory authorities to develop appropriate policy responses. This paper fulfils an important void in the current literature related to the growth of m-banking platforms in emerging markets. While there has been an increasing body of literature examining the potential socio-economic impact of m-banking in developing markets, the purpose of this paper is to explore the implications of m-banking for competitive dynamics between competing firms, and the related issues for regulatory authorities.

According to Author Sriniva Durvasula and Steven Lysonski, (2010), China is undergoing a radical change as the forces of industrialization and modernization transform its society. Money is taking on an increasingly important role, particularly among young Chinese, as the Western ideals of individualism and hedonism thrive. The goal of this research is to understand attitudes towards money in China and how these attitudes affect elements of consumer behaviour such as materialism and vanity. According to Author Alex Wang, (2009), This paper aims to test the relations among consumers' attitudes toward disclosures in credit card issuers' print ads, attitudes toward credit card issuers' CSR practices, and attitudes toward credit card issuers in general, with a survey study. The paper primarily studies the impact of advertising disclosures and CSR practices on corporate image from college students' perspective. The research adds value to the existing literature on CSR, which is important to both academic researchers and practitioners. According to Author Lydia L.Gan, Ramin C. Maysami and Hain Chye Koh, (2008). The purpose of this study is to analyze Singapore's diverse cardholders in search of variations among demographic groups, credit card profiles, and their perceptions with regard to credit card ownership and use. It then aims to discuss possible reasons governing Singaporeans' credit card ownership and use. According to Author Mario J. Miranda and Iaszlo Konya, (2008), The aim is to examine whether supermarkets may be losing the opportunity to increase customer purchase outlays by means of loyalty points, convertible to acquire specialty goods and services provided by bonus partners. The paper offers an actionable strategy for customer retention and enhancement. According to Author Wen-Hung Wang, (2008),The purpose of this paper is to develop and empirically test a model for examination of the impact of different relationship efforts (financial bonding, social bonding, and structural bonding) made by a retailer on key relationship marketing outcomes (trust, relationship commitment, and behavioural loyalty). Consequently, managers and employees of retail banks need to be trained, motivated, and rewarded for making relationship efforts to regular consumers.

According to Author Charles Blankson and Stavros P. Kalafatis,(2007), This article aims to examine positioning strategies of international and multicultural-oriented service brands. This also studies the step forward in the operationalization of the concept of positioning. The research also provides diagnosis of the congruence between management's presumed positioning strategies, firm's actual positioning practices and target group's perceptions of the positioning strategies. Without such knowledge, managers cannot expect to choose the best competitive options to defend or enhance their positions in the market place. According to Author Henry K.Y. Fock, Ka Shing Woo and Michael Hui, (2005), This study investigates the synergetic impact of joint marketing collaboration between a bank and The ensuing discussion offers pragmatic suggestions for those in the financial services community as to how the apparent difficulties and shortcomings of smart card technology may be overcome. An affinity organisation on their affinity credit card holders' behaviours. Seeks to identify the sources of the influence of the alliance partners which induce changes in the attitude and behaviour of cardholders. According to Steve Worthington, (2001), This paper aims to describes the importance of plastic payment cards at the point of sale (POS) and the evolution of the credit card in general and affinity cards in particular. Suggests reasons for both the growth of plastic card payments (the cashless society) and the threats to affinity cards (the interchange fee). Places the affinity credit card within the paradigm of relationship marketing and emphasises the triadic nature of these relationships. Discusses the development of the research into affinity credit cards and the issues of branding and trust that impact upon the triadic relationships. Explores the potential for affinity marketing and reports on research into trust and ethics which is relevant to this concept. Places affinity marketing within the retail arena and finally draws conclusions on the future for payments at the POS, relationships operationalised via plastic cards and triadic affinities. According to Author Vic Edwards and Steve Worthington, (2000), Reports on research into the payments markets of both Australia and the UK, in the context of the concept of relationship marketing. It compares the evolution of the various types of payment; cash, paper cheques, debit and credit cards and examines the linkages with relationship marketing from both a market-based approach, to investigate whether data derived from consumer payments can form the basis of a relationship, and from a network-based approach, to consider how new entrants to the payments market can establish relationships between

organisations. Conclusions on this study are then followed by some thoughts on the directions for future research. According to Author Christopher R. Plouffe, Mark Vandenbosch and Johan Hulland, (2000), For more than a decade, bankers and others outside the financial services community such as hardware manufacturers have sought to solidify the place of smart card technology as a viable retail point-of-sale alternative and, more boldly, as an outright replacement for cash in everyday consumption situations around the globe. Despite strong development efforts and numerous fact-finding market trials, many banks have found smart card technology to be a losing proposition. This article presents a detailed case study of both consumer and merchant adoption of one smart card-based retail point-of-sale system. The system, called Exact, was test marketed for a full year in the Canadian market. Various perceptual and demographic data from consumers as well as firm-level data from retailers are both presented and assessed. According to Author Isabelle Szmigin sand Humphrey Bourne, (1998), The paper examines the current state of relationship marketing in the consumer services market. It questions whether relationships are mutually beneficial to suppliers and customers and argues that the relationship is managed by the retailer primarily for their gain whereas the customer might benefit more from alternative, immediate rewards. This leads to a consideration of how value and equity within relationship marketing might be viewed using social psychology as a basis for re-examining the nature of supplier-customer relationships. Concepts from branding and brand repertoires are also considered in terms of understanding what type of relationship might be most appropriate for consumers. Two case studies are explored to support the suggestion that some consumers are looking for different types of relationship to those currently on offer. Management must consider carefully what this might imply both in terms of future consumer behaviour and how competitive action between retailers may develop. According to Author Virginia Hayden, (1993), Distinguishes between consumers and customers, shows how these two groups' requirements of a particular service often differ; proposes that services within health care need to be marketed to both categories. Recognizes the need for the health and social care services to be more market-oriented. Offers guidelines for introducing or increasing market orientation which are applicable to a large range of service organizations; lists and discusses 13 pointers which are relevant from the viewpoint of the purchasing/ commissioning organizations and the service providers.

VARIABLES After reading all these literature review then I have find some variables like: Credit cards Debit cards Advertising Smart cards Strategic alliances Market strategy Service quality Customer involvement Retailing Perceived Trust Behavioural intension Product positioning Financial services Relationship marketing Channel relationship Trust Attitudes National health service Social service Market orientation Consumers Telephone banking Mobile communication Age, Gender and Status Multi item of value on credit cards Cardholder Demographic groups Customer loyalty Consumer behaviour Developing countries

Super market Banks Ordered probit model Loyalty schemes Private ownership Credit card use Psychographics

Objectives of study:
The main objective of the research was to study and understand to explore the link between the choices of payment mode to customer satisfaction towards credit card. To understand the trends in cards industry in India. To find the consumer perception and state reasons for difference if any. To study the satisfaction level for current cardholders. To do comparative analysis for private and nationalised bank cards. To assess the extent of usage of credit cards by cardholders. To find out the attitude of cardholder towards credit cards.

Research Methodology:
The objective is have an understanding of the credit card industry and identify the various credit card providers and he services providers and the services provided by them and to know the perception of co nsumer towards the various. As far as this research paper is

concerned exploratory as descriptive has been used. Exploratory research: Exploratory research is mainly used to explore the insight of the general research problem. It also used to find out the relevant variables to frame the theoretical model. Descriptive research: Descriptive research is conducted to describe the business or market characteristics. The descriptive research mainly answers who, what, when, where, and how kind of questions. Descriptive researches are generally used in segmenting and targeting the


markets. They mainly conducted to describe the characteristics of some groups for the research, to understand the demographic and other characteristics of the population.

Data collection: Primary data: Primary data will be collected through distributing questionnaire among the respondents. Secondary data: Secondary data already exist in the environment and are mainly collected for some other purposes. The researchers generally use the secondary data to understand the problem and explore the dimensions of the problem. Secondary data has been collected through research paper, magazines, journals and articles. Sample size: 200 Sample size refers to the number of elements to be included in the study. While deciding the sample size, various qualitative and quantitative must be considered.

Sampling technique: Convenience sample: is a part of non probability sampling technique where the entire population does not have equal chances of being selected. So in this case I will be selecting the responsibility that are available the survey.


o Lili Wang Wei Lv and Jiang (2011), The impact of attitude variables on the credit debt behaviour, Nankai Business Review News, vol.2, Iss: 2, pp.120-139. o Alex Wang (2009), Advertising and CSR practices of credit card issuers, Management Research News, vol.32 Iss: 12, pp.1177-1191. o Steve Worthington, (2001), Introduction Affinity credit card: a critical review, International Journal of Retail & Distribution Management, vol.29 Iss: 11, pp. 483508. o Steve Worthington, Vic Edwards (2000), Changes in payments markets past, present and future: a comparison between Australia and the UK, International Journal of Bank Marketing, vol. 18 Iss: 5, pp. 212-221. o Christopher R. Plouffe, Mark Vandenbosch, Johan Hulland (2000), Why smart cards have failed: looking to consumer and merchant reactions to a new payment technology, International Journal of Bank Marketing, vol. 18, Iss: 3, pp. 112-123. o Henry K.Y. Fock, Ka-Shing Woo, Michael K. Hui (2005),The impact of a prestigious partner on affinity card marketing, European Journal of Marketing, vol. 39 Iss: , pp.33-53. o Thomas Foscht, Cesar Maloless, Bernhard Swoboda, Sweo lim Chia (2010), Debit and credit card usage and satisfaction who uses which and why evidence from Austria, International Journal of Bank Marketing, vol.28 Iss: 2, pp.150-165. o Sanjai K. Parahoo (2012), Credit where it is due: divers of loyalty to credit cards, International Journal of Bank Marketing, Vol.30 Iss: 1, pp.4-19. o Charles Blankson, Stavros P. Kalafatis (2007) Positioning strategies of international and multicultural oriented service brands, Journal of Services Marketing vol. 21 Iss: 6, pp. 435-450. o Wen-Hung Wang (2008), The interrelationship of retailers relationship efforts and consumers attitude and behaviour, Measuring Business Excellence, vol. 12 Iss: 1, pp. 13-28. o Jamie Anderson (2010) M-banking in developing markets: competitive and regulatory implications, info, vol.12 Iss: 1, pp.18-25. o