Consumer Behaviour Towards Mutual Fund

SUMMER TRAINING REPORT
ON
“A study on Consumer Behaviour
towards Mutual Fund with reference to
Sharekhan Pvt. Ltd. Lucknow”
Submitted in partial fulfillment of
MASTER OF BUSINESS ADMINISTRATION (MBA)
Conducted by
DR APJ AK TECHNICAL UNIVERSITY, LUCKNOW
Under the guidance of: Under the guidance of:
(Mr. Sambhav Kumar) (Prof. Tirupati Mishra)
Company Supervisor College Guide
Submitted By
Ankit Kumar Yadav
MBA III Semester
Enrolment No.1674870003
SESSION- 2017-18
ANSAL TECHNICAL
CAMPUS, LUCKNOW
SECTOR-C, POCKET-9, SUSHANT GOLF CITY, SHAHEED PATH, LUCKNOW
www.aitmlucknow.edu.in
ACKNOWLEDGEMENT
Any fruitful work is in complete without a word of thanks to those involved directly or
indirectly in its completion. With my sincere gratitude I would like to thanks everyone who
has supported me in my project.
I would like to extend my sense of acknowledgement to learning Experience. I would like to
thanks my HOD for their support of Ansal Technical Campus, Lucknow for their blessings
which always gave me courage to face all challenges and made my path easier.
Their insight as well as guidance helped me understand the essentials of the report I would
like to thanks for their support college Guide of Ansal for their immense help and guidance
that they have provided during the research report .The present work has taken its sharp
largely to their wise counsels, concrete and constructive suggestions.
Ankit Kumar Yadav

Consumer Behaviour Towards Mutual Fund
TABLE OF CONTENT
 Certificate
 Acknowledgement
Chapter I Page Nos.

1. Introduction 1-52
2. Company profile 53-84
Chapter II
3. Objectives of the study 84-85
4. Research Methodology 86-88
Chapter 3
5. Data Analysis & Interpretations 89-98
6. Findings 99-100
7. Suggestions/Recommendations 101-102
8. Conclusion 103-105
9. Limitations 106-107
Bibliography 108-109
Appendix 110-112
INTRODUCTION
1
Introduction
All marketing starts with the consumer. So consumer is a very important person to a
marketer. Consumer decides what to purchase, for whom to purchase, why to purchase,
from where to purchase, and how much to purchase. In order to become a successful
marketer, he must know the liking or disliking of the customers. He must also know the
time and the quantity of goods and services, a consumer may purchase, so that he may
store the goods or provide the services according to the likings of the consumers. Gone
are the days when the concept of market was let the buyer’s beware or when the market
was mainly the seller’s market. Now the whole concept of consumer’s sovereignty
prevails. The manufacturers produce and the sellers sell whatever the consumer likes. In
this sense, “consumer is the supreme in the market”.
As consumers, we play a very vital role in the health of the economy local, national or
international. The decision we make concerning our consumption behaviour affect the
demand for the basic raw materials, for the transportation, for the banking, for the
production; they effect the employment of workers and deployment of resources and
success of some industries and failures of others. Thus marketer must understand this.
The consumer behaviour suggest how individual, groups and organization select, buy, use
and dispose of goods, services, ideas or experience to satisfy their needs and wants. It
also clues for improving or introducing products or services, setting price, devising
channels etc. Since liberalization 100% FDI is allowed in India. This has attracted foreign
companies to penetrate the Indian market. The marketers always look for emergent trends
that suggest new.
2
As a consumer we are all unique and this uniqueness is reflected in the consumption
pattern and process purchase. The study of consumer behaviour provides us with reasons
why consumers differ from one another in buying using products and services. We
receive stimuli from the environment and the specifics of the marketing strategies of
different products and services, and responds to these stimuli in terms of either buying or
not buying product. In between the stage of receiving the stimuli and responding to it, the
consumer goes through the process of making his decision.
CONSUMER BEHAVIOUR
Consumer behaviour is the study of how people buy, what they buy, when they buy and
why they buy. It is a subcategory of marketing that blends elements from psychology,
sociology, socio psychology, anthropology and economics. It attempts to understand the
buyer decision making process, both individually and in groups. It studies characteristics
of individual consumers such as demographics, psychographics, and behavioural
variables in an attempt to understand people's wants. It also tries to assess influences on
the consumer from groups such as family, friends, reference groups, and society in
general.
Consumption is the “process of production, acquisition, utilization and destruction of
goods, services, experiences or places”
Understanding Demographics -
1) Youth – 60% of India’s teens stay in rural area.
2) Women – Only 23 % house wives in urban areas have jobs outside their homes
3
STAGES OF CONSUMER BUYNG PROCESS
4
Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual
purchasing is only one stage of the process. Not all decision processes lead to a purchase.
All consumer decisions do not always include all 6 stages, determined by the degree of
complexity...discussed next.
The 6 stages are:
1. Problem Recognition: The buying process starts with need or problem recognition—
the buyer recognizes a problem or need. The buyer senses a difference between his or her
actual state and some desired state. The need can be triggered by internal stimuli when
one of the person's normal needs—hunger, thirst, sex—rises to a level high enough to
become a drive. A need can also be triggered by external stimuli.
Hunger--Food. Hunger stimulates your need to eat. Can be stimulated by the marketer
through product information--did not know you were deficient? I.E., see a commercial
for a new pair of shoes, stimulates your recognition that you need a new pair of shoes
At this stage, the marketer should research consumers to find out what kinds of needs or
problems arise, what brought them about, and how they led the consumer to this
particular product.
2. Information search— an aroused consumer may or may not search for more
information. If the consumer's drive is strong and a satisfying product is near at hand, the
consumer is likely to buy it then. If not, the consumer may store the need in memory or
undertake an information search related to the need. At one level, the consumer may
simply enter heightened attention.
5
The consumer can obtain information from any of several sources. These include
personal sources (family, friends, neighbors, acquaintances), commercial sources
(advertising, salespeople, dealers, packaging, displays, Web sites), public sources (mass
media, consumer-rating organizations), and experiential sources (handling, examining,
using the product). The relative influence of these information sources varies with the
product and the buyer. Generally, the consumer receives the most information about a
product from commercial sources—those controlled by the marketer. The most effective
sources, however, tend to be personal. Commercial sources normally inform the buyer,
but personal sources legitimize or evaluate products for the buyer.
People often ask others—friends, relatives, acquaintances, professionals—for
recommendations concerning a product or service. Thus, companies have a strong
interest in building such word-of-mouth sources. These sources have two chief
advantages. First, they are convincing: Word of mouth is the only promotion method that
is of consumers, by consumers, and for consumers. Having loyal, satisfied customers that
brag about doing business with you is the dream of every business owner. Not only are
satisfied customers repeating buyers, but they are also walking, talking billboards for
your business. Second, the costs are low. Keeping in touch with satisfied customers and
turning them into word-of-mouth advocates costs the business relatively little.
6
3. Evaluation of Alternatives--need to establish criteria for evaluation, features the
buyer wants or does not want. Rank/weight alternatives or resume search. May decide
that you want to eat something spicy, Indian gets highest rank etc. If not satisfied with
your choices then return to the search phase. Can you think of another restaurant? Look
in the yellow pages etc. Information from different sources may be treated differently.
Marketers try to influence by "framing" alternatives.
4. Purchase decision—In the evaluation stage, the consumer ranks brands and forms
purchase intentions. Generally, the consumer's purchase decision will be to buy the most
preferred brand, but two factors can come between the purchase intention and the
purchase decision. The first factor is the attitudes of others
The second factor is unexpected situational factors. The consumer may form a purchase
intention based on factors such as expected income, expected price, and expected product
benefits. However, unexpected events may change the purchase intention.
5. Purchase--May differ from decision, time lapse between 4 & product availability
6. Post-Purchase Evaluation--outcome: The marketer's job does not end when the
product is bought. After purchasing the product, the consumer will be satisfied or
dissatisfied and will engage in post purchase behavior of interest to the marketer. What
determines whether the buyer is satisfied or dissatisfied with a purchase? The answer lies
in the relationship between the consumer's expectations and the product's perceived
performance. If the product falls short of expectations, the consumer is disappointed; if it
meets expectations, the consumer is satisfied; if it exceeds expectations, the consumer is
7
delighted. The larger the gap between expectations and performance, the greater the
consumer's dissatisfaction. This suggests that sellers should make product claims that
faithfully represent the product's performance so that buyers are satisfied. Some sellers
might even understate performance levels to boost consumer satisfaction with the
product.
Almost all major purchases result in cognitive dissonance, or discomfort caused by post
purchase conflict. After the purchase, consumers are satisfied with the benefits of the
chosen brand and are glad to avoid the drawbacks of the brands not bought. However,
every purchase involves compromise. Consumers feel uneasy about acquiring the
drawbacks of the chosen brand and about losing the benefits of the brands not purchased.
Thus, consumers feel at least some postpurchase dissonance for every purchase.
Why is it so important to satisfy the customer? Such satisfaction is important because a
company's sales come from two basic groups—new customers and retained customers. It
usually costs more to attract new customers than to retain current ones, and the best way
to retain current customers is to keep them satisfied. Customer satisfaction is a key to
making lasting connections with consumers—to keeping and growing consumers and
reaping their customer lifetime value. Satisfied customers buy a product again, talk
favorably to others about the product, pay less attention to competing brands and
advertising, and buy other products from the company. Many marketers go beyond
merely meeting the expectations of customers—they aim to delight the customer. A
delighted customer is even more likely to purchase again and to talk favorably about the
product and company.
8
A dissatisfied consumer responds differently. Whereas, on average, a satisfied customer
tells 3 people about a good product experience, a dissatisfied customer gripes to 11
people. In fact, one study showed that 13 percent of the people who had a problem with
an organization complained about the company to more than 20 people. Clearly, bad
word of mouth travels farther and faster than good word of mouth and can quickly
damage consumer attitudes about a company and its products.
Therefore, a company would be wise to measure customer satisfaction regularly. It
cannot simply rely on dissatisfied customers to volunteer their complaints when they are
dissatisfied. Some 96 percent of unhappy customers never tell the company about their
problem. Companies should set up systems that encourage customers to complain. In this
way, the company can learn how well it is doing and how it can improve
TYPES OF COMSUMER BUYING BEHAVIOUR:
Types of consumer buying behaviour are determined by:
Level of Involvement in purchase decision. Importance and intensity of interest in a
product in a particular situation. Buyer’s level of involvement determines why he/she is
motivated to seek information about a certain products and brands but virtually ignores
others. High involvement purchases--Honda Motorbike, high priced goods, products
visible to others, and the higher the risk the higher the involvement. Types of risk:
Personal risk
Social risk
9
Economic risk
The four type of consumer buying behaviour are:
Routine Response/Programmed Behaviour--Buying low involvement frequently
purchased low cost items; need very little search and decision effort; purchased almost
automatically. Examples include soft drinks, snack foods, milk etc.
COMPLEX BUYING BEHAVIOUR:
Consumers undertake complex buying behavior when they are highly involved in a
purchase and perceive significant differences among brands. Consumers may be highly
involved when the product is expensive, risky, purchased infrequently, and highly self-
expressive. Typically, the consumer has much to learn about the product category. For
example, a personal computer buyer may not know what attributes to consider. Many
product features carry no real meaning: a "Pentium Pro chip," "super VGA resolution," or
"megs of RAM."
10
This buyer will pass through a learning process, first developing beliefs about the
product, then attitudes, and then making a thoughtful purchase choice. Marketers of high-
involvement products must understand the information-gathering and evaluation behavior
of high-involvement consumers. They need to help buyers learn about product-class
attributes and their relative importance, and about what the company's brand offers on the
important attributes. Marketers need to differentiate their brand's features, perhaps by
describing the brand's benefits using print media with long copy. They must motivate
store salespeople and the buyer's acquaintances to influence the final brand choice.
DISSONANCE- REDUCING BUYING BEHAVIOUR:
Dissonance-reducing buying behavior occurs when consumers are highly involved with
an expensive, infrequent, or risky purchase, but see little difference among brands. For
example, consumers buying carpeting may face a high-involvement decision because
carpeting is expensive and self-expressive. Yet buyers may consider most carpet brands
in a given price range to be the same. In this case, because perceived brand differences
are not large, buyers may shop around to learn what is available, but buy relatively
quickly. They may respond primarily to a good price or to purchase convenience.
After the purchase, consumers might experience post purchase dissonance (after-sale
discomfort) when they notice certain disadvantages of the purchased carpet brand or hear
favorable things about brands not purchased. To counter such dissonance, the marketer's
after-sale communications should provide evidence and support to help consumers feel
good about their brand choices.
11
HABITUAL BUYING BEHAVIOUR:
Habitual buying behavior occurs under conditions of low consumer involvement and
little significant brand difference. For example, take salt. Consumers have little
involvement in this product category—they simply go to the store and reach for a brand.
If they keep reaching for the same brand, it is out of habit rather than strong brand
loyalty. Consumers appear to have low involvement with most low-cost, frequently
purchased products.
In such cases, consumer behavior does not pass through the usual belief-attitude-behavior
sequence. Consumers do not search extensively for information about the brands,
evaluate brand characteristics, and make weighty decisions about which brands to buy.
Instead, they passively receive information as they watch television or read magazines.
Ad repetition creates brand familiarity rather than brand conviction. Consumers do not
form strong attitudes toward a brand; they select the brand because it is familiar. Because
they are not highly involved with the product, consumers may not evaluate the choice
even after purchase. Thus, the buying process involves brand beliefs formed by passive
learning, followed by purchase behavior, which may or may not be followed by
evaluation.
Because buyers are not highly committed to any brands, marketers of low-involvement
products with few brand differences often use price and sales promotions to stimulate
product trial. In advertising for a low-involvement product, ad copy should stress only a
few key points. Visual symbols and imagery are important because they can be
remembered easily and associated with the brand. Ad campaigns should include high
repetition of short-duration messages. Television is usually more effective than print
12
media because it is a low-involvement medium suitable for passive learning. Advertising
planning should be based on classical conditioning theory, in which buyers learn to
identify a certain product by a symbol repeatedly attached to it.
Marketers can try to convert low-involvement products into higher-involvement ones by
linking them to some involving issue. Procter & Gamble does this when it links Crest
toothpaste to avoiding cavities. Or the product can be linked to some involving personal
situation. Nestlé did this in its series of ads for Taster's Choice coffee, each consisting of
a new soap-opera-like episode featuring the evolving romantic relationship between two
neighbors. At best, these strategies can raise consumer involvement from a low to a
moderate level. However, they are not likely to propel the consumer into highly involved
buying behavior.
VARIETY SEEKING BUYING BEHAVIOUR:
Consumers undertake variety-seeking buying behavior in situations characterized by low
consumer involvement but significant perceived brand differences. In such cases,
consumers often do a lot of brand switching. For example, when buying cookies, a
consumer may hold some beliefs, choose a cookie brand without much evaluation, then
evaluate that brand during consumption. But the next time, the consumer might pick
another brand out of boredom or simply to try something different. Brand switching
occurs for the sake of variety rather than because of dissatisfaction.
In such product categories, the marketing strategy may differ for the market leader and
minor brands. The market leader will try to encourage habitual buying behavior by
dominating shelf space, keeping shelves fully stocked, and running frequent reminder
advertising. Challenger firms will encourage variety seeking by offering lower prices,
13
special deals, coupons, free samples, and advertising that presents reasons for trying
something new.
Factors Affecting the Consumer Buying Decision Process
14
A consumer, making a purchase decision will be affected by the following four factors:
1. Cultural and sub culture Factor
2. Social Factor
3. Personal Factor
4. Psychological
1. Culture and Sub-culture
Culture refers to the set of values, ideas, and attitudes that are accepted by a homogenous
group of people and transmitted to the next generation. Culture also determines what is
acceptable with product advertising. Culture determines what people wear, eat, reside and
travel. Cultural values in the US are good health, education, individualism and freedom.
In American culture time scarcity is a growing problem that is change in meals. Big
impact on international marketing. Culture can be divided into subcultures: Geographic
regions
Human characteristics such as ethnic background.
Culture affects what people buy, how they buy and when they buy.
2. Social Factors
Consumer wants, learning, motives etc. are influenced by opinion leaders, person's
family, reference groups, social class and culture.
15
Roles and Family Influences--
Role...things you should do based on the expectations of you from your position within a
group. People have many roles. Husband, father, employer, employee. Individuals role
are continuing to change therefore marketers must continue to update information.
Family is the most basic group a person belongs to. Marketers must understand: that
many family decisions are made by the family unit consumer behaviour starts in the
family unit family roles and preferences are the model for children's future family (can
reject/alter/etc) family buying decisions are a mixture of family interactions and
individual decision making. Family acts an interpreter of social and cultural values for the
individual.
The Family life cycle: families go through stages; each stage creates different consumer
demands
Family members can strongly influence buyer behavior. The family is the most important
consumer buying organization in society, and it has been researched extensively.
Marketers are interested in the roles and influence of the husband, wife, and children on
the purchase of different products and services.
Husband-wife involvement varies widely by product category and by stage in the buying
process. Buying roles change with evolving consumer lifestyles. In the United States, the
wife traditionally has been the main purchasing agent for the family, especially in the
areas of food, household products, and clothing. But with 70 percent of women holding
jobs outside the home and the willingness of husbands to do more of the family's
16
purchasing, all this is changing. For example, women now buy about 45 percent of all
cars and men account for about 40 percent of food-shopping dollars.
Such changes suggest that marketers who've typically sold their products to only women
or only men are now courting the opposite sex. For example, with research revealing that
women now account for nearly half of all hardware store purchases, home improvement
retailers such as Home Depot and Builders Square have turned what once were
intimidating warehouses into female-friendly retail outlets. The new Builders Square II
outlets feature decorator design centers at the front of the store. To attract more women,
Builders Square runs ads targeting women in Home, House Beautiful, Woman's Day, and
Better Homes and Gardens. Home Depot even offers bridal registries
Children may also have a strong influence on family buying decisions. Chevrolet
recognizes these influences in marketing its Chevy Venture minivan. For example, it ran
ads to woo these "back-seat consumers" in Sports Illustrated for Kids, which attracts
mostly 8- to 14-year-old boys. "We're kidding ourselves when we think kids aren't aware
of brands," says Venture's brand manager, adding that even she was surprised at how
often parents told her that kids played a tie-breaking role in deciding which car to buy.
Groups
A person's behavior is influenced by many small groups. Groups that have a direct
influence and to which a person belongs are called membership groups. In contrast,
reference groups serve as direct (face-to-face) or indirect points of comparison or
reference in forming a person's attitudes or behavior. People often are influenced by
17
reference groups to which they do not belong. For example, an aspirational group is one
to which the individual wishes to belong, as when a teenage basketball player hopes to
play someday for the Utah Jazz. Marketers try to identify the reference groups of their
target markets. Reference groups expose a person to new behaviors and lifestyles,
influence the person's attitudes and self-concept, and create pressures to conform that
may affect the person's product and brand choices.
The importance of group influence varies across products and brands. It tends to be
strongest when the product is visible to others whom the buyer respects. Manufacturers of
products and brands subjected to strong group influence must figure out how to reach
opinion leaders—people within a reference group who, because of special skills,
knowledge, personality, or other characteristics, exert influence on others.
Reference Groups--
Individual identifies with the group to the extent that he takes on many of the values,
attitudes or behaviours of the group members.
Families, friends, sororities, civic and professional organizations. Any group that has a
positive or negative influence on a person’s attitude and behaviour.
Membership groups
(Belong to) Affinity marketing is focused on the desires of consumers that belong to
reference groups. Marketers get the groups to approve the product and communicate that
approval to its members. Credit Cards etc.!!
18
Aspiration groups
(Want to belong to) Disassociate groups (do not want to belong to)
Honda tries to disassociate from the "biker" group. The degree to which a reference group
will affect a purchase decision depends on an individual’s susceptibility to reference
group influence and the strength of his/her involvement with the group.
Social Class
An open group of individuals who have similar social rank. US is not a classless society.
US criteria; occupation, education, income, wealth, race, ethnic groups and possessions.
Social class influences many aspects of our lives. i.e.; upper middle class Americans
prefer luxury cars Mercedes.
Upper-upper class, .3%, inherited wealth, aristocratic names .Upper uppers are the
social elite who live on inherited wealth and have well-known family backgrounds. They
give large sums to charity, run debutante balls, own more than one home, and send their
children to the finest schools. They are a market for jewelry, antiques, homes, and
vacations. They often buy and dress conservatively rather than showing off their wealth.
Although small in number, upper uppers serve as a reference group for others.
Lower-upper class, 1.2%, newer social elite, from current professionals and corporate
elite.
Lower uppers have earned high income or wealth through exceptional ability in the
professions or business. They usually begin in the middle class. They tend to be active in
19
social and civic affairs and buy for themselves and their children the symbols of status,
such as expensive homes, schools, swimming pools, and automobiles. They include the
new rich who consume conspicuously to impress those below them. They want to be
accepted in the upper-upper stratum, a status more likely to be achieved by their children
than by themselves.
Upper-middle class, 12.5%, college graduates, managers and professionals
Upper middles possess neither family status nor unusual wealth. They are primarily
concerned with "career," They have attained positions as professionals, independent
businesspersons, and corporate managers. They believe in education and want their
children to develop professional or administrative skills. They are joiners and highly
civic-minded. They are the quality market for good homes, clothes, furniture, and
appliances.
Middle class, 32%, average pay white collar workers and blue collar friends.
The middle class is made up of average-pay white- and blue-collar workers who live on
"the better side of town" and try to "do the proper things." To keep up with the trends,
they often buy products that are popular. Most are concerned with fashion, seeking the
better brand names. Better living means owning a nice home in a nice neighborhood with
good schools. They believe in spending more money on worthwhile experiences for their
children and aiming them toward a college education.
Working class, 38%, average pay blue collar workers.
20
The working class consists of those who lead a "working-class lifestyle," whatever their
income, school background, or job. They depend heavily on relatives for economic and
emotional support, for advice on purchases, and for assistance in times of trouble. The
working class maintains sharper sex role division and stereotyping.
Lower class, 9%, working, not on welfare
Upper lowers are working (are not on welfare), although their living standard is just
above poverty. They perform unskilled work for very poor pay although they strive
toward a higher class. Often, upper lowers lack education. Although they fall near the
poverty line financially, they manage to "present a picture of self-discipline" and
"maintain some effort at cleanliness."
Lower-lower class, 7%, on welfare
Lower lowers are on welfare, visibly poverty stricken, and usually out of work or have
"the dirtiest jobs." Often they are not interested in finding a job and are permanently
dependent on public aid or charity for income. Their homes, clothes, and possessions are
"dirty," "raggedy," and "broken-down."
Social class determines to some extent, the types, quality, and quantity of products that a
person buys or uses. Lower class people tend to stay close to home when shopping; do
not engage in much pre-purchase information gathering.
Stores project definite class images.
21
Family, reference groups and social classes are all social influences on consumer
behaviour. All operate within a larger culture.
Celebrity Influence
This is an important tool which is able to influence Indian consumer buying behaviour. In
India, celebrities are being increasingly used in marketing communication by marketers
to lend personality to their products. With the visual media becoming more popular the
use of celebrities in the TV media has increased. Celebrities create headlines. Their
activities and movements are being closely watched and imitated. What they endorse sell
like hot cakes. It is not surprising therefore that using celebrities in advertisements has
become common practice. In India especially, it is not difficult to look for the reasons as
to why companies are increasingly using celebrities. Indians always love their heroes and
heroines. Consumers like advertisements more if they are admirers of the celebrities in
the advertisements. When a consumer likes the celebrity in the advertisement, he or she is
more likely to accept what the celebrity says about the advertised product and therefore
will develop more positive feelings toward the advertisement and the brand itself.
Famous celebrities are able to attract attention and retain attention by their mere presence
in the advertisement
In the midst of the advertisement clutter, the advertisements that celebrities endorse also
achieve high recall rates. When people see their favoured reference group members or
celebrities in the advertisements, they pay more attention to them.
22
Celebrities may also help reposition products. Products with sagging sales needs some
boosting and in these Indian celebrities can help by way of the endorsing the product
concerned.
Personal factors
Ability and Knowledge—
Need to understand individual’s capacity to learn. Learning, changes in a person's
behaviour caused by information and experience. Therefore to change consumers'
behaviour about your product, need to give them new information re: product...free
sample etc. When making buying decisions, buyers must process information.
23
Knowledge is the familiarity with the product and expertise.
Inexperience buyers often use prices as an indicator of quality more than those who have
knowledge of a product. Non-alcoholic Beer example: consumers chose the most
expensive six-pack, because they assume that the greater price indicates greater quality.
Learning is the process through which a relatively permanent change in behaviour
results from the consequences of past behaviour.
Attitudes--
Knowledge and positive and negative feelings about an object or activity-maybe tangible
or intangible, living or non living.....Drive perceptions Individual learns attitudes through
experience and interaction with other people. Consumer attitudes toward a firm and its
products greatly influence the success or failure of the firm's marketing strategy. Honda
"You meet the nicest people on a Honda” dispels the unsavoury image of a motorbike
rider, late 1950s. Changing market of the 1990s, baby boomers aging, Hondas market
returning to hard core. To change this they have a new slogan "Come ride with us".
Attitudes and attitude change are influenced by consumer’s personality and lifestyle.
Consumers screen information that conflicts with their attitudes. Distort information to
make it consistent and selectively retain information that reinforces our attitudes. IE
brand loyalty. There is a difference between attitude and intention to buy (ability to buy)
24
Personality-- all the internal traits and behaviours that make a person unique, uniqueness
arrives from a person's heredity and personal experience. Examples include:
Work holism
Compulsiveness
Self confidence
Friendliness
Adaptability
Ambitiousness
Introversion
Extroversion
Aggressiveness
Competitiveness
Traits affect the way people behave. Marketers try to match the store image to the
perceived image of their customers.
There is a weak association between personality and Buying Behaviour; this may be due
to unreliable measures. Nike ads. Consumers buy products that are consistent with their
self concept.
25
Lifestyles--
People coming from the same subculture, social class, and occupation may have quite
different lifestyles. Lifestyle is a person's pattern of living as expressed in his or her
psychographics. It involves measuring consumers' major AIO dimensions—activities
(work, hobbies, shopping, sports, social events), interests (food, fashion, family,
recreation), and opinions (about themselves, social issues, business, products). Lifestyle
captures something more than the person's social class or personality. It profiles a
person's whole pattern of acting and interacting in the world.
Several research firms have developed lifestyle classifications. The most widely used is
the SRI Consulting's Values and Lifestyles (VALS) y typology (see Figure 5.3). VALS
classifies people according to how they spend their time and money. It divides consumers
into eight groups based on two major dimensions: self-orientation and resources. Self-
orientation groups include principle-oriented consumers who buy based on their views of
the world; status-oriented buyers who base their purchases on the actions and opinions of
others; and action-oriented buyers who are driven by their desire for activity, variety, and
risk taking. Consumers within each orientation are further classified into those with
abundant resources and those with minimal resources, depending on whether they have
high or low levels of income, education, health, self-confidence, energy, and other
factors. Consumers with either very high or very low levels of resources are classified
without regard to their self-orientations (actualizers, strugglers). Actualizers are people
with so many resources that they can indulge in any or all self-orientations. In contrast,
strugglers are people with too few resources to be included in any consumer orientation
26
Economic Situation
A person's economic situation will affect product choice. Anna Flores can consider
buying an expensive Nikon if she has enough spendable income, savings, or borrowing
power. Marketers of income-sensitive goods watch trends in personal income, savings,
and interest rates. If economic indicators point to a recession, marketers can take steps to
redesign, reposition, and reprice their products closely.
4. Psychological factors
A person's buying choices are further influenced by four major psychological factors:
motivation, perception, learning, and beliefs and attitudes.
Motivation
A person has many needs at any given time. Some are biological, arising from states of
tension such as hunger, thirst, or discomfort. Others are psychological, arising from the
need for recognition, esteem, or belonging. Most of these needs will not be strong enough
to motivate the person to act at a given point in time. A need becomes a motive when it is
aroused to a sufficient level of intensity. A motive (or drive) is a need that is sufficiently
pressing to direct the person to seek satisfaction. Psychologists have developed theories
of human motivation. Two of the most popular—the theories of Sigmund Freud and
Abraham Maslow—have quite different meanings for consumer analysis and marketing.
27
Perception
A motivated person is ready to act. How the person acts is influenced by his or her own
perception of the situation. All of us learn by the flow of information through our five
senses: sight, hearing, smell, touch, and taste. However, each of us receives, organizes,
and interprets this sensory information in an individual way. Perception is the process by
which people select, organize, and interpret information to form a meaningful picture of
the world.
People can form different perceptions of the same stimulus because of three perceptual
processes: selective attention, selective distortion, and selective retention. People are
exposed to a great amount of stimuli every day. For example, the average person may be
exposed to more than 1,500 ads in a single day. It is impossible for a person to pay
attention to all these stimuli. Selective attention—the tendency for people to screen out
most of the information to which they are exposed—means that marketers have to work
especially hard to attract the consumer's attention.
Even noted stimuli do not always come across in the intended way. Each person fits
incoming information into an existing mind-set. Selective distortion describes the
tendency of people to interpret information in a way that will support what they already
believe. Selective distortion means that marketers must try to understand the mind-sets of
consumers and how these will affect interpretations of advertising and sales information.
People also will forget much that they learn. They tend to retain information that supports
their attitudes and beliefs. Because of selective retention, Anna is likely to remember
28
good points made about the Nikon and to forget good points made about competing
cameras. Because of selective exposure, distortion, and retention, marketers have to work
hard to get their messages through. This fact explains why marketers use so much drama
and repetition in sending messages to their market.
Learning
When people act, they learn. Learning describes changes in an individual's behavior
arising from experience. Learning theorists say that most human behavior is learned.
Learning occurs through the interplay of drives, stimuli, cues, responses, and
reinforcement.
We saw that Anna Flores has a drive for self-actualization. A drive is a strong internal
stimulus that calls for action. Her drive becomes a motive when it is directed toward a
particular stimulus object, in this case a camera. Anna's response to the idea of buying a
camera is conditioned by the surrounding cues. Cues are minor stimuli that determine
when, where, and how the person responds.
Beliefs and Attitudes
Through doing and learning, people acquire beliefs and attitudes. These, in turn,
influence their buying behavior. A belief is a descriptive thought that a person has about
something. Anna Flores may believe that a Nikon camera takes great pictures, stands up
well under hard use, and costs $450. These beliefs may be based on real knowledge,
opinion, or faith, and may or may not carry an emotional charge. For example, Anna
Flores's belief that a Nikon camera is heavy may or may not matter to her decision.
29
Marketers are interested in the beliefs that people formulate about specific products and
services, because these beliefs make up product and brand images that affect buying
behavior. If some of the beliefs are wrong and prevent purchase, the marketer will want
to launch a campaign to correct them.
People have attitudes regarding religion, politics, clothes, music, food, and almost
everything else. Attitude describes a person's relatively consistent evaluations, feelings,
and tendencies toward an object or idea. Attitudes put people into a frame of mind of
liking or disliking things, of moving toward or away from them. Thus, Anna Flores may
hold attitudes such as "Buy the best," "The Japanese make the best products in the
world," and "Creativity and self-expression are among the most important things in life."
If so, the Nikon camera would fit well into Anna's existing attitudes.
Attitudes are difficult to change. A person's attitudes fit into a pattern, and to change one
attitude may require difficult adjustments in many others. Thus, a company should
usually try to fit its products into existing attitudes rather than attempt to change attitudes
30
The term investment is used to describe the process of investing money in shares,
debentures, fixed deposits, gold, real assets, life policies, mutual funds, and money
market instruments. These outlets where the money is invested are known as investment
assets. By investing, an investor commits the present funds to one or more assets to be
held for some time in expectation of some future return in terms of interest or capital
gain. Individual investor considers a number of factors before deciding to invest their
funds in various securities involving varying degrees of risk and return. In the present
economic scenario, the option available to them is different and the factor motivating the
investors to invest is governed by their socio-economic profile including expected return
and risk tolerance.
In short, the investment decision making process is a multi-faceted subject to
change over a period of time. An attempt has been made in this study to identify the
perceptual factors which influence the investors to invest in mutual funds. There are a
number of investment opportunities available to an investor. Each of these investments
has its own risk and return features. The proverb “never put all the eggs in the same
basket” guides the investor to diversify the risk. Diversification refers to the process
whereby an investor invests his funds in more than one investment opportunity. An
investor must learn to analyze and measure the risk and return of the portfolio. All
investors may not be in a position to undertake fundamental and technical analysis before
they decide about their investment options. Neither do they have the resources nor the
expertise to do so. Instead of investing directly, the investors particularly, small investors
may go for indirect investment through the mutual funds. Instead of becoming the share
31
holder or bondholder of a company, these investors would become the unit holders of
mutual funds. In almost all the capital markets throughout the world, mutual funds have
gained a significant position.
The mutual fund industry plays a significant role in the development of the
economy as well. Its buoyant growth leads to lower intermediation costs, more efficient
financial markets, and increased vibrancy of the capital markets and higher local
ownership of financial assets. If retail investment is directed through the mutual fund
route, it will lead to greater wealth creation in the long run. Thus, the industry can be one
of the causative factors for a healthy economy.
Mutual fund is a retail product designed to target small investors, salaried people
and others who are intimidated by the mysteries of stock market but, nevertheless, like to
reap the benefits of stock market investment. SEBI has played a vital role in regularizing
the mutual fund business. From time to time it has tried to plug the loopholes prevailing
in the system and safeguard the interest of investors who has been backbone of this
unprecedented growth. As of now big challenge of mutual fund industry is to mount on
investor awareness and to spread further to the semi urban and rural areas. Since the need
of this study has been aroused in order to see the preference awareness and the investor’s
attitude regarding the mutual funds.
Investment is a commitment of funds made in the expectation of some positive
return. If the investment is properly undertaken, the return will be commensurate with the
risk the investor assumes. Investment goals vary from person to person business to
32
business. While some want security, others give more weightage to returns alone. With
objectives defying any range, it is obvious that the products required will vary as well.
Investments generally involve real assets. Real assets are tangible, material
thing such as buildings, automobiles, and gold etc. financial assets are pieces of paper
representing an indirect claim to real assets held by someone else.
MUTUAL FUNDS:
A mutual fund is an investment vehicle that pools in the monies of several
investors, and collectively invests this amount in either the equity market or the debt
market, or both, depending upon the fund’s objective. This means you can access either
the equity or the debt market, or both, without investing directly in equity or debt.
INVESTING IN MUTUAL FUNDS:
Diversification is a major advantage of investment through Mutual Funds, as
investors get the benefit of various instruments through a single avenue.
 Professionally qualified people manage the funds.
 Mutual Funds offer flexibility in options and choice of schemes to match
individual needs.
 Transparency of operations as well as investment pattern and philosophy by
disclosures of portfolio also add to the advantages of investing in Mutual Funds.
 The Mutual Fund industry is very well regulated by SEBI
33
Mutual Funds offer tax benefits. Dividend income received from investing in
Mutual Funds is tax free in the hands of the investor. Investments in the growth option
will be subject to long term or short-term capital gains tax as applicable.
ADVANTAGE OF MUTUAL FUNDS
1. Professional Fund Management
2. Services
3. Diversification
4. Affordability
5. Cost effectiveness
6. Liquidity
7. Tax breaks
8. Transparency.
There are wide varieties of mutual fund schemes and are classified on the
basis of its structure and its investment objective.
BASED ON STRUCTURE
OPEN ENDED FUNDS
An open-end fund is one that is available for subscription all through the year.
These do not have a fixed maturity. Investors can conveniently buy and sell units at Net
asset value (“NAV”) related prices. The key feature of this scheme is liquidity.
34
CLOSED-ENDED FUNDS
The fund is open for subscription only during a specific period. Investors can
invest in the scheme at the time of the initial public issue and thereafter they can buy or
sell the units of the scheme on the stock exchanges where they are listed. The objective of
the fund is to declare regular dividend.
BASED ON INVESTMENT OBJECTIVE
GROWTH FUNDS
The aim of growth funds is to provide capital appreciation over the medium to
long-term. Such schemes normally invest a majority of the stock exchanges where they
are listed. The fund may declare dividend but the main objective is only capital
appreciation.
INCOME FUNDS
These are also known as debt funds since they invest in debt instruments
issued by the government, private companies banks and financial institutions. These
funds target low risk and stable income to the investors. While returns in these funds may
be regular, their scale may fluctuate depending on the prevailing interest rates and the
credit quality of the debt securities.
35
BALANCED FUNDS
These funds, as the name suggests, are a mix of both equity and debt funds.
They invest in both equities and fixed income securities in line with pre-defined
investment objectives. The aim at providing a balanced mix of capital appreciation
through investments in equities coupled with investments in stable instruments like bonds
etc.
LIQUID FUNDS
Also know as Money market funds as they invest in securities of short term
nature, typically securities of less than one-year maturity like Treasury Bills issued by the
government, Certificate of Deposits issued by banks and Commercial Paper issued by
companies as well as in the inter- bank call money market. These funds are considered to
be at the lowest rung in the hierarchy of risks.
36
Mutual Fund- An Introduction
Securities Exchange Board of India (SEBI) is the regulatory body for all the mutual
funds. All the mutual funds must get registered with SEBI. A mutual fund is a
professionally managed type of collective investment scheme that pools money from
many investors and invests it in stocks, bonds, short-term money market instruments,
and/or other securities. The mutual fund will have a fund manager that trades the pooled
money on a regular basis. The net proceeds or losses are then typically distributed to the
investors annually.
Since 1940, there have been three basic types of investment companies in
the United States: open-end funds, also known in the U.S. as mutual funds; unit
investment trusts (UITs); and closed-end funds. Similar funds also operate in Canada.
However, in the rest of the world, mutual fund is used as a generic term for various types
of collective investment vehicles, such as unit trusts, open-ended investment companies
(OEICs), unitized insurance funds, and undertakings for collective investments in
transferable securities (UCITS).
A mutual fund may be either an open-end or a closed-end fund. An open-end
mutual fund does not have a set number of shares; it may be considered as a fluid capital
stock. The number of shares changes as investors buys or sell their shares. Investors are
able to buy and sell their shares of the company at any time for a market price. However
the open-end market price is influenced greatly by the fund managers. On the other hand,
closed-end mutual fund has a fixed number of shares and the value of the shares
fluctuates with the market. But with close-end funds, the fund manager has less influence
because the price of the underlining owned securities has greater influence.
37
Mutual Fund Global Overview
Mutual fund assets worldwide decreased 12.1 percent to $21.66 trillion at the end of the
third quarter of 2008. Net cash flow to all funds was negative in the third quarter with
$218 billion in outflows, the first worldwide outflow recorded since the third quarter of
2002. The decline in assets reported in U.S. dollars was exacerbated by strengthening of
the dollar. Long-term funds had net outflows of $246 billion in the third quarter, after
registering net inflows of $73 billion in the second quarter. All categories of long-term
funds experienced outflows. Year-to-date, equity funds have had $254 billion in
outflows, bond funds have had $39 billion in outflows, and balanced/mixed funds have
had $24 billion in outflows. Money market funds experienced net inflows of $28 billion
in the third quarter, compared with outflows of $70 billion in the second quarter of 2008.
Year-to-date money market funds have had $444 billion of net inflows. MFs records Rs.
83081 crore net inflow in FY 2009-10.
Investment Philosophy
UTI Mutual Fund’s investment philosophy is to deliver consistent and stable returns in
the medium to long term with a fairly lower volatility of fund returns compared to the
broad market. It believes in having a balanced and well-diversified portfolio for all the
funds and a rigorous in-house research based approach to all its investments. It is
committed to adopt and maintain good fund management practices and a process based
investment management.
38
UTI Mutual Fund follows an investment approach of giving as equal an importance to
asset allocation and sartorial allocation, as is given to security selection while managing
any fund. It combines top-down and bottom-up approaches to enable the portfolios/funds
to adapt to different market conditions so as to prevent missing an investment
opportunity.
Benefits of investing in Mutual Funds:
There are several benefits from investing in a Mutual Fund:
 Small investments: Mutual funds help you to reap the benefit of returns by a
portfolio spread across a wide spectrum of companies with small investments.
 Professional Fund Management: Professionals having considerable expertise,
experience and resources manage the pool of money collected by a mutual fund.
They thoroughly analyse the markets and economy to pick good investment
opportunities.
 Spreading Risk: An investor with limited funds might be able to invest in only
one or two stocks/bonds, thus increasing his or her risk. However, a mutual fund
will spread its risk by investing a number of sound stocks or bonds. A fund
normally invests in companies across a wide range of industries, so the risk is
diversified.
39
 Transparency: Mutual Funds regularly provide investors with information on the
value of their investments. Mutual Funds also provide complete portfolio
disclosure of the investments made by various schemes and also the proportion
invested in each asset type.
 Choice: The large amount of Mutual Funds offer the investor a wide variety to
choose from. An investor can pick up a scheme depending upon his risk/ return
profile.
 Regulations: All the mutual funds are registered with SEBI and they function
within the provisions of strict regulation designed to protect the interests of the
investor.
 Flexibility: Through features such as Systematic Investment Plans (SIP),
Systematic Withdrawal Plans (SWP) and dividend reinvestment plans, you can
systematically invest or withdraw funds according to your needs and convenience.
 Return Potential: Over a medium to long term, Mutual Funds have the potential
to provide a higher return as they invest in a diversified basket of selected
securities.
40
 Diversification: Mutual Funds invest in a number of companies across a broad
cross section of industries and sectors. This diversification reduces the risk
because seldom do all stocks decline at the same time and in the same proportion.
You achieve this diversification through a Mutual Fund with far less money than
you can do on your own.
Limitation of Mutual Fund:
 Entry and exit costs: Mutual Funds are a victim of their own success. When a
large body like a fund invests in shares, the concentrated buying or selling often
results in adverse price movements i.e. at the time of buying, the fund ends up
paying a higher price and while selling it realizes a lower price. For obvious
reasons, this problem is even more severe for funds investing in small
capitalization stocks. However, given the large size of the debt market, excluding
UTI, most debt funds do not face this problem.
 Waiting time before investment: It takes time for a Mutual Fund to invest
money. Since it is difficult to invest all funds in one day, there is dome money
waiting to be invested. Further, there may be a time lag before investment
opportunities are identified. This ensures that the fund under performs the index.
For open-ended funds, there is the added problem of perpetually keeping some
money in liquid assets to meet redemption. The problem of impracticability of
quick investments is likely to be reduced to some extent with the introduction of
index futures.
41
 Fund management costs: The costs of the fund management process are
deducted from the fund. This includes marketing and initial costs deducted at the
time of entry itself, called “load”. Then there is the annual asset management fee
and expenses, together called the expense ratio. Usually, the former is not
counted while measuring performance, while the later is. A standard 2% expense
ratio means that, everything else being equal, the Fund manager under performs
the benchmark index by an equal amount.
 Cost of churning: The portfolio of a fund does not remain constant. The extent
to which the portfolio changes is a function of the style of the individual fund
manager. It is also dependent on the volatility of the fund size i.e. whether the
fund constantly receives fresh subscriptions and redemption. Such portfolio
changes have associated costs of brokerage, custody fees, and registration fees
etc. that lowers the portfolio return commensurately.
 Change of index composition: The indices keep changing over the world to
reflect changing market conditions. There is an inherent survivorship bias in this
process, with the bad stocks weeded out and replaced by emerging blue chips.
This is a severe problem in India with the Sensex having been changes twice in
the last five years, with each change being quite substantial. Another reasons for
change index composition is Mergers & Acquisitions. The weight age of the
42
shares of a particular company in the index changes if it acquires a large company
not a part of the index.
Rights of Unit holders:
As a unit holder in a Mutual Fund scheme coming under the SEBI (Mutual Funds)
Regulations, you are entitled to:
 Receive unit certificates or statements of accounts confirming your title within 30
days from the date of closure of the subscription under open-ended schemes or
within 6 weeks from the date your request for a unit certificate is received by the
Mutual Fund.
 Receive information about the investment policies, investment objectives,
financial position and general affairs of the scheme.
 Receive dividend within 30 days of their declaration and receive the redemption
or repurchase proceeds within 10 working days from the date of redemption or
repurchase.
 Vote in accordance with the Regulations to:
 Change the Asset Management Company.
 Wind up the schemes.
 Receive communication from the Trustees about change in the fundamental
attributes of any scheme or any other changes which would modify the scheme
and affect the interest of the unitholders and to have option to exit at prevailing
Net Asset Value without any exit load in such cases.
43
 Inspect the documents of the Mutual Funds specified in the scheme’s offer
document.
In addition to your rights, you can expect the following from Mutual Funds:
 To publish their NAV, in accordance with the regulations: daily, in case of open-
ended schemes and once a week, in case of close-ended schemes.
 To disclose your schemes’ entire portfolio twice a year, unaudited financial
results half yearly and audited annual accounts once a year. In addition many
mutual funds send out newsletters periodically.
 To adhere to a Code of Ethics which require that investment decisions are taken in
the best interest of the unit holders.
44
Organizational Structure of Mutual Fund Industry:
Unit Holders
Sponsors
Trustees AMC
Mutual Fund Transfer Agent

Custodia
SEBI
Mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset
Management Company (AMC) and a custodian.
The trust is established by a sponsor or more than one sponsor who is like a promoter of a
company. A mutual fund in India is constituted in the form of a public Trust created
under the Indian Trusts Act, 1882. The sponsor forms the Trust and registers it with
SEBI. The fund sponsor acts as the settler of the Trust, contributing to its initial capital
and appoints a trustee to hold the assets of the Trust for the benefit of the unit – holders,
who are the beneficiaries of the Trust. The fund then invites investors to contribute their
money in the common pool, by subscribing to ‘units’ issued by various schemes
established by the Trust as evidence of their beneficial interest in the fund. Thus, a
mutual fund is just a ‘pass through’ vehicle. Most of the funds in India are managed by
the Board of Trustees, which is an independent body and acts as protector of the unit –
holders interests. At least, 50 per cent of the trustees shall be independent trustees (who
45
are not associated with an associate, subsidiary, or sponsor in any manner). The trustees
shall be accountable for and be the custodian of funds/property of respective scheme.
The trustees of the mutual fund hold its property for the benefit of the unit-holders. The
AMC, approved by SEBI, manages the funds by making investments in various types of
securities.
The custodian, who is registered with SEBI, holds the securities of various schemes of
the fund in its custody.
The trustees are vested with the general power of superintendence and direction over
AMC. They monitor the performance and compliance of SEBI Regulations by the mutual
fund.
The sponsor is required, under the provisions of the Mutual Fund Regulations, to have a
sound track record, a reputation of fairness and integrity in all his business transactions.
Additionally, the sponsor should contribute at least 40% to the net worth of the AMC.
However, if any person holds 40% or more of the net worth of an AMC shall be deemed
to be a sponsor and will be required to fulfil the eligibility criteria specified in the Mutual
Fund Regulations. The sponsor or any of its directors or the principal officer employed
by the mutual fund should not be guilty of fraud, not be convicted of an offence involving
moral turpitude or should have not been found guilty of any economic offence.
46
What are the different investment plans that Mutual Funds offer?
The term ’investment plans’ generally refers to the services that the funds provide to
investors offering different ways to invest or reinvest. The different investment plans are
an important consideration in the investment decision, because they determine the
flexibility available to the investor.
Some of the investment plans offered by mutual funds in India are:
Growth Plan and Dividend Plan
A growth plan is a plan under a scheme wherein the returns from investments are
reinvested and very few income distributions, if any, are made. The investor thus only
realizes capital appreciation on the investment. Under the dividend plan, income is
distributed from time to time. This plan is ideal to those investors requiring regular
income.
Dividend Reinvestment Plan
Dividend plans of schemes carry an additional option for reinvestment of income
distribution. This is referred to as the dividend reinvestment plan. Under this plan,
dividends declared by a fund are reinvested in the scheme on behalf of the investor, thus
increasing the number of units held by the investors.
47
Types of Mutual Fund:
The objectives of Mutual Funds are to provide continues liquidity and higher yields with
high degree of safety to investor. Based on these objectives, different types of Mutual
Fund schemes have evolved.
Open Ended Schemes:
Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units
at NAV-related prices from and to the mutual fund on any business day. These schemes
have unlimited capitalization, open-ended schemes do not have a fixed maturity, there is
no cap on the amount investors can buy from the fund and the unit capital can keep
growing. These funds are not generally listed on any exchange.
Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem
units any time during the life of a scheme. Hence, unit capital of open-ended funds can
fluctuate on a daily basis.
The advantages of open-ended funds over close-ended are as follows:
Any time exit option, the issuing company directly takes the responsibility of providing
an entry and an exit. This provides ready liquidity to the investors and avoids reliance on
transfer deeds, signature verifications and bad deliveries. Any time entry option, an open-
ended fund allows one to enter the fund at any time and even to invest at regular
intervals.
48
Close Ended Schemes:
Close-ended schemes have fixed maturity periods. Investors can buy into these funds
during the period when these funds are open in the initial issue. After that such scheme
cannot issue new units except in case of bonus or rights issue. However, after the initial
issue, investors can buy or sell units of the scheme on the stock exchanges where they are
listed. The market price of the units could vary from the NAV of the scheme due to
demand and supply factors, investors’ expectations and other market factors.
Interval Scheme:
Interval Scheme combines the features of open-ended and close-ended schemes. They are
open for sale or redemption during predetermined intervals at NAV-related prices.
Portfolio Classification:
Income/ Debt Funds
These funds are low risk-low return funds, where in the investments are made in income
bearing instruments such as bonds, debentures, government securities, commercial papers
etc. The share prices of these funds tend to be more stable in value and are best suitable
for regular income investment goals, provided minimum investment period is more than
one year. The leading examples are monthly income funds of UTI, Prudential ICICI
Income Plan, JM Income, Alliance Liquid Fund etc.
49
Growth/Equity Funds
These funds are high risk-high return funds, wherein major chunk of investment goes in
equity shares of companies. The NAV of such funds keep fluctuating, but the potential to
earn in such funds is higher provided they are invested with long-term (more than 5
years) financial goals. The leading examples of such funds are, Kothari Pioneer Prima
Fund, Prudential ICICI Equity Fund, Birla Sun Life Fund, etc.
Balanced Funds
These funds invest in both, equity shares and income bearing instruments. The idea is to
reduce volatility of fund, while providing some upside for capital appreciation. In all, it
is a combination of income and growth funds more return – more risk than income funds
and less return – less risk than growth funds. They are best suited for people looking for
a combination for capital appreciation and regular income and best time – span for such
investments is more than 3 years. The examples are PRUICICI Balanced Fund, IDBI-
PRINCIPAL Balanced Fund, and IDBI-PRINCIPAL Child Benefit Fund etc.
Money Market Mutual Funds
These funds invest in highly liquid instruments such as certificate of deposits and short-
term bonds. They have emerged as an alternative for savings and short-term fixed
deposit accounts. They are best suited for capital preservation investment objectives,
where time-span is least.
50
Geographical Classification
Domestic Funds
Funds which mobilize resources from a particular geographical locality like a country or
region are domestic funds. The market is limited and confined to the boundaries of a
nation in which the fund operates. They can invest only in the securities which are issued
and traded in the domestic financial markets.
OTHER CLASSIFICATION
Sector Funds
Sector funds primarily invest in companies of a particular sector/ industry such as
information technology, pharmaceuticals, FMCGs etc. These types of funds are subject
to more risk as the performance of funds depends on the performance of the industry as a
whole and also because the diversification of risk is reduced. Also with the new rule of
government not allowing investing more than 10% in a particular company, is a big
problem as the number of companies are not very large and at the same time all of them
are not very successful. It is best suited to people willing to take high risk.
Tax Saving Funds (ELSS)
These funds offer tax rebate to the investor along wit capital growth and steady returns.
An Equity United Savings Scheme is available wherein investments are made primarily
in stocks. The investment can be made any time, but it gets lock-in for a period of 3
years and in return tax rebate @ 20% is obtained if investments exceed Rs.1, 00,000.
51
Another such scheme is pension scheme, wherein tax rebate @ 20% can be obtained for
investment up to Rs.60, 000.
Special Funds
Special purpose funds are those funds that target a specific customer segments, such as
children, women, retired people etc. Making their fund oriented towards the need of the
group they are targeting.
Gilt Funds
These funds are sort of government funds wherein the investments are made in debt
instruments of the government, which carry no risk of non-payment of interest as the RBI
manages the payment of interest and principal on the instruments. These funds are best
suited to the regular income and long-term investment objectives. The time-span matters
a lot as there are chances of price volatility, which may lead to possibility of loss of
principal invested, if invested for short-term. Examples are PRUICICI Gilt Fund, IDBI-
PRINCIPAL Government Securities Fund etc.
Index Funds
Index funds invest only in stocks of a particular index such as BSE, S&P CNX 500 etc.
The principle is to duplicate performance of these widely followed indexes while keeping
trading and other costs to a minimum. The returns in case of such funds depend on the
index’s performance. It is best suited to the investors who are satisfied with the returns
of an index.
52
COMPANY
PROFILE
53
COMPANY PROFILE
Company Name:
SHAREKHAN LIMITED
Parental Company: SSKI Group
(Shripal Sevantilal Kantilal Ishwarlal Pvt. Ltd)
Establishment year: 1922
CEO of the
Mr. Tarun Shah
company:
Head Office:
A-206, Phoenix House,
2nd Floor, Senapati Bapat Marg,
Lower Parel,
Mumbai- 400 013.
Surat Main Branch:

M- 1 to 6, Jolly Plaza,
(Where I have taken
Mezzanine Floor,
training)
Athwa Gate,
Surat - 395001
Telephone No: (022) 67482000
0261- 6560310-314
Online division as
“Sharekhan” 8th February 2000
Web Site: www.sharekhan.com
Email: surat@branch.sharekhan.com
Offices(Network): More than 640 outlets in 280 cities
54
55
INTRODUCTION OF SHAREKHAN
Sharekhan is one of the leadingshare broking and retail brokerage firms in

the country.It is the retail broking arm of the Mumbai-basedSSKI Group(Shripal
SevantilalKantilal Ishwarlal Pvt. Ltd), which has more than88 yearsof
experience in the stock broking business.SSKI is a veteran equities solutions
company with more than 8 decades of trust and credibility in the Indian stock
markets. It helps the customers/people to make informed decisions and simplifies
investing in stocks.
Sharekhan brings to you a user- friendly online trading facility, coupled with a
wealth of content that will help you stalk the right shares. SSKI named its online
division as a Sharekhan and it is into retail broking. The business of the company
overhauled10 years ago on February 8, 2000. It acts as a discount brokerage
house to a full service investment solution provider. It has specialized research
product for the smallinvestors and day traders.
Sharekhan’sonline trading and investment site ww.sharekhan.com was

launched in 2000.
Though the www.sharekhan.com, have been providing investors a

powerful online trading platform, the latest news, research and other knowledge-
based tools and Sharekhan's equity related services include trade execution on
BSE, NSE, Derivatives, commodities, depository services, online trading and
investment advice.
56
Sharekhan’s ground network includes over 640 Share shops across 280
cities in India.With branches and outlets across the country, Sharekhan’s
ground network is one of the biggest in India!
They have talent pool of experienced professionals specially designated to

guide you when you need assistance, which is hy investigating with us is
bound to be a hassle-free experience for you!
The Sharekhan provides its Customers First Step program, built

specifically for all investors, so testament is –
“YOUR GUIDE TO THE FINANCIAL JUNGLE”means
“Our commitment to being your guide throughout your investing lifecycle”
The institutional broking arm of SSKI was also awarded ‘India’s best
broking house for 2004 by Asia Money brokers poll recently &It has also won
the prestigiousAwaaz Consumer Vote Awards 2005 for the Most Preferred
Stock Broking Brand in India, in the Investment Advisors category.
57
They have 640 share shops across 280 cities in India to get a host of trading
related services – our friendly customer service staff will also help you with any
account related queries you may have.
Sharekhan won the award by the vote of consumers around the country,
as part of India’s largest consumer study cover 7000 respondents – 21 products
and services across 21 major cities. The study, initiated by Awaaz – India’s first
dedicated Consumer Channel and member of the worldwide CNBC Network, &
AC Nielsen–ORG Marg, was aimed at understanding the brand preferences of
the consumers & to decipher what are the most important loyalty criteria for the
consumer in each vertical.
The reasons behind the preferences for brands were unveiled by examining the
following:
 Tangible features of product / service.

 Softer, intangible features like imagery, equity driving preference.
 Tactical measures such as promotional / pricing schemes.
58
 Sharekhan completes 16 years in Retail Broking Business:
Sharekhan Ltd, India’s leading online retail broking house with a strong online
trading platform, has completed a decade in the business offering services such
as portfolio management, trade execution in equities, futures & options,
commodities and distribution of mutual funds, insurance and structured products.
In a short span of 16 years, the company has scripted a remarkable growth

story. Starting from beginnings in 8th February2000 as an online trading portal,
Sharekhan today has a pan-India presence as well as global footprint in UAE and
Oman with over 1,200 outlets serving 9,50,0000 customers across 400 cities.
Mr. Jaydeep Arora

CEO,
Sharekhan, Says -
“We are proud to be
completing a decade of
setting new standards
in the industry. This
journey has been
eventful. And the
journey couldn’t
have been such a
rewarding one without
the support of our
59
patrons who infused immense faith in our services in the last 10 years. We
profusely thank our patrons for the same.”
Sharekhan in its decade-old journey has set category leadership through

pioneering initiatives like ‘Trade Tiger’; a net based executable application that
emulates a broker terminal besides providing information and tools relevant to
traders. Through its ‘First Step’ program Sharekhan has been guiding first-time
investors and helping them makes informed decisions.
 ABOUT SHAREKHAN
 SSKI named its online division as SHAREKHAN and it is into retail broking.
 The business of the company overhauled 16 years ago on February 8,
2000.
 It acts as a discount brokerage house to a full service investment solutions
provider.
 It has specialized research product for the small investors and day traders.
 Largest chain of 640 shares shops in 280 cities across India.
 The site was also launched on February 8, 2000 and named it as

www.sharekhan.com.
60
 The Speed Trade account of Sharekhan is the next generation technology

product launched on April 17, 2002.
 It offers its customers with the trade execution facilities on the NSE and BSE,
for cash as well as derivatives, depository services.
 Ensures convenience in Trading Experience: Sharekhan’s trading services are

designed to offer an easy, hassle free trading experience, whether trading is
done daily or occasionally. Sharekhan providing the customers with a multi-
channel access to the stock markets.
 It gives advice based on extensive research to its customers and provides

them with relevant and updated information to help him make informed about
his investment decisions.
 Sharekhan offers its customers the convenience of a broker-DP
 It helps the customers meet his pay in obligations on time thereby reducing the
possibility of auctions. And execute the instruction immediately on receiving it
and thereafter the customer can view his updated account statement on
Internet.
61
 Sharekhan depository services offer Demat services to individual and

corporate investors. A customer can avail of Demat, repurchase and
transmission facilities at any of the Sharekhan branches and business partners
outlets.
 BRAND NAME:
The company as a whole in its offline business has named itself as SSKI
Securities Private Limited – Shripal Sevantilal Kantilal Ishwarlal Securities
Private Limited. The company has preferred to name themselves under a
blanket family name.
But, in its online division started since 1997, the company preferred to name
itself as “SHAREKHAN”. The Brand name “SHAREKHAN” itself suggests the
business in which the company is dealing so that the customer could easily
identify the product or service category.
 SHAREKHAN’S MISSION & VISION:
62
· MISSION
“To educate and empower the retail investor to help him/hertake better
investment decisions.”
· VISION
“To be the best retail broking brand in the Indian equities market.”
 ROLE OF SHAREKHAN:
Ø Interface between the stock exchange and the investor.

Ø Assistance to investors in precise allocation of funds.
Ø Building awareness amongst general public about stock market.
Core Services of Sharekhan:
As a Sharekhan customer you can decide the channel through which you
want to receive different Services.
63
 Equity & Derivatives Trading.

 Depositery Services.
 Research & Training
 Portfolio Management
 DIAL- N TRADE
 Commodities Trading
 ONLINE & OFFLINE Services
 Share shops
64
65
 OTHER SERVICES PROVIDED BY SHAREKHAN
1. Online Services
2. Offline Services
3. Depository Services: Demat & Remat Transactions
4. Derivatives Trading (Futures and Options)
5. Commodities Trading
6. IPOs & Mutual Funds Distribution
7. Fundamental Research
8. Technical Research
9. Portfolio Management
10. Free access to investment advice from Sharekhan's Research team
11. Sharekhan Value Line (a monthly publication with reviews of recommendations,
stocks to watch out for etc)
12. Daily research reports and market review (High Noon & Eagle Eye)
13. Pre-market Report (Morning Cuppa)
14. Daily trading calls based on Technical Analysis
15. Cool trading products (Daring Derivatives and Market Strategy)
16. Personalised Advice
17. Live Market Information
18. Internet-based Online Trading: SpeedTrade
1. Online Services:
Online BSE and NSE executions (through BOLT & NEAT terminals
Mutual Funds
66
Commodity Futures
PMS(Portfolio Management Services)

Demat Services
Share shops
2. Offline Services:
Trading with the help of Dealer

Trading without credit
By calling to the Share shops
Credit facility (Only in Delivery-based)
Special website for Offline Clients: www.mysharekhan.com
Physical contract notes
 It provides various On-line trading services throughvarious account:
67
The company provided mainly two types of services to their customers for the
Demat Accounts.
(1) Online Account and
(2) Offline Account
1. Online Account: -
In the Online account, the company simply provides the terminal to the
customers or clients and the clients can do trading himself/herself when he/she
wants. The charges of online account is Rs. 750 /-, which is varies from company
to company. Online accounts are most popular than the Offline accounts.
In the Online A/C, the company provides 3 types of facilities to their clients
as per the requirements
A. Classic Accounts
B. Trade Tiger Accounts
C. Dial – n –Trade
A. Classic Accounts:
68
Investing Online is so much easier!
In Classic accounts, it is very simple to do trading. Here customer has first to

open a Demat account with Sharekhan and after opening an account he can get
the login ID and password. With the help of login ID and password, the client can
login to the Sharekhan.com and in the classic a/c whatever company’s
information the clients wants, he has to type the company’s name or code and he
will get all the necessary information about that company and he can buy or sell
the that company’s stock or shares. But, here in the classical account the client
can access only one scrip at a time.
 Features of Classic Account:
Classic account enables you to buy and sell shares through our website. You
get features like .
 Online trading account for investing in Equities and Derivatives via

sharekhan.com
 Integration of: Online trading + Bank + Demat account
 Instant cash transfer facility against purchase & sale of shares
 Make IPO bookings
 You get Instant order and trade confirmations by e-mail
 Streaming Quotes
 Personalised Market Scan with your own customized stock ticker!
 Single screen interface for cash and derivatives
 Your very own Portfolio Tracker!
69
B. Trade Tiger Account: -
Earlier it was known

as Speed Trade and now it is known as Tiger Trade.
This account is same as fast trade account. But, difference between these
two accounts is that in the Tiger Trade Account the client can access more than
25 scripts at a time and buy and sell the share from wherever they wants. This
account also provides the charts and graphs, so that the clients can easily
understand about the stock of the company. This is only for big clients and dealer
kind of customers. This account is mainly for active traders who trade frequently
during the trading session.
70
 Features of Trade Tiger Account: -

 A single platform for multiple exchange BSE & NSE (Cash & F&O),
MCX, NCDEX, Mutual Funds, IPOs
 Multiple Market Watch available on Single Screen
 Multiple Charts with Tick by Tick Intraday and End of Day Charting
powered with various Studies
 Graph Studies include Average, Band- Bollinger, Know Sure Thing,
MACD, RSI, etc
 Apply studies such as Vertical, Horizontal, Trend, Retracement & Free
lines
 User can save his own defined screen as well as graph template, that is,
saving the layout for future use
 User-defined alert settings on an input Stock Price trigger
 Tools available to gauge market such as Tick Query, Ticker, Market
Summary, Action Watch, Option Premium Calculator, Span Calculator
 Shortcut key for FAST access to order placements & reports
71
 Online fund transfer activated with 12 Banks
C. Dial-n-trade:
 Features of Dial-n-trade:
 TWO dedicated numbers for placing your orders with your cell phone or
landline. Toll free number: 1-800-22-7050. For people with difficulty in
accessing the toll-free number, we also have a Reliance number (Your
Local STD Code) 30307600 which is charged at as a local call.
 Simple and Secure Interactive Voice Response based system for

authentication
 No waiting time. Enter your TPIN to be transferred to our telebrokers
72
 You also get the trusted, professional advice of our telebroker
 After hours order placement facility between 9.00 am and 9.30 am

(timings to be extended soon)
2. Offline Account: -
This is simple way to do trading. In the offline account, the client

can place the order by telephone or through personal visit in the office.
The client who is very busy in their jobs or business, they can directly
place the order by the telephone or the client who are not much busy; they
can come to the office of Sharekhan.
Sharekhan also provide the Dial-n-trade service to their customers.
So that customers can directly place the order by the telephone.
 Demat Account Opening & Brokerage Charges: -
73
· Fee structure for General Individual:
Charges Classic Account Trade Tiger Account

Account Opening Charges Rs.750/- Rs. 1000/-
Brokerage Intra-day : 0.10 Intra-day : 0.10 %

% Delivery : 0.50 %
Delivery : 0.50
%
Annual Maintenance Charges Rs. NIL first year
Rs. 300/= p.a. from second year
onwards
For Intra-day Trades:-
 This is subject to a minimum brokerage of 5 paisa per share. This means

that if the share price you trade in is Rs 50/- or less, a minimum brokerage
of 5 paisa per share will be charged.
For Delivery Based Trades :-
74
 This is subject to a minimum brokerage of 10 paisa per share. Minimum

brokerage of 10 paisa per share will be applicable when the share price
is Rs 20/- or less.
 Sharekhan launchs ShareMobile, an exclusive live streaming quotes and

trading facility for its online trading customers
 Next time when you are on move, you need not worry about your favorite
stocks price movement. You can carry stock market terminal with you
anywhere – anytime.
75
 Have you ever missed an investment or an opportunity to book profit / loss,

just because you were on move?
 Sharekhan brings your freedom of being Mobile. Yes, it’s so easy with
ShareMobile to track your favorite stocks price movement tick-by-tick.
 How ShareMobile does empower you?

 Live tick by tick stock price.
 Latest News Headlines
 Track your My Trade Portfolio investments
 Live Research Fundamental & Trading Calls.
Sharekhan Depository Services:
 Sharekhan Depository Services offers dematerialization services to individual

and corporate investors.
76
 Sharekhan has a team of professionals and the latest technological expertise

dedicated exclusively to our Demat department, apart from a national network
of franchisee, making the services quick, convenient and efficient.
 Trading in Commodity Futures:
 It provides with facility to trade in commodities (Bullion: Gold, silver and

agricultural commodities) through a wholly owned subsidiary of its Parent
SSKI.
 Sharekhan is a member of 2 Commodity Exchanges and offers trading

facility at both these exchanges:
1. Multi Commodity Exchange Of India (MCX)
2. National Commodity And Derivative Exchange, Mumbai (NCDEX)
 Software (Technology) Used In Sharekhan: -
Sharekhan is using different technology for the running of their daily

transactions.
Mainly for the trading, the company using three software.
1. ODIN (VSAT Based)
2. Trade Tiger (WEB Based)
3. Classic/Fast Trade (WEB Based)
And also NEAT System Used for making transaction in NSE listed
company & same way BOLT System Used for making transaction BSE listed
company.
And for the client information or customer service, the company using two
software.
77
1. CIS – Client Information System.

2. BOC – Back Office.
 Some Information about Sharekhan:

Turnover Rs. 15 corers daily
Employees Strength 35
Offices More than 640 outlets in 280 cities
Clients : Demat A/c 5000

Trading A/c 3000
Head office Mumbai
Working Capital More than 400 corers
 Sharekhan Classic Account

Special Features  Sharekhan Trade Tiger Account
 Dial – n - Trade
Sharekhan provide right investment decision to

Investors according to their needs.
78
Seven Reasons
Why Customer’s first choice isSHARAKHAN…?
1. EXPERIENCE:
SSKI has more than eight decades of trust and Credibility in the Indian
stock market. In the Asia Money broker’s poll held recently, Sharekhan won the
‘India best broking house for 2004’ award. Ever since it launched Sharekhan
as its retail broking division in February 2000, it has been providing
institutional-level research & broking services to investors.
2. TECHNOLOGY:
With Sharekhan online trading account you can buy and sell shares in an
instant from any PC with an internet connection. You will get access to our
powerful online trading tools that will help you take complete control over your
investment in shares.
79
3.
KNOWLEDGE:
In a business where the right information at the right time can translate
into direct profits, you get access to a wide range of information on Sharekhan’s
website www.sharekhan.com. You will also get a useful set of Knowledge-based
tools that will empower you to take informed decisions.
4. ACCESSIBILITY:
80
In addition to Sharekhan online and phone trading services also very

useful. Sharekhan also have a ground network of 640 share shops across 280
Cities in India where you can get personalize Services.
5. CONVENIENCE:
You can call Sharekhan’s Dial-n-Trade number to get investment advice

and execute your transactions. Sharekhan have a dedicated Call Center to
provide this service via a toll-freenumber from anywhere in India.
6. CUSTOMER SERVICE:
Sharekhan’s customer service team will assist you for any help that you
need relating to transactions, billing, demat and other queries. Sharekhan’s
customer service can be contacted via a toll-free number-mail or live chat on
Sharekhan.com.
7. INVESTMENT ADVICE:
Sharekhan has dedicated research teams for fundamental and technical

research. Sharekhan’s analysts constantly track the pulse of the market and
provide timely investment advice to you in form of daily research e-mail, online
chat, printed reports and SMS on your phone.
81
 SWOT ANALYSIS of Sharekhan

STRENGTHS:
 Online Trading Facility

 Largest Chain of Retail Share Shops in India
 88 years of Experience in securities market
 Dedicated and responsive workforce/staff
 Value added service for HNI client
 Research Center
 Membership of NSE & BSE
 Trading option like Future & Option and Commodities
 Volume based differentiated product.
WEAKNESSES:
 Less informative website.

 Does not have slab rate brokerage which is provided by competitors.
 Problems due to network crash.
 Unawareness Among Investors.
OPPORTUNITY:
 Collaboration with international financial institution

 To tap the Untapped market
82
 To capture the market lost to its Competitors.

 To focus on developing a superior and powerful portal
 To spread awareness of its Brand Name.
THREATS:
 Follow government laws

 Competitors develops
 Prolonged depression and high volatility in the market
 New Entrants.
 Awards &Achievements of SHAREKHAN:
 2001- Web Award winner of Chip

magazines Best Financial Website
Award.
 2004- Best Local Brokerage by Advisory

Poll of Poll 2004.
 2005- Awaaz Consumer AwardsBest

Broking House by CNBC channel.
 Sharekhan is amongst top 3 online

Brokers in India.
83
84
85
Objectives of the
study
86
OBJECTIVE OF THE STUDY
 To Study the Consumer behaviour of investors towards Mutual Funds.
 To know people’s awareness about various schemes for investment in Mutual
Fund.
 To know the investors knowledge and perceptions about mutual fund.
 To know the investor priority level between different criteria of investment like
safety level, returns, liquidity, tax benefits and maturity etc. of investment.
 Find out reason for choice of mutual fund as an investment avenue.
 To identify the social factors that affect investors’ buying behaviour in Lucknow.
 To measure the satisfaction level of investors regarding various parameters for
investment in Mutual fund.
 Find out reason for choice of mutual fund as an investment avenue.
87
Research
Methodology
88
RESEARCH METHODOLOGY
METHODOLOGY- The science dealing with principles of procedure in research and
study.
 Various investment options have been selected like Mutual Fund, Gold, Bank
Deposits, Post Office Savings and Insurance.
 Various parameters taken for comparison
 Risks
 Time Horizon
 Return on Investment
 Liquidity
Research Design- Descriptive Research Design
Research Approach- Survey Approach
Research Instruments- Questionnaire
Sample Universe- Lucknow
Sample Area - Lucknow
Target population: Investor who invests money into various investment options.
Sampling Element: High Net worth Investors (HNI) and middle class retail investors.
89
Sample method- Random Sample method
Sample Size- 60
Data source- Primary data & Secondary Data
SOURCES OF DATA
The two main sources of data for the present study have been primary data and
secondary data.
1. Primary Data:
Primary data consists of original information collected for specific purpose. The
primary data for this research study was collected through a direct survey with the
viewers guided by a structured questionnaire. The questions were structured and direct
as to make viewers understand easily.
2. Secondary Data:
Secondary data consists of information that already exists somewhere, having
been collected for specific purpose in the study. The secondary data for this study
collected from various books, company websites, and from company brochures.
The main statistical tools used for the collection and analyses of data in this project
are:
 Questionnaire
 Pie Charts
 Bar Diagrams
90
Data Analysis
91
Data Analysis
1. Age Group:
Frequency Per cent

18 years - 30 years 9 15
Above 50 years 12 20
50
50 Frequency
45 Column2
40
35 30
30
25 20
20 15 15
12
15 9 9
10
5
0
18 years - 30 years 31 years - 40 years 41 years - 50 years Above 50 years
From the questionnaire we got different age groups. From the above chart, it can be
derived that most of the investors are in the age group of 31 to 40. The reason being, they
have enough money to invest in risky market because they have job and they are well
settled. This would help us to know to whom we have to target.
92
2. Business or Job/service
Frequency Per cent

Business 6 10
Job 54 90
90
90
80
70 54
60
50 Frequency
40 Column2
30 10
20 6
10
0
Business Job
Most of the people, who are interested in investment, have jobs and we met very few
business class people who are likely to invest in market. Through this we come to know
that we should target on investor who is in job.
93
3. Annual Income
Frequency Per Cent

Up to 2 lac 6 10
2 lac to 5 lac 39 65
Above 5 lac 15 25
65
70
60
50 39
40 Frequency
25
30 Column2
15
20 10
6
10
0
Up to 2 lac 2 lac to 5 lac Above 5 lac
As per income status, most of the investors belong to income group of 2 lac to 5 lac.
From this we come to know that investors belong to income group 2 lac to 5 lac invests
more than above 5 lac.
94
4. Where do you invest?
Frequency Per Cent

Bank Deposit 12 20
Share Market 24 40
Mutual Fund 15 25
Others 9 15
40
40
35
30 24 25
25 20
20 15 15 Frequency
12 Column2
15 9
10
5
0
Bank Deposit Share Market Mutual Fund Others
From the above table we have come to know that the preference of the different
investment of the investor while investing their money that is bonds & insurance products
are most important investment avenue for the investors. Than after money market
instrument and equity share are important for the investors.
Most of the investors like to invest in share market. As per above chart, about 40%
investor invest in share market. The size of the world stock market was estimated at about
$36.6 trillion US at the beginning of October 2009. Participants in the stock market range
from small individual stock to large hedge fund traders, who can be based
anywhere. That’s reason why more people invest in stock market.
5. Are you regular investor?
95
Frequency Per cent

Yes 42 70
No 18 30
70
70
60
42
50
40 30 Frequency
30 18 Column2
20
10
0
Yes No
Most of the investors choose to make safe investments for the long-term, but have to rely
on stock tips from friends or rumors doing rounds of the stock market. Most investors try
to time the market and often get unduly influenced by market rumors and tips and end up
making losses on investments that lack rationale. We concluded from the data that about
70% people we met are regular investor and only 30% investors invest occasionally.
6. Do you want to invest in Mutual Fund?
96
Frequency Per cent

Yes 27 45
No 33 55
55
60
45
50
40 33
27 Frequency
30
Column2
20
10
0
Yes No
From the above table we have come to know criteria’s considered while investing in MF
by the investors that is finance planner advice and the AMC image are most important
criteria’s for the investors while investing in mutual fund. Than after fund performance
and tax incentive are important.
From the surveys which we have done, we have come to know that the people who want
to invest in mutual fund are less than the people who want to invest in other money
market instruments. The major challenge is that how we can convert their investments
from other money market instruments towards mutual fund.
7. Are you aware about all the features of Mutual Fund?
Frequency Per cent

Yes 36 60
No 24 40
97
60
60
50
40
36
40 Frequency
Column2
30 24
20
10
0
Yes No
The investor who knew about mutual fund intensely is 60% and others are not aware
about mutual fund schemes and mutual fund as a system.
8. Would you like to have information on Mutual Fund?
Frequency Per cent

Yes 24 40
No 36 60
98
60
60
50 40
36
40
24 Frequency
30
Column2
20
10
0
Yes No
As above, there are 40% people are not aware about mutual fund and 60% are aware of
the mutual fund. From that 40% people only 8% want to have full information.
From the survey, we come to know the purpose to investing in MF is that low risk and
collective investments are most important purpose of the investor for the investing in
mutual fund. Than after return potential and advantage of professional management are
important while investing in mutual fund.
9. What do you consider during making any investment?
Frequency
Transparency 27
Liquidity 18
Returns 30
Tax Saving 18
Regular Income 25
Risk 18
99
30
30 27
25
25
18 18 18
20
15
10 Column3
From the above table we have come to know that the important criteria considered by
most of the investors more about the returns and focus equally on regular income and
transparency. So there should such schemes which provide them what they actually want
or they consider while investing. This helps us to know that to what scheme does investor
is looking for. These also help us to easily crack the deal.
100
Findings
101
Findings
This training program has played a significant role in understanding the Consumer
Behavior. It help to know about the preferences of investors it give them knowledge
about the different investment options available for investment.
Our Key findings are as follows:
 69 % people are aware of the mutual fund.
 Convenience and risk are most important criteria considered by the investor while
investing their money.
 Tax benefit and safety of the investment are most important objective of the
investors.
 48% have shown interest to invest in mutual fund.
 Income fund & specialized fund are most important for the investing in mutual
fund.
 66% people have income level of Rs. 50,000- Rs.10000/-
 In this current scenario Mutual Funds & Bank deposits become the most preferred
investment option.
 Now a day’s investors want to invest their money for long term prospective to
reach their financial goal and maximizing wealth.
 Yield and return is the most important preference at the time of investment.
 Age group & Income is the most important factor in determining the risk capacity
of individual
102
RECOMMENDATION
103
RECOMMENDATION
 Most of the investors belong to age category of 30 to 40, so there is huge market
available for new and young investor. Fresher are not able to make huge
investment at once so there should be one scheme, especially for the new comer.
 Income group of 2 lac to 5 lac is making more investment than others, so there is
scope and market for mutual fund in this market.
 About 70% of investors are regular investors, so there is need to catch that market
as well.
 Mutual Fund, the concept is widely known, but many people are still unaware
about various schemes of mutual fund, increasing awareness is also very
important thing.
 There is a need to introduce very aggressive scheme which can give maximum
returns to investor as they are more concern about return, transparency and
regular income than risk and liquidity.
104
CONCLUSION
105
CONCLUSION
The present study looks at customer expectation levels in a mutual fund product. This
kind of customer orientation is necessary in a market like India where the market is
turning competitive due to large number of players with varied financial muscle powers
and expertise of reinvestment. The small investors purchase behaviour does not have a
high level of coherence due to the influence of different purchase factors. The buying
intent of a mutual fund product by a small investor can be due to multiple reasons
depending upon customers risk return trade off. Due to the reduction in the bank interest
rates and high degree of volatility in Indian stock market, investors are looking for an
alternative for their small time investments which will provide them a higher return and
also safety to their investments. The bond market is also passing through a recession due
to its interest parity with bank instruments. So mutual funds offer the best alternative to
the small investors in India. A prudent product design by adding the features expected by
investors and spelt out in this research will make the new mutual fund products attractive
for the Indian investors. The factors identified in the study provide key information inputs
regarding investor’s preferences and priorities that will guide future mutual fund product
managers in designing attractive mutual fund products for the Indian market.
106
Learning
 Convenience & risk are most important criteria considered by the investor while
investing their money.
 Tax benefit and safety of the investment are most important objective of the
investors.
 Investors are concerned about the returns.
 MF is good investment tool because of several benefits like Professional
Management, Risk Reduction, Flexibility, Transparency and Low Transaction
Cost.
 As Mutual Fund provides more returns than PPF, Post, Bonds, Fixed Deposit, and
Equity in Long Term so more investors are diverted towards it.
 Age group & Income is the most important factor in determining the risk capacity
of individual.
107
LIMITATIONS
108
Limitations of the study
 As we limited time span so it is not possible to cover each & every detail of the
topic.
 Company uses various software’s which have certain financial information and I
as a trainee cannot access them.
 As the samples are taken randomly and population size of Lucknow is large,
sample errors are inevitable.
 The study will heavily depend on primary data which will be collected from
public at large; hence the authenticity of data can be a limitation.
109
BIBLIOGRAPHY
110
Bibliography
Books:
 Broadbridge,A..and Morgan,H. 2001. Consumer buying behaviour of, and
perception towards retail brand buying products. J. consum. cult. Vol.30(4): 25-
53.
 Davis, H. and Rigaux 1974. Perceptions of marital role in decision processes.
Journal of Consumer Research, p.51-62
 Freda Gnana Selvan (1995). New year discountsale – The psychology of price.
Indian.J.Market. Vol.24 : p.11-15
 Gaur, S.S and Vaheed,K.A. 2002. Study of buying behaviour for branded fine
rice.Indian J. market. Vol.32(7): p.33-36
 Gupta, H.P. and Singh, R. (1989). Consumer’s brand choice behavior for
televisions. Indian.J.Market. Vol.19 : p.17-22.
Website:
 https://www.scribd.com/doc/53607884/Analysis-of-Customer-Attitude-
Preference-and-Satisfaction-Level-of-Mutual-Fund-Investment
111
ANNEXURE
112
QUESTIONNAIRE
(Note: This information is used only for academic Purpose.)
Personal Details:
Name: ____________________________________________Age:__________
Address:_________________________________________________________
E-Mail: ______________________________Contact No.:__________________
Designation:__________________
Professional Details:
1. Business Job/Service
2. Annual Income:
Up to 2 lac 2 lac to 5 lac Above 5 lac
3. Where do you invest?
Bank Deposit Share Market
Mutual Fund
Others_____________________________________
4. Are you a regular investor?
Yes No
5. If in Mutual Fund than in which scheme
_________________________________________________________
113
6. If not, Want to invest in Mutual Fund in Future
Yes No
7. What do you do for saving your Tax?
__________________________________________________________________
____________________________________________________
8. Are you aware about all the features of Mutual Fund?
Yes No
9. Would you like to have information on Mutual Fund?
Yes No
10. What do you consider during making any investment?
Transparency Liquidity Returns
Tax Saving Regular Income Risk
Signature
Thank You…
114

Consumer Behaviour Towards Mutual Fund

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Consumer Behaviour Towards Mutual Fund

Uploaded by

Copyright:

Available Formats

SUMMER TRAINING REPORT

has supported me in my project.

I would like to extend my sense of acknowledgement to learning Experience. I would like to

largely to their wise counsels, concrete and constructive suggestions.

Ankit Kumar Yadav

Chapter I Page Nos.

2. Company profile 53-84

3. Objectives of the study 84-85

4. Research Methodology 86-88

5. Data Analysis & Interpretations 89-98

this sense, “consumer is the supreme in the market”.

that suggest new.

consumer goes through the process of making his decision.

sociology, socio psychology, anthropology and economics. It attempts to understand the

of individual consumers such as demographics, psychographics, and behavioural

variables in an attempt to understand people's wants. It also tries to assess influences on

Consumption is the “process of production, acquisition, utilization and destruction of

goods, services, experiences or places”

1) Youth – 60% of India’s teens stay in rural area.

STAGES OF CONSUMER BUYNG PROCESS

The 6 stages are:

become a drive. A need can also be triggered by external stimuli.

simply enter heightened attention.

personal sources (family, friends, neighbors, acquaintances), commercial sources

media, consumer-rating organizations), and experiential sources (handling, examining,

but personal sources legitimize or evaluate products for the buyer.

People often ask others—friends, relatives, acquaintances, professionals—for

recommendations concerning a product or service. Thus, companies have a strong

3. Evaluation of Alternatives--need to establish criteria for evaluation, features the

Marketers try to influence by "framing" alternatives.

purchase decision. The first factor is the attitudes of others

benefits. However, unexpected events may change the purchase intention.

performance. If the product falls short of expectations, the consumer is disappointed; if it

meets expectations, the consumer is satisfied; if it exceeds expectations, the consumer is

Why is it so important to satisfy the customer? Such satisfaction is important because a

to retain current customers is to keep them satisfied. Customer satisfaction is a key to

merely meeting the expectations of customers—they aim to delight the customer. A

product and company.

A dissatisfied consumer responds differently. Whereas, on average, a satisfied customer

tells 3 people about a good product experience, a dissatisfied customer gripes to 11

damage consumer attitudes about a company and its products.

Therefore, a company would be wise to measure customer satisfaction regularly. It

TYPES OF COMSUMER BUYING BEHAVIOUR:

Types of consumer buying behaviour are determined by:

Level of Involvement in purchase decision. Importance and intensity of interest in a

product in a particular situation. Buyer’s level of involvement determines why he/she is

others. High involvement purchases--Honda Motorbike, high priced goods, products

The four type of consumer buying behaviour are:

Routine Response/Programmed Behaviour--Buying low involvement frequently

automatically. Examples include soft drinks, snack foods, milk etc.

COMPLEX BUYING BEHAVIOUR:

involvement products must understand the information-gathering and evaluation behavior

of high-involvement consumers. They need to help buyers learn about product-class

important attributes. Marketers need to differentiate their brand's features, perhaps by

DISSONANCE- REDUCING BUYING BEHAVIOUR:

example, consumers buying carpeting may face a high-involvement decision because

quickly. They may respond primarily to a good price or to purchase convenience.

good about their brand choices.

HABITUAL BUYING BEHAVIOUR:

learning, followed by purchase behavior, which may or may not be followed by

repetition of short-duration messages. Television is usually more effective than print

media because it is a low-involvement medium suitable for passive learning. Advertising

planning should be based on classical conditioning theory, in which buyers learn to

identify a certain product by a symbol repeatedly attached to it.