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Combined reading and cases for PGPM: 2015

Gap Analysis

Predictive Modeling in credit card companies

What people look for in credit cards are various convenience features to facilitate purchase of
items. However the features needed in credit cards are different in different economic segments.
For class A and B , the customers look for features such as :

(a) international acceptance

(b) accessible payment centers

(c ) higher credit limits

(d) wide acceptance

However, for class C category, customers look for :

(a) low interest rates

(b) wide acceptance

(c ) ease of international use

(d) accessible payment centers etc.

Credit cards are predominantly used in departmental stores ,restaurants, supermarkets, drug
stores , electronic stores etc.The main acquisition channel is usually through applying to the
banks and through their sales agents.

Segmenting credit card market in the Philippines

Category AB segment C-segment D-segment

Income (> 50,000/month) (15,000- 50,000) (8,000- 15,000)

Spend/month 12,000 5,900 3900

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No. cardholders 300,000 600,000 500,000

Billing/month 3.702 B 3.725 B 2.06 B

Total revenue 0.878 B 1.649 B 1.262 B

Kinds of cardholders

(a) Transactors who use the credit cards and pay off the dues every month . Banks generate
income from these cardholders through annual fees, sometimes on late payment charges etc.
These people are the predominantly on-time payers.

(b) Revolvers who use credit cards as financing tools. They do not pay the full amount of
their total outstanding balance but only pay the minimum amount due or pay in installments.
They are charged interest on the unpaid charges by the banks. Banks earn most from these
customers as they charge higher interest rates of about 2.9 % to 3.5 % per month ,for this
category of cardholders.

Gap Analysis Application for credit cards:

This analysis was carried out to determine which features of the credit card are considered
significantly important by users of credit cards in general. In addition the analysis also helped to
do a competitor analysis amongst several credit card companies operating in the industry. For
this purpose the following attributes were used:

(1) International acceptance

(2) Accessible payment centers
(3) Higher credit limit
(4) Ease of international Use
(5) Wide acceptance
(6) Low interest rates
(7) Brand value
The seven attributes are rated on a 4-point scale in this case. The ratings are on
importance attributed to each item, above, as well as on satisfaction obtained on each
with respect to different credit card companies.
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Identifying significance of key success factors in a contact center context

Delphi approach

Contact Center is a part of outsourcing industry. Over the last few years the growth in the
contact centers has been explosive. This has been largely because the global businesses have
preferred to outsource their call center operation so as to save on the initial capital investment.
Over the last one decade, the industry has evolved from being a sole call center to a contact
center and as it finally moves into the stage of service center , companies are going to be heavily
dependent on technology and operational efficiency to attract and sustain new businesses.

A researcher is set to determine the key success factors of the contact center industry . To arrive
at his objective he decided to carry out a Delphi technique approach where he would develop a
very short questionnaire ,interview a few key industry experts ,familiar and knowledgeable in
this field and ask them to rate a list of 10 to 15 possible key success factors of BPO companies in
the Philippines ,on a 5-point scale where

1=least significant 5= highly significant

The researcher planned to interview experts both residing in the Philippines (domestic experts )
as well as those residing in the US ,whom he would interview over long distance telephone call.

The list of possible key success factors would be :

(1) Quality, pertaining to the ability of the service provider to commit a certain level of quality
standard. For example, a lower rate of call response time ,blockage time would indicate higher
level of quality.

(2) Portfolio of services ,relating to the number of related service that a contact center can offer to
its customer. A greater number of services in the portfolio would indicate larger revenue because
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of cross selling and a higher customer satisfaction due to a one stop center experience for all
needs of a customer.

(3) Number of locations , higher number indicating cost advantage and ability to recruit talent.
Contact centers having operations in prime as well as non-prime areas

have less attrition rates and so the cost of training and recruitment goes down. Also locations in
non prime areas require less capital investment and working capital because of lower real estate
prices , power prices and lease/rent.

(4) Number of employees ,having direct correlations with the ability to take on large projects and
meet difficult deadlines.

(5) Industry-academia tie up , bringing state of the art knowledge to the contact center and
possibility of recruiting good talent from college.

(6) Breadth of vertical industry. Serving a highly diversified customer base in different vertical
industry helps in reducing the cyclical nature of the different client business models . The business
model of a call center is such that the revenue is directly a function of the number of calls it takes.
Since the majority of the services in the Philippines is that of customer care, the volumes of calls
received is directly proportional to the revenue of the clients in that particular year. If the business
of client is cyclic it turns out that the business of service provider also becomes cyclic.

(7) Breadth of language skills, because it always pays for the contact center to have the ability to
work in different language levels.

(8) Training, referring to the ability of the service provider to train its employees on ever changing
process technology to meet client requirements. Competitive advantage in providing quality
training is the key to minimize cost (less attrition, better employee growth prospect) and
increased revenue ( better technology and higher service level commitments and fulfillment )

(9) HR practices, indicating cost efficiency and quality commitments of the service provider.
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(10) Process certifications. In a highly competitive environment certifications like BS7799(process

security) ,BS15000 (process efficiency and transparency ) and CMM ( Capacity maturity model)
give a competitive advantage to the players in terms of winning businesses from new clients.

(11) Cost of services. The entire logic of outsourcing is based on the cost competitive advantage.

(12) Number of marketing cells at client site. Number of marketing offices at the client site
signifies the ability of a service provider to make itself available to the clients needs.

The questionnaire used

Assignment for Small Sample Scenario

Key Success Factors for a BPO company as perceived by their corporate clients.

KSF considered :: Indicator variables:

V1:quality

V2:portfoli

V3:noofloca

V4:noofempl

V5:industry

V6:breadtho

V7:breadt_a
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V8:training

V9:hrpracti

V10:processc

V11:costofse

V12:brand

V13:marketing

V14: size (three- size categories 1=small; 2=medium; 3=large)

n=13

Assignment:

(1) Are these ksf considered significant by corporate clients of BPO Co?

Conduct t- test for significance on ksf above.

Which of them, if any, could be considered significant ?

(2) Look at the bivariate correlations between different KSF using Spearmans rank correlation (applies
to small sample).

Which of the KSF are significantly correlated with each other (look at * and ** ).

KSF Quality of service delivered, is it significantly related to any other KSF ?

What is the insight you get from this correlated matrix ?

SPSS command : Statistics/Analyze correlate bivariate Spearman

(3) Does size of client corporations have any effect on their perceptions?
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Conduct Kruskal Wallis test on three latent constructs with size as the grouping variable.

SPSS commands : Statistics/analyze nonparametric k independent sample

(4) Consider size categories 1 and 2. Do both of them have same perceptions (averages) on the ksf ?

Conduct Mann-Whitney test .

SPSS commands : Statistics/analyze non parametric 2 independent samples

Test variables : all ksf.

Grouping variable is :size.

Similarly conduct Mann-Whitney test for size categories 1,3 and 2,3.

What does the result of this test tell you ?

(5) Look at associations between KSF. Conduct Chi-square

contingency test on all KSF with size.

What do the results tell you?

SPSS commands : Statistics/analyze summarize crosstabs

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Gap Analysis :

Predicting consumers preference for medical treatment

Every person has to utilize the services of a doctor during his/her lifetime. All of us go to doctors
for ailments ranging from the common cold / cough to the chronic ailments like cancer,
tuberculosis etc. While we do so, we have an option to select from amongst the different kinds of
medical treatments available viz. allopathy, ayurveda, homeopathy and other alternate medical
treatments like reki, yoga etc.

To determine which attributes are found to be significantly important when a consumer chooses
a particular medical treatment, an empirical study was conducted where responses were
considered on a 4-point scale for following attributes:

Quick effect
No side effect
Cost
Ease of Availability
Reliability of the practitioner
Prevention vs. cure
Years of experience.

The sample means and standard errors were obtained as.:

quick noside cost ease relia prev expn

Mean

Standard
Error

Risk Assessment by Monte Carlo Simulation : EXCEL and Crystal Ball.

Simulation is one of the most widely used quantitative approaches to decision making. Here one
observes a real life system and then constructs a model that represents the system. The
simulation contains the mathematical expressions and logical relationships that describe how to
compute the value of the outputs given the values of the inputs.
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Any simulation model has two inputs:

Controllable inputs/ controllable variables
Probabilistic inputs/ random variables

Probabilistic inputs

Controllable inputs
Output

Case : North western company

Northwestern Inc. produces valves on a weekly schedule.

Shipments are made to two customers, A and B. The customers enter orders , by phone, every
friday after their weekly maintenance inspection is completed and want immediate delivery. Past
experience has indicated the following demand pattern:
Customer A orders 15 valves 35 % of the time or 20 valves 65 % of the time
Customer B orders 25 valves 20 % of time; 30 valves 40 % of the time or 35valves in the
remaining cases.

Probability distribution and random numbers:

Customer A

Valve prob cumulative prob random numbers assigned

15 .35 .35 00-34
20 .65 1.00 35-99

Customer B

Valve prob cumulative prob random numbers assigned

25 .20 .20 00-19
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30 .40 .60 20-59

35 .40 1.00 60-99

The company would like to meet all demand at least 95% of the time. The production manager
thinks that he can do it with a weekly production schedule of 48 valves. Valves not demanded on
Friday are used as safety stock which currently stands at five units. Demand that cannot be met
from production is met from the safety stock. Demand that cannot be met is considered as lost
opportunity.
Compute average weekly profit if one valve brings $ 27.50.

Week RN1 demand A RN2 demand B total demand left over lost sales sales

1 63 20 34 30 50 3 0 50

2 87 20 66 35 55 0 4

3 06 15 12 25 40 8 0

4 51 20 87 35 55 1 0

Enhancing competitive advantage by energy cost reduction

The management of Country club ABC proposes to set up an in-house bio-gas power generation
outfit by collecting their in house kitchen waste and feed it as input material to the bio-gas plant
which will thereby generate methane. The methane can subsequently be used to generate power
to be used in the country club facility as well as be used in the kitchen, thereby reducing the huge
fuel-cost incurred by the country club..

The Plant would require a total initial cost of $10,000 , would have an estimated economic life
of about 8 years and would give a significant cost saving.
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All the same the management wanted to get an estimate of the risk associated with the cost
saving to be accrued in the facility.
To estimate the risk, the country club obtained the following probability distributions.
Initial cost in dollars :

Cost probability estimate cumulative probability random numbers

8,000 .05 .05 00-04

10,000 .80 .85 05-84

12,000 .15 1.00 85-99

Economic life:

Economic life probability cumulative random numbers

(in years)

5 .10 .10 00-09

6 .20 .30 10-29

7 .40 .70 30-69

8 .20 .90 70-89

9 .10 1.00 90-99

Cost saving per year prob cumulative random numbers

2000 .20 .20 00-19

3000 .40 .60 20-59

5000 .40 1.00 60-99

===============================================================
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Risk assessment under the assumption of uniform distribution

Initial cost has Uniform Distribution on the range 8000 to 12,000

Cost Saving has Uniform distribution on 2000 to 5000.

Risk assessment under the assumption of Normality

The Country Club Management also wanted to conduct the risk assessment as per
another set of probability distributions, as determined by an external consultant, as follows:

Initial cost having a Normal distribution with mean $ 10,000 and

Standard deviation, sigma = $2000
Economic Life having the same discrete distribution
Cost saving having a Normal distribution having mean $ 3000 and
standard deviation= $ 500.

Comparing Project proposals for marketing two separate products in different markets :
Monte Carlo Simulation Wilton Toy Company.
In May 2010, Mr. Brian Cunningham, President of Wilton Toy Company, was evaluating two
new product proposals for two separate market segments, to determine which one his company
should accept. After the two proposals had each reached the final planning stages, Mr.
Cunningham reviewed the companys financial position and decided that only one new product
proposal could be undertaken at that time.
He wanted to select the most profitable venture but, more so, he hoped to avoid a great deal of
risk.
In the past, Wilton Toy had always calculated the before tax return on investment that could be
expected for a new venture. When two or more proposals were in the final planning stages and
were competing for the same funds, the Return on Investment, ROI, was used as the determining
factor.
The two proposals being considered in May recommended that Wilton produce a toy pistol or a
plastic mini motorcycle replica. Sales estimate for the pistol were made with considerable
confidence since the market potential was well known for this kind of product. The sales
manager believed that 30,000 pistols could be sold at a price of $ 4.00 per unit. The project
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would require an investment of about $110,000 and would incur $ 4,000 fixed costs and $3 per
pistol variable costs.
The sales manager, however, experienced considerable difficulty in making a sales estimate for
mini motorcycle due to the novelty and the uniqueness of the toy. After considerable discussion
and deliberation, the sales manager set the best estimate for motor cycle sales at $ 6,000 units for
Wilton s $11.50 selling price. The required investment would be $ 116,000 while fixed costs
would be $ 5,000 and variable cost would be $ 6.00 per motor cycle.Mr. Cunningham realized
the ROI for the motor cycle proposal was 24.1 % compared to 23.6% for the pistol, but he was
worried about the uncertainty of the motor cycle sales volume. So he hired a consultant to
suggest how uncertainty could be better estimated in the two proposals.
The consultant identified three random variables for each proposal and estimated probability
distributions as follows. Thereafter he planned to run Mote Carlo Simulation to illustrate the risk
by revealing the spread of possible outcomes for each proposal.
Table 1 : Wilton Toy Company Sales Forecasts
Toy Pistol Motor cycle
Estimate probability estimate probability
24,000 .05 2,500 .05
28,000 .25 3,500 .25
30,000 .20 6,000 .20
31,000 .25 7,500 .30
33,000 .20 9,000 .15
36,000 .05 11,000 .05

Wilton Toy Company Investment forecast

Toy Pistol Motor cycle
Estimate probability estimate probability
106,000 .05 113,000 .05
108,000 .10 115,000 .20
109,000 .15 116,000 .25
110,000 .20 118,000 .20
112,000 .30 120,000 .20
115,000 .20 123,000 .10

Wilton Toy Company variable cost forecast

Toy Pistol Motor cycle
Estimate probability estimate probability
2.94 .05 5.85 .05
2.96 .20 5.90 .15
2.98 .15 5.95 .20
3.00 .10 6.00 .10
3.02 .20 6.05 .25
3.04 .20 6.10 .15
3.07 .10 6.15 .10
----------------------------------------------------------------------------------------------------
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Consider the Wilton Toy Case above.

Conduct Monte Carlo Simulation and recommend which product idea is to be pursued.

Case on probability distribution of IRR by Crystal Ball.

Monte Carlo Simulation by Crystal Ball

A company is thinking of investing in a new venture involving setting up a vocational
educational facility for the family members of its employees. The facility would also be open to
general public after giving priority to the company employees. The facility is expected to
generate a net yearly cash- flow of INR 200,000 growing at an yearly rate which is normally
distributed with a mean of 4% and standard deviation of 1%. ( The yearly average growth rate is
assumed to be the same for all years). The project is expected to continue for 10 years.
The initial investment required for the facility is estimated to be normally distributed with a
mean of INR 450,000 and standard deviation of 150,000. The operating cost = 50% per
year.
Run Monte Carlo Simulation on Crystal Ball software for 1000 runs. Find
(a) Mean IRR= (1) 12 -15 % (2) 15-20% (3) 20-24%
(4) 24-30%

(b) P (15% < IRR < 20 % ) =

(c) Probability ( 20 % <= IRR <=25%) = 9.02/10.00

(1) 20-35 % (2)35-50% (3) 50-58% (4) 58-68%

(d) What is the spearmans rank correlation between IRR and growth rate3: =

(a) 28-35% (b) 35-45% (c) 45-55% (d) 55-65%

(e) How many assumption variables do you have?`
(a) 2 (b) 3 (c) 11 (d) 12

Simulating Returns on portfolio:

A company wants to invest in 4 different stocks in IT, FMCG, Steel and Real-estate.
The total investment will be $5000.
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The percentages invested in the 4 stocks will be 10%, 25%, 35% ,30%.
The yearly percentage return are : R1, R2, R3, R4,
So the return on the portfolio = ( 0.10*R1 + 0.25*R2 +0.35*R3 +0.30*R4)*5000.
R1 has a normal distribution with mean 15 %, standard deviation 20%,
R2 has a normal distribution with mean 5 %, standard deviation 10%,
R3 has a normal distribution with mean 4 %, standard deviation 10%,
R4 has a normal distribution with mean 10 %, standard deviation 20%,
(1) Customer Lifetime Value ( LTV) for consumer segments at Portacom.

LTV is the expected profit that a company will realize from sales to a particular customer in
the future. Although it builds on past customer history, LTV is all about future. It is based,
primarily, on the customers expected retention and spending rate, plus some other factors that
are easy to determine. To understand LTV, consider the following table.

acquisition second
year year third year

customers 100,000 60000 42000

retention rate 0.6 0.7 0.8

orders per yr 1.8 2.5 3

avg order
size 90 95 100 discount rate

total revenue 16200000 14250000 1.3E+07 15%

costs 0.7 0.65 0.65

cost of sales 11340000 9262500 8190000

acqui/mrkcos
t 55 20 20

marketing
cost 5500000 1200000 840000

total costs 16840000 10462500 9030000

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LTV=npv/100,00
npv 0

gross profit -640000 3787500 3570000 $4,654,705.35 $46.55

Based on the above model PortaCom wanted to estimate the CLV for a middle-to-high income
segment which comprised about 100,000 customers.
Now for PortaCom, the retention rate was obtained as a random variable having a Normal
Distribution with mean 0.7 and standard deviation as 0.1.
Retention Rate = N( 0.7, 0.1)
The number of orders per year was found to be having an Uniform Distribution on the domain
0.5 and 2.0.
Number of orders = U( 0.5, 2.0 )
Average order size is a random variable having an Uniform distribution between $60 and $80.
Average order size = U ( 60, 80 ).
The estimated number of customers in the base year, when the portable printer will be launched
= 100,000. This number holds for the particular customer segment PortaCom was interested in.
Cost of sales = 70 % in the base year and 65 % thereafter.
The Acquisition and marketing cost = 55 in the base year and 30 thereafter.
PortaCom assumed the customers would continue to remain customers for a span of 10 years
and under this assumption they estimated the customer life time value for this segment.

Using Probability Distributions in Crystal Ball

Normal : This is the most important distribution in probability theory beaus it describes
many natural phenomena like demand and sales distribution, operating cost incurred,
inflation rates, price distributions lead time, etc. ,
Lognormal : Widely used in situations where values are positively skewed, like in financial
analysis for security valuation or in real estate for property valuation
Triangular Distribution : used to describe situation where oe knows the minimum ,
maximum and most likely value( mode), like car sales for a week, where past sales can give
minimum, maximum and usual number of cars sold.
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Students t- distribution: to describe small sets of data which look like normal but with
thicker tails ( more outliers)
Exponential distribution : for Inter arrival time, time between failures ..related to Poisson
distributions.
Erlang: fot IAT when events are not completely random.
Uniform
Weibull : failure time in reliability studies
Beta distribution: Used in critical path analysis (PERT and CP
Max extreme distribution: Used when we need probabilities of extreme values.
http://www.vosesoftware.com/riskwiki/Probabilitycalculationfunctions.php

Logistic Regression
Case 4: Offering a new product : Product design and Positioning : Arjun Aryan

Think of a simple young individual, Arjun Aryan, who lived in a little township around
Udaipur, India . Arjun inherited a beautiful, historical, ornate, Rajasthani traditional ancestral
home , though falling apart ,surrounded by bajra farm ,cultivated by a farming community
who had been with Arjuns family over generations.
But the farming community and Arjuns family encountered bad times and faced severe
difficulty economically. Arjun witnessed the downturn of his own family and the community
surrounding him and decided to do something about it, someday.
Initially Arjun joined a local medical school but did not forget the idea. Someday he would
renovate his historical ancestral home which came with unique Rajasthani architecture
,carved marble arches, priceless antique collections and even a white marble temple, in the
middle of a fountain lake to a culture tourism destination .
The organization he would thereby set up would be a social enterprise where Arjun would
generate wealth but distribute it back towards the farming community and empower them in the
long run.
Strengths of Arjuns social enterprise would be a great potential product offering, first movers
advantage and human capital advantage . Like any venture ,Arjun knew that he would also have
to deal with a lot of weakness like his property in run down condition and lack of in-house
funding .
So, after graduation, he decided to set up his own clinic in the outhouse of his ancestral house
where decades back the manager of the property would stay .Beside the clinic he would also
maintain a small dispensary which would house some emergency and generic medicines.
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But besides this clinic he would set up a social enterprise, where he would transform his
ancestral house, with its exquisite architecture ,antique furniture ,and art collection to a
historical and cultural place to visit which he would call Sanskriti, essentially a culture
tourism destination in the modern tourism language.
Arjun knew that tourism products such as nature and adventure, health, sports, eco-tourism,
convention and business are already well accepted in this industry. In addition ,new types of
products such as cultural and heritage tourism, health and wellness tourism, learning and
experiential tourism were also being conceptualized.
All the same, before investing on his project Arjun wanted to have a realistic assessment of the
market and determine if there was really a demand for culture tourism destination.
For this purpose Arjun conducted a random survey with a detailed questionnaire where he asked
questions on demography of the respondents and also asked them to rate the importance of
various attributes of a tourism destination.
The question he asked is :

Demography
(a) your age : (a) <20 (b) 20-30 (c)30-40 (d) 40-50 (e) 50-60
(b) sex : Female (1) Male(2)
( c) Marital Status Married Single
(d) Do you have children Yes No
(e) Occupation Other student self-employed salaried
(f) Educational attainment High school college graduate post graduate
(g) Monthly income(in Rupees) 250,000 & over(4) 140,000-250,000(3)
70,000 140,000(2) 10,000-70,000(1)

(h) Are you permanent resident Yes tourist

(1) How often do you go on vacation every year ?

once a year 2 a year 3 times a year more than 3 times a year

(2) How much do you spend on a vacation ?

50,000 & above 20,000-50,000 10,000 20,000 5,000 10,000
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(3) How long is your vacation on an average

<=3 days 3-5 days 5-7 days more than 7 days

(4) What type of a resort do you prefer to go to

Beach Dive Wildlife Golf Mountains Heritage/culture other

(5) When did you last go on vacation

Less than 3 months 3-6 months 6-12 months more than 12 months

(6) How did you find out about the resort you last visited
Previous visit radio ad travel agent travel guide internet newspaper ad
TV ad friend article referred by office
(7) Are you familiar with culture/ heritage tourism yes(1) no(2)
(8) would you be interested in culture tourism destination yes(1) no(0)
Please rate the factors you feel are important for a tourist destination for you.
Not imp somewhat imp imp very imp
9.1 good infrastructure
9.2 accessibility
9.3 modern comfort
9.4 natural setting
9.5 affordability/price
9.6 outdoor/golf tennis
9.7 good food
9.8 locations with old forts
9.9 educational for kids
9.10 indoor/ indoor activities
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9.11snorkeling, trekking
9.12 good dining experience
9.13 ethnic music and dancing
9.14 museum facility/activity
9.15 locations with running water
9.16 locations with natural monuments
9.17 locations with heritage/historical facilities/museum
9.18 beach resorts
9.19 mountain resorts
9.20 boating/water park experience
9.21.trekking/outdoor games
9.22 places famous in history
9.23 traditional rajasthani food
9.24 old world ambiance

(10) How likely would you be to visit Sanskriti ?

Statistics

Predicted probability

Percentiles 20 .0000095

40 .0001406

60 .4289523

80 .9999938
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Launching a dry shampoo brand in India

Based on the Business Analytics project conducted by Abhishek Shastri, Atul Kumar, Ashish A,
Dhananjay Kumar,Roberto Micozzi, Shashikant,and Saurabh Meena at IIM Ahmedabad, 2012.
Dry Shampoo
Dry shampoo is an innovative product which uses powder like substance to work without water.
Following features make them an attractive offer for customers:-

Eco-friendliness
Flexibility
User friendliness
Convenience in use
Customized products
The convenience of anytime and anyplace shampoo is supplemented by environmental
considerations of less use of water. But the idea and effectiveness of a shampoo without traditional
use of water creates suspicion and doubts in minds of consumers.
There are mostly two types of dry shampoos:

Loose powder form

Aerosol(spray) form
Powder dry shampoos can be applied directly on to the scalp from the bottle and either brushed
through or massaged in using your fingers. Dry shampoo aerosols can be sprayed directly onto the
scalp from a few inches away.
The ingredients in dry shampoo soak up oil and dirt on the scalp. When hair appears greasy, its
usually just the roots that need to be refreshed. Applying a dry shampoo effectively soaks up any
oil and dirt, leaving hair looking refreshed and clean.
Many hair types may be sensitive to over washing and may lose their color. So, hair should not be
washed for more than 2-3 times a week. On other occasions, when one is time strapped or one
needs to freshen looks of ones hair dry shampoo may serve as a great option. It is also a good
option for women especially busy women who have problem in washing their long hairs again and
again. Dry shampoo provides a good option.
The idea behind dry shampoo is to remove excess oil from hair follicles without having to actually
wash the hair using a traditional shampoo and water. Households may keep a small amount of dry
shampoo on hand as part of an emergency hygiene kit. In the event that water is not available, the
dry shampoo compound can be applied and provide at least a partial cleansing of the hair.
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Questionnaire for Survey

The following online survey was floated for collecting responses. A total of 116 responses were
received.

Dry Shampoo-BA

This survey is intended to collect information about perception and need of dry shampoo among
consumers. The survey is conducted as a part of Business Analytics, an academic course at IIM
Ahmedabad. The information collected will be used to assess the acceptability of dry shampoo
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and required features of dry shampoo among consumers and would be used purely for academic
purposes.
Rate the following attributes, on a 10-point scale, in accordance with their importance while
deciding which shampoo to buy.
______ Time Saving
______ Ease of Use
______ immediate effect on hair
______ Use by Peer
______ Dandruff fighting Capabilities
______ Anti-hair fall capabilities
______ Contains moisturizers
______ Provides shine to hair
______ Makes hair soft and silky
______ Removes greasiness and oiliness
______ Prescribed by dermatologists
______ Assurance of performance like company certification
______ Saves Water
How frequently do you use your shampoo?
1-2 times a month
Weekly
2-3 times a week
Daily

What is your awareness of dry shampoo?

Used it
Heard of it
Don't know about it
Rate the following benefits ( in 10-point scale, 10 being very important ) in accordance of their
importance with respect to a dry shampoo

______ I can use it anywhere

______ It requires less time for application and drying
______ It does not require water
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Would you use a dry shampoo?

Yes
No
Your Gender: Male, Female

Your Age Category

Below 18
18-25
26-35
36-45
Above 45

Your Family Annual Income (Expected if you are a student)

Less than 3 Lakhs

3 lakhs - 8 Lakhs
8 Lakhs - 15 Lakhs
Above 15 Lakhs
Your Profession

Service (Public)
Service(Private)
Self-employed / Business
Student
Others

Multivariate Cluster Analysis:

Case: Chestnut Ridge Country Club

Filename: chestnut1=2011.sav

The Chestnut Ridge Country Club has long maintained a distinguished reputation as one of the
outstanding country clubs in Elma, Tennessee, area. The clubs golf facilities are said by some
to be the finest in the state, and its dining and banquet facilities are highly regarded as well .
This reputation is due in part to the commitment by the Board of Directors of Chestnut Ridge to
offer the finest facilities of any club in the area.
For example , several negative comments by club members regarding the dining facilities
prompted the board to survey members to get their feelings and perceptions of the dining
facilities and food offerings at the club .Based on the survey findings, the board of directors
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established a quality control committee to oversee the dining room and a new club manager was
hired.

Most recently ,the board became concerned about the number of people seeking membership to
Chestnut Ridge. Although no records are kept on the number of membership applications
received each year, the board sensed that this figure was declining. They also believed that
membership applications at the three competing country clubs in the area Alden, Chalet and
Lancaster were not experiencing similar declines. Because Chestnut Ridge had other
facilities , such as tennis club and a pool ,that were comparable to the facilities at these other
clubs , the board was perplexed as to why membership applications would be falling at Chestnut
Ridge.

To gain insight into the matter, the board of directors hired an external research team to conduct
a study of the country clubs in Elma Tennessee area and assess their market performance. The
goals of the research were (1) to determine peoples overall perception of Chestnut Ridge and
(2) to provide recommendations for ways to increase membership applications at the club.

Assessing trend in the membership application at Chestnut Ridge Country Club

The research team first wanted to check if the hypothesis believed to be true by the Board, that
membership application at Chestnut Ridge was declining, was indeed supported by data.

For this purpose the research team obtained total yearly membership applications from the
accounting office of Chestnut Ridge Country club for the last 10 years.

The data is as follows:

Table 1.1
year Application in numbers
2000 132
2001 135
2002 133
2003 125
2004 126
2005 124
2006 122
2007 110
2008 105
2009 103

Assessing Market Performance

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The research team met with the board of directors and key personnel at Chestnut Ridge to gain
a better understanding of the goals and directions adopted by the company. A literature search of
published research relating to country clubs uncovered no studies. The researchers then decided
to interview country club goers in general including people who were enrolled at the other three
clubs. This interview would be gain insights regarding the needs and preferences of country club
goers which would lead to the development of issues and concerns in designing the
questionnaire which would form the research instrument in the subsequent empirical survey
research.

The research team thought it would be useful to survey members from Alden, Chalet, and
Lancaster in addition to those from Chestnut Ridge for two reasons. One, members of these other
clubs would be knowledgeable about the levels and types of services and facilities desired from a
country club, and, two, they had at one time represented potential members of Chestnut Ridge.
Hence their perceptions of Chestnut Ridge might reveal why they chose to belong to a different
country club.

The researchers obtained a consolidated list of members from all four country clubs which
became the sampling frame for the research. A review of the lists subsequently obtained showed
Alden had 114 members, Chalet had 98 members and Lancaster had 132 members. Thereafter a
sample of 348 was obtained across all four country clubs and the questionnaire mailed to each
individual in the sample. A final sample of size 120 was obtained with the break up as given in
the data sheet.

Questionnaire

questionnaire.

(1) Of which club are you currently a member (1) Chestnut Ridge (2) Alden
(3) Chalet (4) Lancaster

Demography :

(2) your age : (a) <20 (b) 20-35 (c)36-50 (d) 50-60 (e) >60

(3) sex : Female (0) Male(1)

(4) Marital Status Married Single widowed divorced

(5) Number of dependents including yourself: 2 or less (1)

3-4 (2)
5-6 (3)
>6 (4)
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(6) Distance of residence from your club 0-2 km(1) 2-5 kms(2)
2-10 km(3) >10 km (4)

(7) Monthly income less than $ 20,000

$20,000 - 29,999
$30,000 49,999
$ 50,000 99,999
$ 100,000 or more

(8) on the whole how satisfied are you with your country club
(1) not satisfied
(2) neutral
(3) somewhat satisfied
(4) satisfied
(5) very satisfied

(9)The following is a list of factors that are usually important to you in a country club. Please
rate the factors according to their importance in country club.
1=not at all important and 5=extremely important

9.1 golf facilities 1 2 3 4 5

9.2 tennis facility 1 2 3 4 5
9.3 pool facilities 1 2 3 4 5
9.4 dining facilities 1 2 3 4 5
9.5 social events 1 2 3 4 5
9.6 family activities 1 2 3 4 5
9.7 number of friends who are members 1 2 3 4 5
9.8 cordiality of members 1 2 3 4 5
9.9 prestige 1 2 3 4 5
9.10 location 1 2 3 4 5

10)The following is a list of factors that usually influence your satisfaction in a country club.
Please rate the factors according to their extent of satisfaction in your country club.
1=not at all satisfied and 5=very satisfied

9.1 golf facilities 1 2 3 4 5

9.2 tennis facility 1 2 3 4 5
9.3 pool facilities 1 2 3 4 5
9.4 dining facilities 1 2 3 4 5
9.5 social events 1 2 3 4 5
9.6 family activities 1 2 3 4 5
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9.7 number of friends who are members 1 2 3 4 5

9.8 cordiality of members 1 2 3 4 5
9.9 prestige 1 2 3 4 5
9.10 location 1 2 3 4 5

Factor Analysis and Cluster Analysis Datafile = climate change assignment.sav

Awareness to global warming/Climate Change and what community and industry can do

Questionnaire
Objective: To measure (1) awareness to global warming/climate change

Greetings.
Please answer the following questions relating to how aware you are to the phenomenon of
global warming, its impacts as well as to what you can do to lesson its impact in the future.

Demography
Please circle

(a) your age : (a) <30 (b)30-40 (c)40-50 (d) 50-60

(b) sex : Female (0) Male(1)
( c) Marital Status Married Single
(d) Do you have children Yes No

(a) <Bachelors degree (b)Bachelors degree (c)Masters degree

(f) Educational attainment
(d) > Masters degree
(g) income (a) < 20,000 (b) 20,000- 40,000 (c) 40,000 - 60,000 (d) > 60,000
For the next question: NA = not aware
LA = little aware
A = aware
VA = very aware

( Question 1) How aware are you that due to global warming

(1) There will be a prevalence of disease NA LA A VA

( 2) Glaciers will melt NA LA A VA

(3) Sea level will rise NA LA A VA

(4) Many islands will go under water NA LA A VA

(5) there will be increase morbidity and mortality

 29

from diarrheal disease NA LA A VA

(6) rise in coastal water temperature would

increase toxicity of cholera NA LA A VA

(7)natural habitats of vector- and water borne

diseases likely to expand NA LA A VA

Structural Equation Modeling:

Example : Customer satisfaction in banking industry.

Research question : To identify critical factors affecting overall customer satisfaction with
banking service.

Five unobserved variables, latent variables, have been considered.

(1) Responsiveness of service

(2) Speed of transaction
(3) Availability of service
(4) Professionalism
(5) Overall satisfaction with service.

The manifest/indicator variables are:

Responsiveness of service=Q : SD D N A SA

I waited a short time before I was helped

The service started immediately when I arrived
Whenever I had questions they were answered immediately

Speed of transaction :=Usability

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The teller handled transaction in a short period of time SD D N A SA

The teller did not waste any time in completing work
The time taken was shorter than I had expected

Availability of service:=delivery

The financial consultant was available to work

with me at a good time SD D N A SA
My appointment with the financial consultant
Was at a convenient time
All materials needed were made available

Professionalism=Price

The teller talked to me in a pleasant way SD D N A SA

The teller had a professional appearance
The teller carefully listened to what I had to say
The teller knew how to handle the transaction

Overall satisfaction with service

The quality of the way the teller treated me was high SD D N A SA

The way the teller treated me met my expectation
I am satisfied with the way teller treated me.

Developing a structural equation model on the above variables/constructs.

 31

Model NPAR CMIN DF P CMIN/DF

Default model 26 38.297 19 .005 2.016

Saturated model 45 .000 0

Independence model 9 973.654 36 .000 27.046

Default model = my model

Saturated model =best model

Independence model = worst model.

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e1 e2 e3 e4
1 1 1 1

PpleasantPappearance Pcareful Phandle

1
e5 e6 e7
1 1 1
professionalism
Rwait Rimmediate Rquerries
1
1

responsiveness
1
e17
e18

e81 e91 e101

Otreat Oexpect Osatis

1
1
overallsat e19

e14 e15 e16

1 1 1
e11 e12 e13 ASavail ASconv Amaterial
1 1 1
1
Sshort Swate Sexpect
1 availability

speed 1
1

e21
e20

Online Shopping
 33

Latent constructs in the model and their indicator variables

Ease of use is explained by
a. Ease of navigation: Ease with which a customer is able to find/browse a desired
product using the online shopping portal
b. Page load time: Time taken to display the website by the browser
c. Payment options: Cash on delivery, Net banking, Credit card, etc.
d. Check-out-process: Ease with which a customer is able to place an order once he/she
has selected the product
(b)
Quality of product display is explained by
a. Product description: Text description giving details of the product
b. Product review: Reviews about the product by existing customers
c. Product images: Quality of image of the products
d. Range of products: Number of products offered by the online shopping portal
(c)
Price is explained by
a. Price of product: Online price of a product
b. Shipping cost: Cost of delivering the product to designated place, which is charged
to the customer
c. Coupons and discounts: Regular or seasonal discounts and coupons which can be
utilised for shopping
(d)
Quality of delivery and after sales is explained by
a. Customer service: Experience of talking with a customer service executive while
resolving a query
b. Exchange/return policy: Ease with which a customer can return a product if the
delivered product is faulty
c. On-time delivery: Punctuality of delivering a product
 34

(e)
Overall satisfaction is explained by
a. Recommendation
b. Repurchase
c. Satisfaction
 35

Case on SEM

A project report on
 36

Understanding the drivers of customer satisfaction and Customer Loyalty at Caf Coffee
Day

Ankur Banka

Ashwini Kumar

Yugal Tiwari

INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD

Understanding the drivers of customer satisfaction and Customer Loyalty at Caf Coffee
Day

In recent times there has been a spurt in the opening of coffee bars in tier 1 as well as tier 2 cities
in India. Coffee bars have emerged as a Third Place after home and office where people can
socialize over a cup of premium coffee. Coffee, as a beverage has been finding favor with the
youth. International brands like Starbucks have opened shop in India.

In light of the increasing competition, incumbent players like Caf Coffee Day (CCD) have been
feeling the heat. The customers are prone to experimentation and may switch to other brands.

This study was undertaken with the view of understanding how the customers of CCD rate it on
various attributes and understanding the attributes which drive customer satisfaction and customer
loyalty.
 37

Research Design

We were primarily interested in urban customers in the age bracket of 18-35 years, the primary
target group for coffee bars like CCD.

We started out by doing 5 in-depth interviews among this TG to understand what customers look
for from a coffee bar. This resulted in a list of attributes that the customers considered important.

Then a survey was designed to capture the customers evaluation of CCD on these parameters. We
considered responses from customers who have visited CCD in the last 3 months. 124 valid
responses were received.

Data Analysis was done by. Structural Equation Modeling (To confirm and fine-tune our
understanding of the drivers of Customer Satisfaction and Customer Loyalty)
 38

e1
e2 e3
1 e13
1 1
1
Coffee_VarietyCoffee_Quality Food_Quality
1 Ambience
e11 e12
1
productquality
1 Relaxing
1
e10
1 e18
Entertaining
e14 1
Overall_Satisfaction
e5 1 Hang_Out
e4 1
e6
1
Prompt_Service experience
1

Polite_Staff e7 1
1
Knowledgeable_Staff
1 Helpful_Staff e15

servicequality
1
Good_Crowd
e8 e9
1 1 1
e16
Status Cool_to_be_seen_here e19
1

buildingimage 1

e17
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