Chapter - I

Introduction
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CHAPTER - I

INTRODUCTION

Modern era is the era of Globalisation and it is the right time to think
globally and act locally. The notion of globalization indicates connection,
integration and interdependence in the world leading to advancements in
science and technology, transmission of information with the help of
electronic computers and communication devices. The process of
globalisation exhibits numerous possibilities and challenges.

The process of Globalisation refers to the process by which the world

is being made a single place and also a global village. It is transforming and
integrating societies.

“Global integration of many former national economies into global

economy mainly by free trade and free mobility; but also by easy or
uncontrolled economic purposes” said by Herman E.Daly about Globalisation
phenomenon.

It is a phenomenon, the “Dynamic Force” behind global integration of

world economies, trade, finance, communication, and transport.

Globalisation process has led to economic growth and social

development in all walks of life, society and business. Change is the eternal
law of nature. Everything is changing according to the need of the time.
Change is the need and order of today’s modern world. Globalisation has
been the basic mantra after 1991. So, everyone thinks of being global.
Liberalization, privatization and globalization (LPG) are the basic concepts of
success in all aspects of development.
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Competition is the driving force behind the challenges that everyone

has to face. Competition has become tough now due to globalization.

Today, the global economy is called as knowledge driven economy.

This calls for growth in trade, investment, technology, cross border
production systems, information flows and communication. The presence of
globalization is realized everywhere. Globalisation is a positive force and we
can foresee a world of happiness as a result of globalization.

Globalisation is an inevitable process which is the key to rapid

economic growth. It is a new word that has occupied an important place in the
lives of the people all over the globe.

Globalisation process impacts all the people on this globe in one way
or other. It is an inevitable process which is the driving force and is the key to
rapid economic growth and poverty reduction in developing countries.

The people on the globe live in the “Age of Globalisation”. It is a

phenomenon that has affected all human worldwide but in a different form
and degree. It’s impact is seen everywhere and thus making this phenomenon,
as an important issue.

Today’s globalised world is a changing world. Everyone, be it an

individual or a firm has to compete for better success. Marketing is the major
concept behind any kind of business, especially services like banking and
insurance.

The phenomenon of globalization has given rise to the growth of

Multinational Companies (MNCs), the major path maker for economic
growth. After globalization, marketing of products and services have taken a
new dimension and it is the most challenging task now.
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Marketing of products and services after globalization has become:

More customer centric one.

Mostly service based.

More competitive.

The Economic Value Addition (EVA) has become the major concern
in case of all types of business activities, be it a product or a service industry.

In a nutshell, it is rightly said that Globalisation process decides the

way in which the people on this universe have to lead their lives.

Need and Importance of the study

The Liberalisation and globalization of Indian economy have brought

the potential private players in banking and other insurance services. A
thriving insurance sector is of essential significance to every growing nation
like India, because it encourages the people to save, provide safety and
security to the people of India. This calls for the opening up of insurance
coverage to private sector and is considered as the most welcomeable one in
the present economic climate.

These private sector organizations exert the momentum of competition

to the public sector banks and insurance companies. Amid this heavy
competition, the service qualities, customer satisfaction are found to play a
predominant role.

Globalisation has brought global players in competition with domestic

players. Global firms are very big and always give a tough competition to the
local service providers. In this Era of severe competition, every domestic firm
has to face challenges and find out innovative and creative strategies inorder
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to survive and withstand in the market. The survival of the fittest is the mantra
of globalization.

The liberalization of the financial sector in India is taking Indian

insurance and banking companies to a new competitive environment so as to
move towards a better tomorrow. The meaning of the word “global” indicates
“change”. Therefore it is boldly said that liberalization and globalization have
nearly changed the spirit, enthusiasm of private players in the insurance and
banking services market.

The ultimate effect of globalization on the economy is development.

Globalisation process will bring progress through a continuous expansion of
market and so it is the driving force behind the future economic development
of a nation.

The liberalization and globalization of Indian economy have impacted

the importance of private sector banks which further increased their growth.
They provide multivarious new services to their customers and prove
themselves as strong competitors to public sector banks. The changes in
Information technology have made the banks to provide more customer
focused services.

The private sector banks brought the state of the art technology to the
banking system. Both the Insurance and banking companies strive to identify
customer requirements and develop strategies that help them to meet or beat
the service qualities shown by their competitors. Customer satisfaction is one
of the core aspect of banking and insurance services.

Therefore the present juncture compels the researcher to shortly

measure the impact of globalization of the economy on the consumer
behavioural aspects towards banking and insurance services.
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OBJECTIVES OF THE STUDY

1. To study the socio economic profile, of banking and insurance

consumers.

2. To analyse the factors influencing consumer behaviour towards

banking services and insurance products

3. To analyse the relationship between globalization and information

search and service availability perception of consumers

4. To measure the influence of demographic details of consumers on

globalization awareness

5. To study about the influence of globalization on consumer behaviour

towards banking services and insurance products

6. To offer suggestions and recommendations to banks and insurance

companies.

HYPOTHESES

Hypothesis 1: The factors of economic globalization perception of

consumers of banking services and insurance products do not differ
significantly.

Hypothesis 2: There is no significant influence of globalization factors

on information search of consumers of banking services and insurance
products.

Hypothesis 3: There is no significant influence of globalization factors

on consumer preferences towards banking services and insurance products.
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Hypothesis 4: There is no significant influence of demographic details

of consumers on their economic globalization awareness

Hypothesis 5: There is no significant influence of globalization on

consumer behaviour towards banking services and insurance products.

SCOPE OF THE STUDY

This study pertains to analyze and evaluate the influence and the
impact of globalization on behavioural attitude of consumers towards the
banking services and insurance products. It is focused to study the
repercussions of globalization on consumer’s inclinations towards the banking
services and insurance products. Earlier studies have focused on aspects like
service quality, and life style pattern. The scope of this study is extended to
analyse the effect of globalization in terms of preference, information search,
purchase decision, customer’s satisfaction, post globalization consumer
behavior towards banking services and insurance products. The main scope of
the study is to understand, how globalization has changed the mind of
consumers by offering a competitive and cost-effective market. It focuses on
identifying various factors which influence and motivate the consumers to opt
for banking services and insurance products which have become
indispensable for consumers.

RESEARCH METHODOLOGY

The present study is descriptive in nature and adopts the survey

method. A structured unbiased questionnaire has been used to collect the
information. Efforts have been also taken to collect all the published
information through available references and materials.
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SELECTION OF BANKING AND INSURANCE SERVICES

Banking services and insurance products have become a part of every

family in the society. With the lot of finance, services like Mobile banking,
SMS in respect of deposits and withdrawals of cash, RTGS, ECS for utility
payments, E-transfer of money and ATM Services have reached a common
man. Life Insurance products of both the public life insurance company (LIC
of India) and private life insurance companies offer multi featured policies to
the public which play a vital role, in one’s life.

To identify the banking services and insurance products for the present
study 1023 sample respondents have been asked about the various globalised
Banking and Insurance Services. Based on the responses, the services utilized
and the products possessed by most of them have been considered for further
study. Therefore the researcher has considered in general, all the banking and
insurance services.

DESIGNING THE QUESTIONNAIRE

The questionnaire used for the study has three constructs. The first
construct is to arrive at the demographic factors of the respondents. It has
queries like the age, education, income level, occupation and area of residence
of the respondent.

The second construct is to identify the globalization dimensions of the

respondents. It consists of data pertaining to the banking services, insurance
product awareness, comparing skills related to such services and products,
mode of payment and distribution outlet. These have been studied on
(Optional questions) objective questions and also considered as independent
variables, having derived out of both national and international studies.
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The third construct is about the details regarding the banking services
and insurance products and attitudinal behaviours of consumers. These are
studied on a five-point scale ranging from 1- strongly disagree to 5-strongly
agree. A list of 45 statements has been selected after a literature survey of
various studies. It has questions like: the impact and influence of globalization
on the different banking services offered to and availed by them and insurance
products held by them.

PRE-TESTING OF THE QUESTIONNAIRE

The questionnaire used for the study has been pre-tested on a sample of
50 respondents chosen randomly and eliminate ambiguous terms and
instructions. The required changes are made in the light of the comments
received. A pilot study on 50 respondents has been undertaken to find out the
number of banking services availed by them and the insurance products held
by them. The study also aims at finding out the various attributes of
globalization that influenced, the consumer’s preferences, information search,
purchase decision, their behavior and satisfaction amid and also during post
globalization period.

Reliability of the consumer attitude construct (final version) has been

tested with the help of Cronbach alpha coefficient. It is found that the scale
has a reliability coefficient of 0.86 which is considered sufficient and
adequate for the study. This implies that the questionnaire is reliable at 86
percent level and can be used for the main study.

AREA OF STUDY

The study has been conducted in Chennai city in the State of Tamil
Nadu in India. The rationale behind the choice of Chennai is explained below:
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Chennai is identified as “Sixth Business Friendly City out of the Top

Ten Business Friendly Cities” by the Confederation of Indian Industry
(CII) with the ranking criteria of communication, private finance,
literacy, income level, economy and overall rating.

The sprouting growth of Information Technology (IT) and Information

Technology Enabled Services (ITES) has led to a change in the
banking and insurance consciousness of the people residing in the
study area.

The area is estimated to account for a major share in the total banking
services and insurance products market in Tamil Nadu.

The respondents have been accustomed with various banking services

and life insurance products.

Chennai city has amazing mixture of population ranging from lower

income to upper income class.

SAMPLING DESIGN

Simple random procedure has been used for selecting the samples from
the huge population of the consumers of banking services and insurance
products in Chennai city. After testing its reliability, the revised questionnaire
has been administered to a total of 1154 respondents throughout Chennai in
which the respondents returned only 1045 out of which 1023 have been
completely filled and used to conduct the research. Hence the sample size is
determined at 1023.
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SELECTION OF VARIABLES

The Variables used in the study are :

The dimensions of Globalisation

The Banking services and insurance products.

The preference of the consumers has been influenced by various

factors like the influencers, the media, the perception of the consumers
regarding the banking services and insurance products, the attributes and the
after sales service factors. The purchase decision variables selected for the
study are:

The influencers

The sources of information

The perception of the Consumers on selecting the banking services

and insurance products.

Opinion on purchasing such selected services and products.

The attributes of such banking services and insurance products.

ANALYSIS OF DATA

The primary data collected from the consumers have been analyzed,
using the following statistical tools using SPSS package.

Factor analysis

In order to identify the consumer attitude dimensions, the Principal

Component with Varimax Rotation has been applied on the responses of the
construct.
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Cluster Analysis

Cluster Analysis has been applied to segment the sample respondents

on the basis of their consumer characteristics. “K means” clustering technique
was applied to the attitude dimensions. By trial and error method, a three
cluster solution has been arrived at. Canonical discriminant analysis has been
applied to find out the validity of the three cluster solution. The reliability of
the eight-dimensions has been analysed through analysis of variance.

Multivariate analysis

The impact of demographic variables on the characteristics of

globalization has been studied using the multivariate analysis. The same is
also used to study the impact of the demographic variables on the purchase
decision of the selected services, and insurance products based on the
attributes of such services and products.

Anova

Analysis of variance has been used to find out the impact of the
influencers (family members, friends and relatives, company sales persons
and the agents etc) on the purchase decision of the selected banking services
and insurance products on the respondent’s purchase decision of such
services, products.

Paired Sample Test

To analyse the perception of the respondents regarding the requirement

of the selected services, and insurance products, paired sample test has been
applied.
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Chi Square Test and Correspondence Analysis

Chi Square test has been used to find out whether the respondents
differed in their demographic variables or not. The Chi Square test and the
Correspondence analysis are applied to study the banking and insurance
companies choice behavior exhibited by the consumer segment.

LIMITATIONS OF THE STUDY

The study has few limitations:

1. The data have been collected only from Chennai City.

2. The banking services and the insurance services market seems to be

very large. Hence, the size of sample is determined at 510 banking
consumers and 513 insurance consumers.

3. Any study of consumer’s attitude can’t provide enduring findings

over a time because of behaviourial changes of consumers.

4. The period of study is confined to the period from 2011 - 2014.

CHAPTERISATION

The different processes regarding the study have been discussed in six
chapters. The contents of each chapter is given below:

Chapter – I: Introduction deals with globalization and consumer

attitude, behaviour, objectives of the study, hypotheses, research
methodology, area of the study, scope and limitations of the study,

Chapter- II: Sketches the review of related literature relevant to the

present study.
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Chapter – III: This chapter relates to the conceptual framework of

globalization and consumer behaviour and also it provides the profile of
banking and insurance industry.

Chapter – IV: Factors of Globalization influencing Consumer

Behavior - An analysis.

Chapter – V: Impact of Globalization on preferences of Consumer

towards Banking services and Insurance products - An analysis.

Chapter – VI: Deals with summary, findings, conclusions and

suggestions - Scope for further study - summarizes all the results obtained
through statistical analysis to arrive at conclusion and to offer suggestions.