Project Report On Mutual Fund and Customers' Perception Towards It

Project Report
On
“MUTUAL FUND AND CUSTOMERS’

PERCEPTION TOWARDS IT”
Submitted in partial fulfilment for BBA, C.C.S University, Meerut.
Institute of Management Studies, Noida
Submitted To: - Submitted By:-
Dr. Iram Ahmed Harshit Chaurasia
1591909588
I
DECLARATION
I hereby declare that the project entitled “MUTUAL FUND AND CUSTOMERS’
PERCEPTION TOWARDS IT” submitted for the BBA Degree is my original work
and the project has not formed the basis for the award of any degree, associate
ship, fellowship or any other similar titles.
Place: Signature of the Student:
Date:
II
CERTIFICATE
This is to certify that the project entitled “MUTUAL FUND AND CUSTOMERS’
PERCEPTION TOWARDS IT” is the original work carried out by Harshit Chaurasia
student of BBA C.C.S. University, Meerut, during the year 2018, in partial fulfillment of the
requirements for the award of the Degree of BBA and that the project has not formed the
basis for the award previously of any degree, diploma, associateship, fellowship or any other
similar title.
Place: Signature of the Guide:
Date:
III
ACKNOWLEDGEMENT
It is a pleasure to have the opportunity to extend my heartiest thanks to everybody who

helped me through the successful completion of the project, which is a great source of
learning and experience for me. While working with this esteemed and professionally
managed institute I have realized the importance of practical experience and also to
relate my theoretical knowledge with practical market place.
I would like to express my gratitude to ‘Dr. Iram Ahmed’ my project guide, who has
been a source of inspiration and encouragement to complete this project.
I also feel highly privileged to express my indebtedness to teachers, staff members, my

family and friends for their valuable support and guidance in carrying out this project.
IV
TABLE OF CONTENTS
S.NO. TOPICS PAGE NO.
1 Executive Summary
2 CHAPTER-1 INTRODUCTION:
I. Company Profile 1-10

II. Background of Mutual Funds
III. Situational Analysis
3 CHAPTER-2 S.W.O.T ANALYSIS 11-12
4 CHAPTER-3LITERATURE REVIEW:
I. Customer Perceptions
II. Classification of Mutual Funds 13-36
III. Factors affecting choice of Mutual Funds
IV. Marketing Strategies
V. Research Objectives
5 CHAPTER-4 RESEARCH METHODOLOGY 37-39
6 CHAPTER-5 DATA ANALYSIS AND INTERPRETATION 40-52
7 CHAPTER-6 FINDINGS 53-55
I. Limitation and Conclusion
8 CHAPTER-7 RECOMMENDATIONS 56
9 ANNEXURE 57-61
10 BIBLIOGRAPHY 62
V
EXECUTIVE SUMMARY
As a part of my course curriculum, I have performed a research work on the topic “Mutual
Fund and Customers’ Perception towards It”. I have chosen Nivesh.com to perform my
research work. I have gathered data regarding working of mutual funds through Nivesh.com
and customers’ perception of mutual funds. The data collected includes both primary and
secondary data.
In my research work, I found out that India is a country where mutual funds are burgeoning
but still only a small number of population is investing in mutual funds. The mutual fund
industry has grown nearly 10 times in asset over the past 10 years even as folio count growth
has been somewhat moderate.
This is because education and awareness is of utmost important for the people. There are
people who are willing to invest but do not possess adequate knowledge about mutual funds
and how to start their investment. Due to lack of knowledge and source, most people end up
putting their money in Savings Account, Fixed Deposits etc.
Investors, who have knowledge or invest through brokers, prefer Systematic Investment Plan
and Lump sum both. Equity Funds are preferable for investors ready to take high risk and
expect high returns.
The research work led me to interact with people who are customers of mutual funds and who
are not having any idea of mutual funds. The research led me to a conclusion that more
education and awareness is required for citizens of India to exploit the mutual fund industry
and yield great returns.
VI
COMPANY PROFILE
Nivesh.com is a mass market mutual funds investment platform. Mutual funds were set-up to
provide an opportunity to ordinary investors to invest in financial assets, which they could
not do otherwise on their own. However, they lack a proper vehicle to initiate their journey.
In the spirit of financial inclusion, the platform aims to be such a vehicle that will not only
help them get started but also support them along the way.
Nivesh.com is a paperless experience for the investors. The platform simplifies the process
by categorizing funds as per broad investment objectives, and further curating schemes to
provide a shortlist. The aim is to take away the complexity while ensuring objective
investment process. After initial account creation, investors can transact in mutual funds in
few simple steps. Post transaction, the platform helps in tracking the portfolio performance
with timely alerts and notifications.
Local business partners are key elements in our strategy. They assist investors in the
onboarding process and make them comfortable in using the platform for transactions and
tracking performance.
Nivesh.com is owned by Providential Advisory Services Private Limited. The Company was
incorporated on 1st August 2016 and commenced operations on pilot basis in January 2017.
We are now live and scaling up our operations in a steady manner.
BUSINEES PARTNERS
BSE Star MF is a BSE's mutual funds platform, enabling online transactions in mutual
funds by mutual funds distributors on behalf of their customers.
1
How Nivesh.Com Works?
• Search Nivesh.com on • Create your profile • Select your investment

Play Store • Input basic KYC goal , like – Tax
• Install app details Saving, Short term
• Create login ID and • Upload your signatures investment etc.
password and Cancelled cheque • Compare & Choose
• Gmail users can login schemes within the
with their Gmail ID by category
clicking of google on • Select investment
the login page option SIP or one time
• Make payment
Install app from Create Profile Start investing
Play Store
How To Register Client On Application
2
Objectives Of The Company
• Paperless App and Web Portal for Mutual Funds Investments
• Goal based selected mutual funds schemes
• Portfolio Tracking
• Analytics based re-balancing
• Customer is our focus
3
INTRODUCTION
Investor
pools
money
Profits Fund
HOW
passed Manager
MUTUALFUNDS
back to invests in
WORK?
investor securities
Securities
generate
returns
Mutual funds are financial intermediaries, which collect the savings of investors and invest
them in a large and well-diversified portfolio of securities such as money market instruments,
corporate and government bonds and equity shares of joint stock companies. A mutual fund
is a pool of common funds invested by different investors, who have no contact with each
other. Mutual funds are conceived as institutions for providing small investors with avenues
of investments in the capital market. Since small investors generally do not have adequate
time, knowledge, experience and resources for directly assessing the capital market, they
have to rely on an intermediary, which undertakes informed investment decisions and
provides consequential benefits of professional expertise. The raison d’etre of mutual funds is
their ability to bring down the transaction costs. The advantages for the investors are
reduction in risk, expert professional management, diversified portfolios, and liquidity of
investment and tax benefits. By pooling their assets through mutual funds, investors achieve
economies of scale. The interests of the investors are protected by the SEBI, which acts as a
watchdog. Mutual funds are governed by the SEBI (Mutual Funds) Regulations, 1993.
Investment in mutual funds can done through 2 ways:
• A lump-sum payment is a one-time payment for the value of an asset such as an annuity or
another retirement vehicle. A lump-sum payment is usually taken in lieu of recurring
payments distributed over a period of time.
• Systematic InvestmentPlan (SIP) is an investment strategy wherein an investor needs to

invest the same amount of money in a particular mutual fund at every stipulated time period.
4
Structure Of Mutual Funds In India
Sponsor: A sponsor is a body corporate who establishes a mutual fund. It may be one person
acting alone or together with another corporate body. Additionally, the sponsor is expected to
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, he shall be deemed to be a sponsor and will be required to
fulfil the eligibility criteria specified in the mutual fund regulation.
Board of Trustees: A mutual fund house must have an independent Board of Trustees,
where two-thirds of the trustees are independent persons who are not associated with the
sponsor in any manner. The Board of Trustees of the trustee company holds the property of
the mutual fund in trust for the benefit of the unit-holders. They are responsible for protecting
the unit-holder's interest.
Asset Management Company: The role of an AMC is highly significant in the mutual fund
operation. They are the fund managers i.e. they invest investors' money in various securities
(equity, debt and money market instruments) after proper research of market conditions and
the financial performance of individual companies and specific securities in the effort to meet
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or beat average market return and analysis. They also look after the administrative functions
of a mutual fund for which they charge management fee.
Custodian: The mutual fund is required by law to protect their portfolio securities by placing
them with a custodian. Nearly all mutual funds use qualified bank custodians. Only a
registered custodian under the SEBI regulation can act as a custodian to a mutual fund.
Background Of Mutual Funds In India
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India
(UTI) at the initiative of the Reserve Bank of India (RBI) and the Government of India. The
objective then was to attract small investors and introduce them to market investments. Since
then, the history of mutual funds in India can be broadly divided into six distinct phases.
Phase I (1964-87): Growth Of UTI:

In 1963, UTI was established by an Act of Parliament. As it was the only entity offering
mutual funds in India, it had a monopoly. Operationally, UTI was set up by the Reserve Bank
of India (RBI), but was later delinked from the RBI. The first scheme, and for long one of the
largest launched by UTI, was Unit Scheme 1964.
Later in the 1970s and 80s, UTI started innovating and offering different schemes to suit the
needs of different classes of investors. Unit Linked Insurance Plan (ULIP) was launched in
1971. The first Indian offshore fund, India Fund was launched in August 1986. In absolute
terms, the investible funds corpus of UTI was about Rs 600 cores in 1984. By 1987-88, the
assets under management (AUM) of UTI had grown 10 times to Rs 6,700 crores.
Phase II (1987-93): Entry of Public Sector Funds:

The year 1987 marked the entry of other public sector mutual funds. With the opening up of
the economy, many public sector banks and institutions were allowed to establish mutual
funds. The State Bank of India established the first non-UTI Mutual Fund, SBI Mutual Fund
in November 1987. This was followed by Canara bank Mutual Fund, LIC Mutual Fund,
Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual
Fund. From 1987-88 to 1992-93, the AUM increased from Rs 6,700 crores to Rs 47,004
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crores, nearly seven times. During this period, investors showed a marked interest in mutual
funds, allocating a larger part of their savings to investments in the funds.
Phase III (1993-96): Emergence of Private Funds:

A new era in the mutual fund industry began in 1993 with the permission granted for the
entry of private sector funds. This gave the Indian investors a broader choice of 'fund
families' and increasing competition to the existing public sector funds. Quite significantly
foreign fund management companies were also allowed to operate mutual funds, most of
them coming into India through their joint ventures with Indian promoters.
The private funds have brought in with them latest product innovations, investment
management techniques and investor-servicing technologies. During the year 1993-94, five
private sector fund houses launched their schemes followed by six others in 1994-95.
Phase IV (1996-99): Growth and SEBI Regulation:

Since 1996, the mutual fund industry scaled newer heights in terms of mobilization of funds
and number of players. Deregulation and liberalization of the Indian economy had introduced
competition and provided impetus to the growth of the industry.
A comprehensive set of regulations for all mutual funds operating in India was introduced
with SEBI (Mutual Fund) Regulations, 1996. These regulations set uniform standards for all
funds. Erstwhile UTI voluntarily adopted SEBI guidelines for its new schemes. Similarly, the
budget of the Union government in 1999 took a big step in exempting all mutual fund
dividends from income tax in the hands of the investors. During this phase, both SEBI and
Association of Mutual Funds of India (AMFI) launched Investor Awareness Programme
aimed at educating the investors about investing through MFs.
Phase V (1999-2004): Emergence of a Large and Uniform Industry:

The year 1999 marked the beginning of a new phase in the history of the mutual fund
industry in India, a phase of significant growth in terms of both amount mobilized from
investors and assets under management. In February 2003, the UTI Act was repealed. UTI no
longer has a special legal status as a trust established by an act of Parliament. Instead it has
adopted the same structure as any other fund in India - a trust and an AMC.
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UTI Mutual Fund is the present name of the erstwhile Unit Trust of India (UTI). While UTI
functioned under a separate law of the Indian Parliament earlier, UTI Mutual Fund is now
under the SEBI's (Mutual Funds) Regulations, 1996 like all other mutual funds in India.
The emergence of a uniform industry with the same structure, operations and regulations
make it easier for distributors and investors to deal with any fund house. Between 1999 and
2005 the size of the industry has doubled in terms of AUM which have gone from above Rs
68,000 crores to over Rs 1,50,000 crores.
Phase VI (From 2004 Onwards): Consolidation and Growth:

The industry has lately witnessed a spate of mergers and acquisitions, most recent ones being
the acquisition of schemes of Allianz Mutual Fund by Birla Sun Life, PNB Mutual Fund by
Principal, among others. At the same time, more international players continue to enter India
including Fidelity, one of the largest funds in the world.
Advantages Of Mutual Funds
• Professional Management – The primary advantage of funds is not having to pick stocks
and manage investments. Instead, a professional investment manager takes care of all of this
using careful research and skilful trading. Investors purchase funds because they often do not
have the time or the expertise to manage their own portfolios, or they don’t have access to the
same kind of information that a professional fund has. A mutual fund is a relatively
inexpensive way for a small investor to get a full-time manager to make and monitor
investments.
• Diversification – By owning shares in a mutual fund instead of owning individual stocks or

bonds, your risk is spread out across many different holdings. The idea
behind diversification is not to put all of your eggs in one basket – instead, spread
investments across a large number of diverse assets so that a loss in any particular investment
is minimized by gains in others. In other words, the more stocks and bonds you own, the less
any one of them can seriously hurt your finances. Large mutual funds typically own hundreds
of different stocks in many different industries. It wouldn't be practical for an investor to
build this kind of a portfolio with a small amount of money.
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• Economies of Scale – Because a mutual fund buys and sells large amounts of securities at a
time, its transaction costs are lower than what an individual would pay for securities
transactions. Moreover, a mutual fund, since it pools money from many smaller investors can
invest in certain assets or take larger positions than a smaller investor could. For example, the
fund may have access to IPO placements or certain structured products only available
to institutional investors.
• Simplicity – Buying a mutual fund is fairly straightforward. Many banks or brokerage firms
have their own line of in-house mutual funds, and the minimum investment is often small.
Most companies also have automatic purchase plans whereby as little as Rs.500 can be
invested on a monthly basis. Brokers can also purchase any other listed mutual fund on behalf
of clients.
• Variety – Mutual funds today exist with any number of various asset classes or strategies.
This allows investors to gain exposure to not only stocks and bonds but also commodities,
foreign assets, and real estate through specialized mutual funds. Some mutual funds are even
structured to profit from a falling market (known as bear funds). Mutual funds provide
opportunities for foreign and domestic investment that may not otherwise be directly
accessible to ordinary investors.
• Transparency – Mutual funds are subject to industry regulation that ensures accountability
and fairness to investors.
Disadvantages Of Mutual Funds
• Active Management – Many investors debate whether or not the professionals are any
better than you or I at picking stocks. Management is by no means infallible, and, even if the
fund loses money, the manager still gets paid. Actively managed funds incur higher fees, but
increasingly passive index funds have gained popularity. These funds track an index such as
the S&P 500 and are much less costly to hold.
• Costs and Fees – Creating, distributing, and running a mutual fund is an expensive
undertaking. Everything from the portfolio manager's salary to the investors' quarterly
statements cost money. Those expenses are passed on to the investors. Since fees vary widely
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from fund to fund, failing to pay attention to the fees can have negative long-term
consequences. Actively managed funds incur transaction costs that accumulate over each
year. Remember, every dollar spent on fees is a dollar that is not invested to grow over time.
• Dilution – It's possible to have poor returns due to too much diversification. Because
mutual funds can have small holdings in many different companies, high returns from a few
investments often don't make much difference on the overall return. Dilution is also the result
of a successful fund growing too big. When new money pours into funds that have had strong
track records, the manager often has trouble finding suitable investments for all the new
capital to be put to good use.
• Liquidity – A mutual fund allows you to request that your shares be converted into cash at
any time, however, unlike stock that trades throughout the day, many mutual
fund redemptions take place only at the end of each trading day.
• Taxes – When a fund manager sells a security, a capital-gains tax is triggered. Investors
who are concerned about the impact of taxes need to keep those concerns in mind when
investing in mutual funds. Taxes can be mitigated by investing in tax-sensitive funds or by
holding non-tax sensitive mutual fund in a tax-deferred account, such as a 401(k) or IRA.
• Cash Drag – Mutual funds require a significant amount of their portfolios to be held in cash
in order to satisfy share redemptions each day. To maintain liquidity and the capacity to
accommodate withdrawals, funds typically have to keep a larger portion of their portfolio as
cash than a typical investor might. Because cash earns no return, it is often referred to as a
“cash drag.”
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S.W.O.T ANALYSIS
Mutual funds are among the financial products that benefit from conducting a SWOT
analysis. By reviewing their strengths, weaknesses, opportunities and threats, an individual
investor can be better informed on where to invest their money, and be positioned to shift
gears along with the market.
 Strengths
The most critical strength for a mutual fund is its performance. If a fund is outperforming the
market, and particularly if it is at the top of its benchmark, that is a big selling point. If the
fund is part of a well-established company with a track record of success and a family of
high-performing products, that brand name and historical record may also be a strength. A
best-in-class research department or methodology that has a track record of picking winners
is a huge asset as well. Different financial metrics may be depending on your investment style
and the fund involved: dividend yield may be the key for one investor, total return over a 10-
year period for another.
 Weaknesses
One weakness to look at is your fund’s fees. A high expense ratio is a weakness even if it
pays for an active management currently beating the market with its returns. Even in good
times, expenses are a drag on investor return, and they will be more difficult to accept if the
performance declines. Size can be a weakness as well, since bigger isn’t always better. As a
small-cap fund gets bigger, for example, it will have a hard time finding growth opportunities
for all of its assets and may have to close or expand outside of its stated objective. Risk may
be a weakness for some investors looking for a smaller beta or standard deviation.
 Opportunities
Investors – Penetration and awareness (through on-ground investor engagement campaigns
by AMFI, AMCs and distributors) in Tier II, Tier III (B-15 cities6) and rural markets is
expected to increase, leading to expansion of the retail investor base and hence, a greater
share of the AUM from the retail segments HNIs and the Mass Affluent segment is expected
to dominate the retail segment Institutional segment is likely to witness emergence of new
categories of Small and Medium Enterprises (SMEs) seeking investments in MFs.
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Products – Going by trends in other Asian economies and matured economies like the U.S.,
share of mutual funds products as an investment alternative should grow Traditional debt and
equity oriented products could continue to dominate the market with AMCs and distributors
pushing high margin products. New product launches could witness a gradual decline till the
time Indian investors become more financially sophisticated.
Channels – Structural shift from “transaction-led” pricing model to an “advisory-led”

pricing model has been initiated by the regulator; tiered pricing models based on the
relationship value are likely to evolve further. Emerging distribution channels based on
online and mobile platform are expected to gain further prominence Effective strategic
alliances or partnerships in distribution model has become very crucial.
 Competition – The industry is likely to witness a wave of consolidation as shrinking

revenues and escalating costs would put pressure on the existing small and medium sized
players. Additionally, regulatory landscape is skewing towards additional capital investment
for AMCs. Due to increased competition; it could become imperative for AMCs to not lose
their asset base/market share to other players. Retaining and strengthening asset base could
become pivotal Industry profitability is likely to increase with favourable structural changes.
Operations – While revenues are expected to increase with the increase in AMCs reach in
B-15 cities, operating expenses are also expected to increase due to increasing distribution
and marketing cost. It’s not enough to look at the current numbers when evaluating
prospective mutual funds. You also need to look at the overall market and consider whether
the fund is best positioned to take advantage of trends. A lagging fund may offer the best
opportunity for growth if the combination of a management change and economic trends
prove beneficial. A change in the government regulatory environment not only affects
different industries, but the funds that concentrate in those sectors as well.
 Threats
To some extent, many funds move along with general economic news. Some types of funds
do better in a recession while others track well in boom times -- those funds are particularly
threatened by a sudden change in the unemployment rate that undermines consumer
confidence or a stimulus plan that gets people spending again.
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CUSTOMER PERCEPTION
3.1 Introduction
Retailers aim to increase their sales by determining what drives their customers ‘purchase
decisions. Consumer perception theory attempts to explain consumer behavior by analyzing
motivations for buying or not buying for particular items. Consumer perception applies the
concept of sensory perception to marketing and advertising. Just as sensory perception relates
to how humans perceive and process sensory stimuli through their five senses, consumer
perception pertains to how individuals form opinions about companies and the merchandise
they offer through the purchases they make. Retailers apply consumer perception theory to
determine how and what their customers perceive about them. They also use consumer
perception theory to develop marketing and advertising strategies intended to retain current
customers and attract new ones. Three areas of consumer perception theory relate to
consumer perception theory: self-perception, price perception and perception of a benefit to
quality of life.
Self-Perception
Self-perception theory attempts to explain how individuals develop an understanding of the

motivations behind their own behavior. Self-perception by customers relates to values and
motivations that drive buying behavior -- which is also an important aspect of consumer
perception theory. For instance, a study by researchers at the University of Massachusetts at
Amherst addressed how self-perception shaped consumers' buying behavior. The study
considered the question of whether consumers believed their buying decisions had a real
effect on issues such as environmental impact. The researchers concluded that consumers
‘self-perception was a driving factor in whether or not they placed a priority on socially
conscious purchase and consumption practices. Consumers who viewed themselves as
socially conscious tended to place more weight on issues such as environmental impact when
making buying decisions than consumers who did not hold similar views of themselves.
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Price Perception
While mass merchandisers such as Wal-Mart emphasize low prices as an inherent virtue,
upscale merchants attempt to emphasize quality and value for money to appeal to potential
customers. Researchers at the School of Business Administration at LaSalle University and
Lebo College of Business at Drexel University considered several factors, including price
perception – whether consumers believed they were being charged fair prices -- in
determining whether online shoppers would make repeat purchases through the same website.
There searchers concluded that price perception strongly influenced whether customers were
satisfied with their purchases and whether they would make future purchases. Two factors
that shaped price perception were the perceived quality of the merchandise or service in
question and price comparisons with merchants offering similar merchandise or services.
Benefit Perception
"It's good, and it's good for you." Many consumers are familiar with this phrase frequently
associated with food advertising. Researchers from Marquette University, Louisiana State
University and the University of Arkansas surveyed customers to determine how nutrition
claims associated with food affected their perception of that food's nutritional value. The
researchers found that consumers tend to reject general, unsupported claims of enhanced
nutrition, especially concerning high nutritional value for foods that are traditionally viewed
as unhealthy. The researchers also theorized that consumers would demonstrate a trend
toward applying more scrutiny to nutrition claims and would demand more specific
information about the foods they purchase.
3.2 Conceptual Analysis of Customer Perception
The concept of customer perception has also been defined by various researchers as per the
needs of the environment. Human psyche is a very complex process because it involves not
only the economic factors but also the emotional and social factors (Clark and Goldsmith,
2006). Thus, it is really very difficult to provide inadequate concept of consumer perception.
It has been observed by the various researchers that the success or failure of the product or
service is directly related to the human psyche and their preference (Kauffman, 1996).
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Hence, an understanding of the human psychology helps marketers to come up with the
innovative product mixes (Peter and Donnelly, 2002). Consumers are the base of the business
of the business organizations. All the consumers are not similar with each other according to
their perception and behavior (Zhang and Neelankavil, 1997).
In the words of Fox all (1998), Consumer buying behavior is the study of intrinsic qualities of
consumers, such as, motivators, perceptions, personality and learning patterns. According to
various theorists, it is the branch of knowledge, which studies behavior of an individual and
its mental state (Hausman, 2000). According to Sheth and Parvatiyar (1995), evaluation of
various factors related to the consumer perception and behavior allows the business firms to
strengthen the relationship between business and consumers. There are many factors which
influence the perception of a human being and the buying process, which essentially begins
from early childhood, remains through the teen years and adult life also (Lal et al, 1996). The
evaluation of perception comprises many factors to understand the psychology of consumers.
These factors belong to culture, values, family, society, feelings, thinking, attitude,
personality, etc. These factors also vary from consumer to consumer and shape their buying
behavior.
According to Byron McCann (2011), correlation between behavior, experience and

perception of consumer can help an organization to understand in real time what customers
really think, experience and do. He stated:
Behavior + Perception +Experience= the whole real picture.
Figure 3.2.1: The whole diagram of Market Scenario.
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He also analyzed that the whole of the insight is much greater than the sum of the three parts;
it just provides an information platform on which the firm can align a management team,
optimize the customer experience and implement a continuous process improvement plan that
helps in building brand equity.
3.3 The factors that influence customer perception.
There are sufficient evidences and empirical resources that explain about the various factors
that influence the perception of consumers and affect their buying behavior. Many factors are
available in the environment that influences the behavior of consumers. Internal factors
comprise consumer’s lifestyle, personality, attitude, knowledge, affordability etc. These
factors integrate culture, values and norms, family and friend circle, social status, family,
reference groups, etc.(Sjo’berg and Elisabeth, 2005).
Environment is the external condition, which affects the perception and the consumer
behavior. It consists of both physical and social factors. Physical factors, also known as
macro factors, include demographic, economic, changes in technology, political elements and
globalization (Mourali et al, 2005).
Economic Factors: Economy of a country impacts the perception of consumer in a great

manner and also emphasizes his buying pattern. High economy means high-income level,
which ultimately influences the consumer to purchase expensive and luxury items (Clark and
Goldsmith, 2006). Due to the continuous changes in the technology, the world has become a
global village, which provides a large variety of products and services to the consumers.
Often the environments are not in the hands of the manufacturers, so they have to modify the
marketing strategy in order to influence internal factors, which in turn affects the perception
and behavior (Kotler, 2002). Thus, this factor and environment has a great impact on the
customers’ choice and is largely responsible in shaping his liking and preference for the
product.
Social and Cultural Factors: A marketer should be able to produce a product that will
capture the need and demands of the consumers. Following social and cultural factor affect
the buying behavior of consumers. in a society, the interaction of persons with the family,
groups, and social classes is highly responsible for the influence on the perception of
16
consumer’s (Tanja and Piri-rajh, 2003). The term attitude, values and buying process are
generally influences by social class. Social class can be defined as a group of people in which
all members have the similar social status, which is generally overlooked by the people. The
classification of target market falls into four groups, i.e. upper class, upper middle, middle
class and lower class (Mourali, et al, 2005).
Components of culture are patterns of living, norms of behavior, life style, communication
tool, eating habit, political, economical, technological outlook and values (Zhang and
Neelankavil, 1997). In the words of Hanse (2005), it is very important to interpret the
customer’s tastes, preferences and habits so as to manufacture the products according to their
demands and desires as per their culture. Language and values play a very important role in
marketing a product(Kaynak and Kara, 2001).
Customer perception is affected by several components like grades, education, age,

psychological attributes, etc., so these factors should always be considered while
manufacturing products. Brand name and product quality has also its own importance in the
society (Sirgy, 1985) and players in the retail industry have identified that according to the
social and cultural development, people have become more concerned about the brand name
and quality of the products. Brand name ultimately raises the living standard of the people in
the society which helps in developing the perception of self-esteem.
Different Geographic Region: Different Geographic region have different culture and values
that lead to the perception of consumers in different manner. Diversity is the main concept in
the different geographical areas and it is popular in every cultural and geographical area. In
these geographical areas, the marketers always look at various aspects such as consumer’s
personal values, language, social behavior, income level, etc. that are directly related to the
external environment of geographic area (Clark and Goldsmith, 2006).
It is necessary for the organization to understand the diversity regarding language and culture
of a particular geographic region before expanding their business. In the era of globalization,
culture is also moving towards change and personal values are also changing according to the
geographic areas (Dubois, 1993). The perception of the consumer highly depends on the
elements of culture and diversity.
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3.4 The Drivers and Determinants of success to attract and retain customers
In today’s environment, according to the consumer’s perception, companies are competing

not only to attract new customers but also for loyalty and retention. Helgesen, (2007),
describe that companies are developing strategies to maintain and grow average revenue per
user through customer retention, process improvement and product innovation. Companies
are looking to drive value from the customer management, value chain and cost reduction
strategies, which can provide highest level of customer service (Miocevic, 2008).
The main aim of the retention strategy is to keep existing customers of organization, increase
brand loyalty and spread positive word of mouth for referral based sales. Retention drivers
are policies and promotion activities that increase the time duration of customers. These
drivers and factors are as follows: Effective Communication System: Effective
Communication System and innovative information tools with the customers, is a successful
business model to retain them (Meyer-Waarden, 2008). In order to establish and maintain a
long term relationship with customers, companies develop two-way communication model
and presently it has become multisided communication model. It is helpful in exchange of
thoughts, feelings and reaction of customers with the companies(Egan, 2000).
Companies provide products and services according to their customer need and ability. These
information tools and communication process enables the stakeholders to share their
thoughts, feelings, and open-ended questions about his/her family background, habits,
cultural values, employment, goals and tastes(Romano and Fjermestad, 2003). From this
database of information about customers, organizations create a long term relationships and
make profits from their retained customers (Ahmed and Buttle, 2002).
Quality of Products and Services: Product or services offered by the companies are the key
element of the business. These products and services also show the concern of the companies
towards the society. Highest quality and minimum cost of the products and services are
preferred by the customers. According toAdebanjo (2001), in less developed countries, in
Retail and Grocery stores, people want all the products and services under one roof. This in
both developed and newly industrialized countries, by offering high quality products the
firms can retain consumers for long time. High quality product attracts new customers and
18
builds brand loyalty.
Customer Loyalty Program: Customer Loyalty programmes are also one of the main
strategies to retain and attract customers for long time. These kinds of programs are held by
almost all the Multi-national Retailers or small stores to maintain long term relationships with
the consumers. These loyalty programs also provide an opportunity for the companies to
create competitive advantage. Helgesen (2007) asserted that the main aim of these kinds of
programs and strategies is to provide incentive for relevant customers to attract them for
participating in buying process from a particular store.
These programs include credit card payment, heavy discount offers, giving loyalty points,
membership cards etc. Customer loyalty programs increase the overall value of the product
and motivate loyal customers to upgrade their purchase(Miranda, 2008). Such programs
allow the companies to build stronger relationship, create enclose trade, increase revenue, etc.
But, if these are launched without proper insight, they can have adverse effects such as
decrease in profit, irritation to customers and negative image.
Effective and Lower Cost: Along with product quality, cost is one of the main features to
attract and retain the consumers for long term. According to the marketing concepts given by
Kotler and Keller (2009), retailers should always concentrate on the pricing strategies to
maintain a balance between the competitor’s prices and profitability. An effective pricing
strategy allows them to keep similar prices or lesser price as compared to other stores.
Retailers provide offers, coupons and discount schemes to increase sales and influence the
buyers to purchase company’s product (Ranjan and Agarwal, 2009).These strategies attract
new customers and after this retailers can retain them through customer Loyalty Programs.
Talented and Motivated Employees: In order to get success and increased sales, retailers also
need highly motivated and talented employees. Employee’s communication skills, right and
positive attitude, strong will power, good manner, strong communication skills are essential
to attract customers. According to Miocevic (2008), these employees supply quality services
to the customers and produces higher rates of sales. Motivated employees can deal more
effectively with customers and customers are affected by those persons who give a positive
and polite response to the consumers.
19
Reference Groups: One of the main driving forces to attract and retain customers is reference
group. Frow and Payne (2009), described in their research that consumer perception and
buying behavior is affected by some reference groups also such as friends, family members
and peers. They create publicity of the company by spreading their words and perception is
influenced by words also. This driver of success enables the companies to increase number of
customers as many retailers provide a local environment to their customers. This affects their
social and cultural values and thus they are attracted.
It is really a difficult task for the companies to attract and retain customers for longtime, but
these above explained driving forces and strategies enables the companies to retain
consumers as per their changing perception, attitude and buying behavior. Firms operations
may be affected by a shortage of qualified drivers and its ability to service customers and
thus, revenue could also be adversely affected.
3.5 Link between CRM and Customer Perception.
As it has been very clear that customer relationship process is a process of developing long-
term relationship with customers by knowing more about customers need and about their
thinking pattern (Reynolds,2002), it has a direct relationship with the perception of
consumers. In the words of Ahuja,et al (2003),with the help of CRM , businesses know about
their customers by using different technology and human resources.
In the era of relationship marketing, the consumer perception and buying behavior are
directly proportional to each other. Bose (2002), explained in his research, about the link
between CRM and customer buying behavior that accompany that collects lots of data
regarding the buying patterns of customers can make effective CRM strategy easily in
comparison of those companies that have less data about consumer’s buying pattern. He also
stated in his research that financial companies and telecommunication companies can make
effective CRMstrategies as they have lots of data regarding their customers buying patterns.
In the same manner, Retail companies should also collect sufficient data and
information about customers to retain them for a long time.
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Based on the above literature review, a conceptual relationship of link between CRM and
consumer perception can be explained in the following manner. The main objective behind
implementation of CRM process is to develop a long-term relationship with the consumers
and understand those factors that influence their perception in a particular region (Sarlak and
Fard, 2009). This is because consumer perception is a process through which customers make
decision regarding their selection, purchase and use of goods and services (Dibb and Simkin,
2001). So, by analyzing this process of customer perception, CRM manager can plan,
organize and control the customers according to their product offering. Thus, both CRM and
customer perception are linked with each other and also affect operation of each other
(McMahon, 2008).
With the help of study of customer perception and their buying behavior, an organization can
also measure the success of its CRM strategies. It has been discussed in the below table that
different customers should be kept into different categories, so that the companies can review
their CRM process and develop a high potential to maintain customers for long term. It is
because if the implementation of CRM strategy helps in increasing the buying of their
customers then it is considered that CRM system is effective (Roberts et al, 2003). On the
other hand, if the implementation of CRM strategy does not increase the buying of their
customers then it is considered that CRM system is not effective. It motivates an organization
to make an effective CRM system (Du et al, 2008).A result-oriented CRM helps an
organization to change the perception and also retrieve buying behavior of consumers. A
relationship and profitability potential between CRM process and their perception can be
evaluated with the help of following table:
HIGH LOW
HIGH • No choice but handle • Cultivate relationship.

the customer carefully. • Spend Energy.
• Will consume energy. • Go out of your way
• Thinking about
innovative ways to
retain consumer for
21
long term.
LOW • Focus on short term • Very cautious decision

Profitability. needed.
• Spend minimum • Re-examine business
energy to meet plan and strategy to
company’s objective regain consumers.
and customer’s • Need in depth strategies review.
requirements.
• Utilization of
optimum resources.
Table 3.5: Categorizing customers through CRM process to evaluate the potential of CRM and
profitability
Relationship and Profitability Potential are used to categorize customers as per their buying
behavior.
In the words of Frow and Payne (2009), the main activities of CRM process are creating
profits, learning from customers and prospects, acquiring new customers, creating value for
customers, creating and retaining loyal customers, etc. All these activities are directly linked
with the formation of consumer perception. Without gaining understanding about the
consumer’s perception and what is going in his mind, it would not be possible for the
companies to complete all the activities and create competitive advantages (Baran et al,
2007).
Ranjan and Agrawal (2009) described that CRM is related with the management of customer
experience. For the effective management of this, it is necessary for organizations that they
continuously understand about their customers need and buying pattern. It is also important
that they effectively manage their interaction with customers. Companies can also earn
competitive advantage by linking CRM and customer perception. It is because the better
linkage between CRM and customer perception provide several benefits to the companies
such as increase in profit by customer retention and loyalty (Frow and Payne, 2009). To
describe the link between CRM and perception, Ranjan and Agrawal (2009), define CRM as
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a process of initiation, enhancement and maintenance of customers. In this process,
organizations develop long-term relationship with their customers on the basis of information
that are related with their perception.
In any organization, the main aim of CRM is to retain its customers in comparison of
building new customers. This is the reason why CRM is closely related with consumer
perception (Mithas et al, 2005). It is because organizations create relationship marketing on
the basis of information about customer such as their needs, preferences, perception, buying
patterns and price sensitivity. It helps in maximizing the overall value of its customer (Chen
and Popovich, 2003).Focus of CRM system is to retain their profitable customers for which
they try to make their customers realize that they are important for them and the organization.
Meyer –Waarden (2008) stated that on the basis of the perception of the consumers retailers
create value for their customer. They collect information about consumer attitude, behavior,
perception, expectations etc. with the use of different information technology such as data
warehousing and data mining. In current business scenario, retailers manage the information
regarding customer perception through the use of some sources such as call centers, account
management personnel and interactive response system (Wilson, 1996). This information is
further used by them to make better CRM strategies such as decide core services of customer
to build better customer relationship and provide extra benefit for these services.
Customer’s perception is affected by several factors such as culture, social, personal and
psychological and CRM process allows the retailers to understand the extent of all these
factors on the purchasing process of customers (Palan, 2001).All these factors affect the
consumer’s perception. Thus, also affect the CRMstrategies. It is because CRM is closely
related with customer perception and the effect on customer perception also affects the CRM
(Verhoef, 2003).
3.6 Summary
This chapter broadly explores various concepts and ideas of CRM and customer perception. It
investigates various factors associated with the CRM and customer perception process such
as factors and forces that influence perception including buying behavior of consumers such
as economical, social, cultural, geographical, languages, reference groups, family, society ,
etc.
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This chapter also discusses about the various driving forces and strategies to retain and attract
the consumers for long term These driving forces are product quality, effective cost, effective
communication process, uses of IT techniques and the systems to run effective CRM Process
for both B2B and B2C business models. Additionally, this chapter also provides a theoretical
description about the basic concept of CRM and Customer perception. The explanation about
the link between customer relationship management and consumer perception helps in
developing knowledge about the conceptual framework of both these notions. These
determinants play a significant role to develop competitive advantage forth firm as well as for
customer acquisition and retention. At the same time various determinants of CRM and
consumer perception and their interrelationships also described to understand the philosophy
of consumer to buy a particular product that too from a particular store.
This idea of customer relationship management has been brought forward in the context of
consumer perception. It also argues that in order to retain and attract consumers for long term
it is really essential for the companies to implement an effective CRM process and practice,
so that the retailers can understand the perception and buying behavior of consumers and
attract them towards their store for a long time period.
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Classification Of Mutual Funds
Types of Mutual
Funds
Based on category
Based on structure of financial
instrument
Open Ended Equity Fund
Closed Ended Debt Fund
Hybrid Fund
1. Based on the structure.

2. Based on the category of financial instrument these funds invest in.
Types of MF based on Structure-
Open Ended – An open ended scheme is available to investors on an on-going basis to buy
into the scheme and redeem from the scheme from mutual fund office or its registrar’s office
itself on any given business day.
Closed Ended – Close ended funds usually have only certain period when you can enter into
a fund and exit at the time of maturity only. Closed ended funds would generally have a fixed
number of units usually listed on a major stock exchange. Unlike in an open-end mutual fund,
25
in close ended funds you cannot buy from or sell units to the mutual funds on a continuous
basis.
Types of MF based on Investments Instruments –
Debt Funds – A debt fund is an investment pool, such as a mutual fund or exchange-
traded fund, in which core holdings are fixed income investments. A debt fund may invest in
short-term or long-term bonds, securitized products, money market instruments or floating
rate debt.
Equity Funds – An equity fund is a mutual fund that invests principally in stocks. It can be
actively or passively (index fund) managed. Equity funds are also known as stock funds.
Balanced Funds – Balanced funds, which are often called hybrid funds, own both stocks and
bonds. They earn the "balanced" moniker by keeping the balance between the two asset
classes.
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 Difference between Equity Funds, Debt Funds Balanced Funds
Basis Equity Funds Debt Funds Balanced Funds
Definition An equity fund is a A debt fund is an investment Balanced funds, which are
mutual fund that pool, such as a mutual fund or often called hybrid funds, own
invests principally in exchange-traded fund, in which both stocks and bonds. They
stocks. It can be core holdings are fixed income earn the "balanced" moniker by
actively or pass| investments. A debt fund may keeping the balance between
(index fund) invest in short-term or long- the two asset classes
managed. Equity term bonds, securitized
funds are also known products, money market
as stock funds. instruments or floating
rate debt.
Investment Stocks or shares Government securities or bonds Mix of equity and debt (60:40)
Risk Moderate to high Low Moderate
Returns 15-30% 7-8% 10-20%
Exit Load 1% exit load is No exit load 1% exit load is charged if you
charged if you withdraw before 1 year
withdraw before 1
year
Tax 15% + 3% cess tax 10% without indexation or 20% 15% + 3% cess tax on profit
implication on profit for 1 year. with indexation whichever is for 1 year. After 365 days, tax
After 365 days, tax lower + 5% surcharge + 3% free.
free. cess
27
Suitability • For investors • For corporate/HNI/retail • For those looking for some
pooling money for investor who have surplus equity exposure but do not
at least a period of fund for few days/weeks or have a very long time
2-3 years and risk maximum for a month. frame (for 1 year to 3
appetite is good. • For investors who wants to years holding period.)
• For long term invest for a shorter period of • For replacement of FDs
wealth creation time and has low risk for better return and higher
• For investors appetite. liquidity
looking for tax • For investors expecting • For investors with
free returns better returns than moderate risk appetite and
current/saving bank account. looking for tax free returns
Sub Categories of Mutual Funds Provided by Nivesh.com
1. Liquid Funds
2. Ultra Short Term Fund
3. Corporate Bond Funds
4. Arbitrage Funds
5. Dynamic Asset Allocation-Equity Savings
6. Dynamic Asset Allocation- Balanced Advantage
7. Equity Diversified
8. Tax Saving Funds
9. Retirement Plan
Liquid/Debt Funds
• Definition- Liquid funds are a subset of debt funds. They invest in very short term debt
instruments with a maturity period of less than 91 days.
• Suitability- Ideal for corporate/HNI/retail investor who have surplus funds for few days or
weeks or maximum for a month.
• Exit Load- Nil
• Settlement Day- 1 to 3 days
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Ultra Short Term Fund
• Definition - Ultra short-term funds invest in fixed-income instruments which are mostly
liquid and have short-term maturities.
• Suitability – Ideal for investors who wish to invest money for 1-9 Months and expecting a
return of 7-9%.
• Exit Load – Nil
• Settlement Day – T+1 day
Corporate Bond Funds

• Definition - Corporate bonds are issued by companies to raise more capital. The money is
used to reinvest in their operations, buy other companies or even pay off older, more
expensive loans.
• Suitability- Suitable for investments for more than 1 year, and ideally for more than 3 years
due to significant tax saving due to indexation.
• Exit Load – 1% within 365 days and for units in excess of 10% of the investments
• Settlement Day- T+2 days
Arbitrage Funds
• Definition- Arbitrage fund leverages the price differential in the cash and derivatives market
to generate returns. The fund simultaneously buy shares in the cash segment and sell futures
in the derivatives segment of the same company as long as the futures are trading at a
reasonable premium.
• Suitability- Suitable for those investors who don’t want to take any risk and want tax free
return.
• Exit Load- 0.25% within 30 days
• Settlement day- T+2 days
Equity Savings Fund

• Definition- Equity savings funds are a new variant in the equity mutual fund basket. Equity
savings funds aim to generate returns from equities, arbitrage trades, and fixed income
securities. To retain equity taxation, funds will restrict the fixed income (debt) exposure to 35
per cent.
• Suitability- Ideal for 1 to 3 years. It takes 20-40% open equity position,25-45% hedged
position and remaining in debt to reduce volatility.
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• Exit load- 1% within 365 days
Balanced Advantage Fund

• Definition- The Balanced Advantage Fund allows investors to take advantage of both the
equity and debt markets. It is meant for investors who are looking for returns in the long run
and are ok with a higher risk profile.
• Suitability- Suitable for investors who want higher open equity position
• Exit load- 1% within 365 days
Equity Diversified
• Definition- A diversified equity fund invests in companies regardless of size and sector. It
diversifies investments across the stock market in a bid to maximize gains for investors.
• Suitability- Suitable for long term investments( 3 year and above)
• Exit Load- 1% within 365 days
Tax Saving Fund

• Definition- Tax-planning funds cater to the investors' need of minimizing tax burden on the
returns from investments. They are also called equity-linked tax saving funds or ELSS.
These funds are market capitalization agnostic. These are close ended schemes with a lock-in
period of 3 years.
• Suitability- Under 80C investor can invest in these schemes to avail Rs. 1.5 deduction from
income in one Financial Year
• Exit Load- Lock-in for 3 years
• Settlement Day- T+ 3 Days
Retirement Plan
• Definition- A group of investment products available to anyone as a conservative means of
saving for retirement. A RIF is generally a mutual fund that is well diversified in large and
mid-cap stocks and bonds.
• Suitability – Suitable for retirement planning goals
• Exit Load- 3% for redemption within 1095 days and 1% above 1095 days
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Plan for children

• Definition- Children’s Gift funds are dedicated mutual fund schemes which are positioned as
Child plans to meet children’s future financial needs like education, marriage expenses etc.
• Suitability- These are long term plans for children
• Exit Load- 3% within 365 days, 2% within 366-730 days and 1% within 731-1095 day
Factors affecting choice of mutual funds Type of Fund
Risk: Good Equity Diversified

Time horizon: At least 2-3 years Fund
Expectation: Tax free returns
Risk appetite: Low Liquid/Debt Funds

Time horizon: Few days/weeks/months/one year
Expectation: Better returns than current/saving bank account
Suitable for: HNI/Corporate/Retail investors
Risk: Low Ultra Short Term

Time horizon: 1-9 months Funds
Expectation: Park surplus money, but wants higher returns than liquid
funds (Preferred for STPs)
Risk: Low Corporate Bond Funds

Time horizon: Recommended for more than 1 year and ideal for more than 3 years.
Expectation: Significant tax saving
Risk: Low Equity Savings Fund

Time horizon: 1-3 years
Expectation: 10-18% returns
Risk: Low Arbitrage Funds

Time horizon: 1 year or less
Expectation: Tax free returns
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Risk: Low Dynamic Asset
Time horizon: 1-3 years Allocation - Equity
Suitable for: Investor looking for equity exposure but time frame is less Savings
Risk: Low Dynamic Asset

Time horizon: 1-3 years Allocation - Balanced
Expectation: Higher equity exposure, returns just like equity funds Advantage
Risk: Low Tax Savings Funds

Time horizon: Lock in for 3 years
Expectation: Save tax and build wealth
Risk: Low Retirement Plan

Time horizon: Exit load charged for redemption/switch before 59 years of age
Expectation: Build wealth for retirement, secure retirement plans
Risk: Low Plan For Children

Time horizon: Long term – 5-10 years
Expectation: Long term wealth creation for child’s future
Marketing Strategies
Marketing strategies of mutual funds can be divided into –
Direct Marketing – This constitutes 20 percent of the total sales of mutual funds. Some of
the important tools used in this type of selling are –
Personal Selling–In this case the Relationship Manager or Customer Relationship Executive
of a particular branch takes appointment from the potential prospect. Once the appointment is
fixed, the Business Development Executive (BDE) then meets the prospect and gives him all
the details about the various schemes being offered by the funds. The conversion rate in this
mode of selling is in between 30%- 40%.
Telemarketing – In this case the emphasis is to inform the people about the funds. The
names and phone numbers of the people are picked at random from telephone directory.
32
Some fund houses have their database of investors and they cross sell their other products.
Sometimes people belonging to a particular profession are also contacted through phone and
are then informed about various funds they can invest in. Generally the conversion in this
form of marketing is 15%-20%.
Direct Mail – This is one of the most common method followed by all mutual funds.
Addresses of people are picked at random from telephone directory, business directory,
professional directory etc. The Customer Relationship Executive then mails the literature of
the recommended funds. The follow up starts after 3-4 days of mailing the literature. The
CRE calls on the people to whom the literature was mailed. Answers their queries and is
generally successful in taking appointments with those people. It is then the job of BDE to try
his/her best to convert that prospect into a customer.
Advertisements in newspaper and magazines – Information about various mutual fund

products are advertised in newspapers and magazines besides in leading national dailies. The
purpose to keep investors aware about the different funds offered and their performance in
recent past. Advertisement in TV/FM Channel. The companies aggressively show up their
advertisements in TV and FM Channels to promote mutual funds.
Hoarding and Banners – In this case the hoardings and banners are put up at important
locations of the city where the movement of the people is very high. These consist of either
particular fund or scheme.
Marketing agency/department – In this case a company develops a marketing department

or gets associated with a marketing agency, who promotes the mutual fund products. This is
done through Facebook posts, Emails, SMSs, Short Code etc. and names and contact
numbers of the prospects are picked from these sources.
Selling through intermediaries – Intermediaries contribute towards 80% of the total sales of
mutual funds. These are the people/distributors who are in direct touch with the investors.
They perform an important role in attracting new customers. They do a commendable job in
convincing investors to invest in mutual funds. A lot depends on the after sales services
offered by the intermediary to the customer. Customer prefers to work with those
intermediaries who give them right information about the fund and keep the abreast with the
33
latest changes taking place in the market especially if they have any bearing on the fund in
which they have invested.
Regular meetings with distributors – Most of the distributors conduct monthly meetings
with their distributors. The objective is to hear their complaints regarding service aspects and
other queries related to market situation. Training programs are also conducted for the
agents/distributors. Training is given regarding mutual fund products, market performance,
what the investors are doing and what they can do to increase the sales of the fund.
Joint calls – This is generally done when the prospect seems to be a high net worth investor.
The BDE and the Agent (who is located close to the HNI’s residence or area of operation)
together visit the prospect and brief him about the funds. The conversion rate is very high in
this situation, generally around 60%. After sales service is provided.
Meetings with HNI – Whenever a top official visits a particular branch office, he devotes at
least one to two hours in meeting with the HNIs of that particular area. This generally
develops a faith among the HNIs towards investment.
Marketing of Mutual Funds: Challenges & Opportunities

When we say marketing of mutual funds, it means, includes and encompasses the following
aspects:
 Assessing of investors needs and market research

 Responding to investors needs
 Product designing
 Studying the macro environment
 Timing of the launch
 Choosing the distribution network
 Finalising strategies for publicity and advertisement
 Preparing offer documents and other literature
 Getting feedback about sales
 Studying performance indicators about fund performance like NAV
34
 Sending certificates in time and other after sales activities
 Honouring the commitments made for redemption and repurchase
 Paying dividends and other entitlements
The above aspects of marketing of mutual funds are in totality. Even if there is a single weak
link among the factors which are mentioned above, no mutual fund can successfully market
its products.
RESEARCH OBJECTIVES
 Evaluate perception towards risk involved in mutual funds in comparison to other

financial avenues.
 To know about the perception customers have about mutual funds
 To enhance our knowledge about the subject.
 To have a vivid picture of major players in Mutual Fund industry in India.
 How effectively they are reaching their customers.
 To study the marketing of Mutual Fund products in India
 To study the marketing strategies to know how customers are made
 To study the preferences of customers for Mutual Funds
Who Can Invest?
 Resident Indians
 Non-resident Indians (NRI, people who are away from India For more than 182 Days)
 Persons of Indian Origin (PIO)
 Indian Public Sector Undertakings & Indian Private Sector Undertakings
 Parents/Guardians on behalf of minors
 Hindu Undivided Family
 Sole Proprietorship Firms
 Partnership Firms
 Cooperative Societies
35
 Charitable or Religious Trusts
 Trustee, AMC or Sponsor of their associates
 Endowment or Registered Societies
 Army/Air Force/Navy/Para-Military funds and other eligible institutions etc.
36
RESEARCH METHODOLOGY
Research Design – Exploratory Research was found to be suitable since this kind of research
has the primary objective of development of insights into the problem. It studies the main
area where the problem lies and also tried to evaluate some appropriate courses of action.
Advantages of exploratory research –
 Increasing Understanding – The purpose of explanatory research is to increase the

understanding of a researcher on a certain subject. It does not provide conclusive results
because of lack of its statistical strength, but it makes the researcher determine how and
why things happen.
 The flexibility of Sources – Secondary sources, such as published literature or data, are
commonly used in the explanatory type of research. Care ought to be taken to choose a
scope of fair-minded sources to give a wide and balanced comprehension of the subject.
 Better Conclusions – Exploratory Research can be very advantageous in directing

subsequent research approaches. A great understanding of the subject allows the
researcher to hone subsequent research questions and can greatly increase the usefulness
of a study’s conclusions. This exploration is likewise exceptionally valuable in deciding
the best way to deal with accomplish a specialist’s goal.
Disadvantages of exploratory research –
 Bias information – Exploratory Research generates such types of information and

interpretations which could sometimes lead to banal information.
 Useless samples – Exploratory Research studies make use of modest number samples
which could not be for a targeted/ specific type of audience.
Sample – When secondary data are not available for the problem under study, a decision may
be made to collect primary data by different methods for information. The information may
37
be collected by either the census method or sample method. The sample is a portion of
universe.
Sampling Method – The sampling method chosen in the research was convenient sampling.
It is obtained by convenient population. This is also called as chunk.
Sample Size – 50
Sources of Data
 Primary Data – Primary data are those data which is originated by the author for the specific
purpose of describing or analysing something. The information was collected by conducting a
survey among the customers as well as other people. Besides, a set of questionnaire was
prepared which was filled up by them.
Advantages of Survey Method –
 Large number of respondents possible.

 Question responses can be highly structured and easily coded.
 Respondent has time to consider questions.
 Inexpensive way to cover a large geographical area.
 Questionnaires are replicable and can be used in later studies and if well-constructed
and properly piloted, they should be reliable.
 Statistical tests are possible (depending on nature of data collected)
Disadvantages of Survey Method –
 If not administered face to face (through email or online) there is a possibility of a low
response rate.
 Questions can be answered to respondents and can be misinterpreted and answers
cannot be put in any real world context.
 Questionnaires cannot tell about context and meaning behind a response.
 Likelihood of socially desirable responses to certain questions.
 Secondary Data – Secondary data are data collected for some purpose other than the main
facts. Secondary data are quick source of background information. Some data was collected
to gather information for the research from secondary data sources as well. The sources are:
38
 Articles
 Nivesh.com records
 Factsheet
 Management journals
 Research reports
 Internet
 Newspaper
Analysis Of Data – After the data is collected it misanalysed. The data obtained from the
questionnaire is arranged in a serial order and their master copy with tabulation and
percentage method is prepared. Tabulation is part of the technical procedure where in the
essential data is put in the form of percentage. The method used for representation of analysis
includes pie charts and bar graphs.
39
DATA INTERPRETATION AND ANALYSIS
A survey was conducted among the people to know about the Customers’ Perception towards
mutual funds. A sample of 50 people was chosen. The research was done through a
questionnaire (Google Forms) in which people were to respond to questions related to their
knowledge and perception towards mutual funds. Based on the answers received in the
survey, I analysed the data and interpreted it. Types of chart used in the analysis are Pie Chart
and Bar Graph.
Figure 1: Categories of the population
According to the survey, about 40% of the people work in private firms and 28% of the
people belong to the younger generation. Considerably less number of people were
professionals, self-employed or businessmen among those who were surveyed.
40
Figure 2: Income of the population
It is observed that annual income of the population is highly diversified since all categories of
people were included in the sample. Students who are not yet employed appear to have
income below Rs. 1 Lakh. So, it can be stated that people have income between Rs. 1 Lakh to
10 Lakhs or above.
41
Figure 3: Preference of saving
People with regular income generally prefer to put their money into Savings Account, FD,
Shares, Postal Savings, Real Estate. But a fairly large number of people invest their money in
mutual funds as well. Investment in Gold/Silver appears to be low.
42
Figure 4: Factors influencing investment
According to the survey, 68% of the investors focus on how much returns they would be
getting by their investment. Other factors such as safety, liquidity, less risk and marketability
hold a minor role in investment decision as compared to the returns the investor is expecting.
43
Figure 5: Knowledge of mutual funds
About 84% of the people said that they know about mutual funds and 16% said that they do
not know about mutual funds. (Knowledge here refers to basic knowledge of mutual funds.)
Figure 6: Investor in mutual funds
44
It is observed that 84% of the people said that they know about mutual funds but only 60% of
them are investors. While other 40% are not investors.
Figure 7: Investment pattern
According to the survey, most investors of mutual funds prefer SIP (Systematic Investment
Plan). People who are regular investors also invest their money in lump sum at times.
Figure 8: Type of mutual fund scheme
45
Investors who are putting their money in mutual funds for a longer period of time prefer
Equity Funds because these funds generate higher returns but with higher risks only with long
term investment plans. While Debt Fund and Hybrid Fund are also preferred by many
investors.
Figure 9: Category of Equity Fund
Investors put their money into Diversified Equity Funds, Tax Saving Funds, Mid Cap Funds
and also other funds.
46
Figure 10: Factors affecting choice of mutual funds
People who invest in mutual funds check past performance of the particular scheme, ratings,
AMC records and also consult experts for advice.
Figure 11: Sources of information for investment decision
47
According to the survey, most people contact the brokers of mutual funds to guide them
through the investment. Others who have a bit of knowledge about the sector prefer to collect
information from internet and magazines. TV Channels, Consultants and Financial
institutions are also sources of information.
Figure 12: Time horizon of investment
It is observed that most people who are investing in mutual funds have started investing
recently. There is a major part of the population who are non-investors or they have just
started investment in mutual funds.
48
13. You invest in mutual funds schemes because:
Professional fund managers manage them with in depth

research inputs from investment analysts
Mutual funds diversify the risk of the investor by investing in a

basket of assets
Very simple to invest and monitor fund performance on a

regular basis
Less calculation is required as compared to share market
They give assured and consistent return
it is better to invest in mutual funds rather than investing

directly in shares
It is a good investment instrument
0 1 2 3 4 5 6
Figure 13: Reasons for investing in mutual funds
Different people have different objectives for investment. Some people invest because it is a
good instrument, very simple to invest and monitor fund performance on a regular basis, it is
better to invest in mutual funds rather than investing directly in shares etc.
49
Figure 14: Need for mutual fund awareness
All the people surveyed said that mutual fund awareness is utmost important to know about
all the pros and cons of investment.
50
15. You have not invested in mutual funds because:
It’s not a lucrative investment instrument
9.1 0 9.1 No satisfactory return on investment when compared to other investment

0 instruments.
No safety for funds invested
Risky investment instrument

27.3
No/ Less liquidity
No knowledge about how to invest
0 54.5 No knowledge about where to invest/investment centres
No mutual fund investors' education & service centres
It is related to share market, so it is very risky and the returns are not guaranteed.
Figure 15: Reasons for not investing in mutual funds
All the people surveyed who were non investors stated that either they did not know how to
invest or they did not have appropriate education as investors. Even when they knew what
mutual funds are, but they did not possess in depth knowledge.
51
16. What do you/would you prefer?
45
55
Online platform Offline platform
Figure 16: Mode of investment
According to the survey, preference towards online and offline mode of investment is
somewhat same. 55% people think online platform is more convenient whereas other 45%
think offline is more reliable.
Some suggestions provided by the people are stated above.
52
FINDINGS
 It was found that different people prefer different and more than one investment or
savings option such as in Savings Account, Fixed Deposits, Gold/Silver, Postal
Savings, Shares/Debentures, Real Estate and Mutual Funds.
 People’s investment decisions are majorly based on the amount of returns they would
be receiving. Factors such as safety, liquidity, risk and marketability also affect the
investment decision.
 Around 84% people had basic knowledge of mutual funds but only 60% of the people
were investors in mutual funds.
 Most people who are investors go for Systematic Investment Plan as well as lump
sum investment. Both are in demand depending upon the income of the investor.
 Investors put their money into Diversified Equity Funds, Tax Saving Funds, Mid Cap
Funds, Sector Specified Funds and more.
 People who invest in mutual funds check past performance of the particular scheme.
Investors also look for ratings, AMC records and consult experts for advice.
 It was found that 55% of the investors have started investing recently that is around 1
year.
 Investors prefer mutual fund generally because it diversifies the risk of the investors
by investing in a basket of assets and professional fund managers manage them with
in depth research inputs from investment analysts.
 Among the non-investors, 54.5% of the people stated that they did not invest in
mutual funds due to lack of knowledge and appropriate education as investors. Some
of them knew the basics of mutual funds but did not possess in depth knowledge.
53
LIMITATIONS
 This study was limited to sample size of 50.
 The time has constraint of 1 month.
 The customer was not providing right information to us.
 Non-availability of past data, Balance Sheet etc.
 Non-availability of Fund Manager to discuss on fund strategies and growth

projections due to geographical location.
 This study has been limited by time and cost factors.
 This study has been made from the information given by Nivesh.com office.
Accuracy of the findings is dependent on the quality of their Responses.
54
CONCLUSION
A mutual fund brings together a large group of people and invests their aggregated money in
stocks, bonds, and other securities. The advantages of mutual funds are professional
management, diversification, economies of scale, and wide range of offerings. The
disadvantages of mutual funds are high costs, over-diversification, possible tax
consequences, liquidity concerns, and the inability of management to guarantee a superior
return.
There are many, many types of mutual funds. You can classify funds based on asset class,
investing strategy, region, etc. Mutual funds have expenses that can be broken down
generally into on-going fees (represented by the expense ratio) and transaction fees
(loads).Some funds carry no broker fee, known as no-load mutual funds.
One of the biggest problems with mutual funds are their costs and fees. Mutual funds are easy
to buy and sell. You can either buy them directly from the fund company or through a third
party. Comparing fund returns across a number of metrics is important, such as over time,
compared to its benchmark, and compared to other funds in its peer group.
Moreover, since most of the population belong to the young generation who do not possess
much knowledge about mutual funds. But there is high demand and requirement of education
and awareness for mutual funds for the common public.
Keeping in mind Nivesh.com, which is an online mutual fund platform, it was concluded
from the survey that most people would prefer an online platform for investment in mutual
funds and it is a positive sign for the mutual fund industry.
55
RECOMMENDATIONS
1. Tapping the upcoming market – Semi Urban Market as there is a lot of opportunity. Most of
the Mutual Funds are operating in the metros and big cities as per there present branch office
location if they have their market size they have to open more distribution centres at the
various urban and semi urban market.
2. To create the awareness about the different product of mutual fund and not about the generic
product various respondent were not aware of mutual fund product and the type of mutual
fund schemes and the risk associated with them. Also create awareness in various
government offices and professional institutions.
3. To provide some kind of curriculum at the school college level to create awareness regarding
mutual fund since a large portion of the population belong to the younger generation who
must be educated about mutual fund in their initial stage.
4. To provide variety of options online and eliminate paperwork as much as possible to ensure
smoother and a convenient process of transactions of mutual funds.
5. As recommended by a customer, an online platform must include past performances of

different mutual funds of more than 5 years for proper comparison.
56
QUESTIONAIRE
Survey Questionnaire on “Mutual Fund and Customers’ Perception Towards It”
This survey is going to conduct due to successfully completion of my research work. My

major area of concern is to know about the mutual funds and customers’ perception towards
it. There is no any other objective related with this survey. You are requested to fill up the set
of questionnaire carefully. The information provided by you will remain confidential.
Name:
Location:
Contact number:
Email ID:
Gender:
1. You belong to which one of the following category:
Govt. Employee Professional Private Firm Employee Self Employed
Business Person Agriculturist Others
2. Your annual income is in the range of:
Below Rs. 1 Lakh Between 1 Lakh to 2 Lakh
Between 2 Lakh to 3 Lakh Between 3 Lakh to 4 Lakh
Between 4 Lakh to 5 Lakh Above Rs. 5 Lakh.
57
3. Where do you invest your savings?
Savings Bank Fixed Deposit Shares/Debentures Gold/Silver
Postal savings Real Estate Mutual Funds Insurance
Others (Please Mention)
4. What are the factors to which you give priority when you invest?
Returns
Safety
Liquidity
Risk
Marketability
Others
5. Do you know about Mutual Fund?
Yes No
6. Are you an investor in Mutual Funds?
Yes No
7. If yes, how is your investment pattern?
Systematic Investment Plan Lump sum/One time Very rare
8. In which type of Mutual Fund Scheme have you invested?
Equity Fund Debt Fund Hybrid Fund
58
9. If Equity Funds then, in which category do you invest?
Diversified Equity Fund Mid Cap Fund Sector Specified Fund
Tax Saving Fund Others
10. What do you look before investing in a particular mutual fund?
Past Performance (NAV) Ratings by CRISIL, ICRA, etc.
Management Companies (AMC) Expert Advice
11. Where do you gather information about the performance of different mutual funds
schemes?
Financial Institution Brokers Consultants TV Channels
Internet Magazines
12. Since how many years are you investing in Mutual Fund Schemes?
1 year 2-3 years More than 5 years More than 10 years
13. You invest in mutual funds schemes because:
Professional Funds manager manages them with in depth research input from investment
analysis
Mutual funds diversify the risk of the investor by investing in a basket of assets
Very simple to invest monitor fund performance on a regular basis
Less calculation id required as compared to share market
59
They give assured and consistent return
It is better to invest in mutual funds rather than investing directly in shares
It is good investment instrument
14. Is there a need for creating awareness among the public about the benefits of investing in
Mutual Funds?
Agree Disagree
15. You have not invested in mutual funds because:
It’s not a lucrative investment instrument
No satisfactory return on investment when compared to other investment instruments.
No safety for funds invested
Risky investment instrument
No / Less Liquidity
No knowledge about how to invest
No knowledge about where to invest / investment centres
No Mutual Fund investors’ education & service centres
It is related to share market, so it is very risky and the returns are not guaranteed
16. What do you/would you prefer?
Online platform Offline platform
60
17. Do you have any suggestion to improve the popularity of mutual funds among the
investors?
61
BIBLIOGRAPHY
 www.valueresearch.com
 www.moneycontrol.com
 www.wikipedia.com
 www.nivesh.com
 Nivesh.com App
 Google Forms
62

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Project Report

“MUTUAL FUND AND CUSTOMERS’

Submitted in partial fulfilment for BBA, C.C.S University, Meerut.

Institute of Management Studies, Noida

Submitted To: - Submitted By:-

Dr. Iram Ahmed Harshit Chaurasia

Place: Signature of the Student:

Place: Signature of the Guide:

It is a pleasure to have the opportunity to extend my heartiest thanks to everybody who

I also feel highly privileged to express my indebtedness to teachers, staff members, my

S.NO. TOPICS PAGE NO.

I. Company Profile 1-10

3 CHAPTER-2 S.W.O.T ANALYSIS 11-12

5 CHAPTER-4 RESEARCH METHODOLOGY 37-39

6 CHAPTER-5 DATA ANALYSIS AND INTERPRETATION 40-52

7 CHAPTER-6 FINDINGS 53-55

I. Limitation and Conclusion

• Search Nivesh.com on • Create your profile • Select your investment

How To Register Client On Application

• Paperless App and Web Portal for Mutual Funds Investments

• Goal based selected mutual funds schemes

• Analytics based re-balancing

• Customer is our focus

Investment in mutual funds can done through 2 ways:

• Systematic InvestmentPlan (SIP) is an investment strategy wherein an investor needs to

Background Of Mutual Funds In India

Phase I (1964-87): Growth Of UTI:

Phase II (1987-93): Entry of Public Sector Funds:

Phase III (1993-96): Emergence of Private Funds:

Phase IV (1996-99): Growth and SEBI Regulation:

Phase V (1999-2004): Emergence of a Large and Uniform Industry:

Phase VI (From 2004 Onwards): Consolidation and Growth:

Advantages Of Mutual Funds

• Diversification – By owning shares in a mutual fund instead of owning individual stocks or

Disadvantages Of Mutual Funds

Channels – Structural shift from “transaction-led” pricing model to an “advisory-led”

 Competition – The industry is likely to witness a wave of consolidation as shrinking

Self-perception theory attempts to explain how individuals develop an understanding of the

3.2 Conceptual Analysis of Customer Perception

According to Byron McCann (2011), correlation between behavior, experience and

Figure 3.2.1: The whole diagram of Market Scenario.

3.3 The factors that influence customer perception.

Economic Factors: Economy of a country impacts the perception of consumer in a great

Customer perception is affected by several components like grades, education, age,

In today’s environment, according to the consumer’s perception, companies are competing

3.5 Link between CRM and Customer Perception.

HIGH • No choice but handle • Cultivate relationship.

LOW • Focus on short term • Very cautious decision

Open Ended Equity Fund

Closed Ended Debt Fund

1. Based on the structure.

Types of MF based on Structure-

Types of MF based on Investments Instruments –

Basis Equity Funds Debt Funds Balanced Funds

Risk Moderate to high Low Moderate

Returns 15-30% 7-8% 10-20%

Sub Categories of Mutual Funds Provided by Nivesh.com

Corporate Bond Funds

Equity Savings Fund

Balanced Advantage Fund

Tax Saving Fund

Plan for children