Source: E-mail dt. 7.8.2012




Dr. Vishnumurty Narra

Quadruple Doctorate in Business Management, Philosophy, Education and Psychology

Hyderabad, India



Globalization and Changed Consumer Disposition    



Modern economies all over the world   in the ultimate analysis -consumer vis-à-vis market analysis - are thriving based on the consumer disposition towards nature, society and life in general and his consumer behavior pattern in particular.  Globalization phenomenon emerged onto the global scenario from the womb of global economy with national economies as its constituents which are closely knitted and interwoven with each other.   While globalization is an offshoot of modern world economy based on the principles of profit-maximization, export of capital and export of technical know-how, having mode is an offshoot of its sibling-consumer activism.     In fact, consumer activism has reached to such an extent, more particularly, in certain service sectors, such as Cellular telephony and in regard to certain FMCGs such as detergents, tooth pastes to TV sets, of late, a kind of consumer confusion and consumer enigma is prevailing in the market.


       Principles of world-economy with an emphasis on free economic competition reinforced by free expression of consumer interests – consumer feelings, expressions, ideas, thoughts, views and opinions- has become the embodiment of modern economic and business philosophy, that is, Globalization. Thus, globalization is finding its echoes and re-echoes not only in the principles of economy and management but in shaping, influencing and determining the consumer behavior patterns as well.    Globalization has become not only an economic phenomenon but a socio-cultural and politico-economic phenomenon too.


       Acquisitive Society is the basis for the emergence of  Having Mode in modern consumer world, that is, modern consumer is increasingly realizing his nature  in acquiring more and more assets, and/or articles in general and electronic gadgets, electronic produces’/devices in particular (Erich Fromm).   Thus, his individual behavior and consumer behavior are increasingly influenced not just in acquiring more knowledge in epistemological sense but in acquiring more assets and gadgets in having mode.   Consumers are increasingly giving value addition to their life by the physical/material, commercial and market value of the acquired products which includes the brand image of the services acquired. He is looking at his individual self-image is the summation of his individual knowledge and individual assets plus the brand image/s of the acquired products/organizations. The same phenomenon is finding its expression even with respect to the age-old service sector organizations such as educational service and medical services. Consumers are deriving pleasure not only in acquiring modern products, such as power-steering cars but in acquiring professional qualifications in Management, Computer science, Electronics & Telecom. Engineering, Financial Engineering, Public Relations and so on so forth; as well.   Modern consumer wants to give value addition to his individual strength and individual personality not just by equipping himself with the conventional goods, properties and conventional services but by equipping his mind and life with the knowledge of cybernetics, informatics, management and by having a latest cell phone device, Credit/Debit Card, ultra modern car, an aesthetically designed flat/apartment by availing housing and personal loans from Banking institutions in general and new-born private banks such as ICICI, HDFC, UTI Bank Ltd, Citi Financial Bank,. HSBC   and so on so forth.


Thus digital having mode has become the élan vital –employalty essential style- of the modern societies in general and that of modern consumer in particular.   It has become the philosophy of his life, that is, his ideas, conceptions, attitudes, societal necessaries and social wants are very much influenced at every moment and in every act of social and consumer walk of life. In fact, lack of total satisfaction, and longing for the possessiveness of goods, comforts and assets are the root causes for the development and progress of history.   Had there been total satisfaction with respect to goods, services and comforts one owns as enunciated by ancient ascetics such as Lord Buddha of India, plausibly, the modern business world in general and modern telecommunications and banking organizations would have been collapsed within no time.  The fundamental characteristic of the modern consumer after 90s’ is, his constant search for beauty, value and strength not just by mere acquisition of a plenty of goods, services  and comforts but in finding value realization through electronic oriented goods and services.    Though electronic revolution had its impact during 80s itself, yet, services found their sway only after 80s’.    Consequently, modern consumer is longing for services blended with digital technologies.   Services such as e-Learning, e-Medicine/Telemedicine-Governance, teleshopping and so on so forth have come into being.  Even the Customer Relationship Management has been visualized by the modern consumer as e- CRM. But for his craving for ‘more comfort with little effort’, e-Business as an offshoot of e-Commerce acquired lot of prominence.    Whether it is a Television, Car, Lap- Top or a Stereo system, or availing banking & telecommunications services, everything, a modern consumer wishes to handle it using remote device/s (Credit Cards, Online payment systems, etc) so that he can have more comfort with little effort.


New ways of doing things on the Electronic Photonic Infrastructure viz; e-Governance, e-Medicine/Telemedicine, e-Commerce, e-Education, e-Advocacy, e-Balloting, e-Conferencing, e-Tourism, e-Ticketing and e-Banking respectively.


Changed Life-style impact on Banking Services sector



a. Scope of Services in Profit Seeking Organizations


       Changes in life-style and increase in affluence is creating a good market for services in the area of rentals of houses, apartments, farm houses, hotels etc.  This overall increase in affluence i.e. spending power and wish for more comforts is resulting in demand for those services such as voice & internet telephony, Banking which includes ATM banking, on-line banking apart from conventional banking with eye-to-eye contact.   Changes in life style have also resulted in women going to work.  The working women segment promises a good scope in personal care services like beauty parlors, hair dressing, image services, etc.  The change in life style has also resulted in increased leisure time which has materialized into recreational and entertainment services (Zeithaml V A & Bitner M J, 2003).   Greater life expectancy, with the desire to live longer has resulted in special care facilities in the services like private hospital (Apollo Health Club) diagnostic services and medical related services.  Fast, mechanical and self centered life and deterioration in law and order have created scope for the more involvement of public and private sector telecom and banking organizations apart from other service sector organizations.


       Increased complexity of life particularly in the sphere of business has lent an increasing scope in professional services like legal consultancy, accounting/management consultancies.  Similarly, growing uncertainties and increasing competition have its effect on education, schools, hospitals, colleges and vocational studies and to serve the needs of these fast growing services sector, telecom and banking organizations, the two core group service sector organizations are spreading their tentacles across the country.   Apprehension of an uncertain future has made the general public to plan financially.   Banking, Insurance and Insurance linked banking and other such financial services are having a wide scope (Gairola PL, 2007).


       The constantly changing economics have resulted in globalization and privatization (deregulation) which in turn have given an impetus to the various communication services like courier service, land line & cellular services, limited mobile service, fax, telex, e-mail, Internet & Intranet, web sites vis-à-vis search engines, etc.


       Privatization and deregulation policies have produced its effect on transportation services. Private Airways (like Jet Airways, Sahara and other such private air ways), private telecommunications companies, private national and international banking services growth have increased and there still remain a tremendous scope in the services.   The dramatic change in technology is resulting in increased potential of new service offerings.  


       One of the most profound effects is seen in the services of Internet.   Some of the Internet based services are internet based bill paying service, the project of the connected car allows people to access all kinds of existing and new services like providing weather forecast, warnings, booking a room at a nearby hotel, recommend restaurant and make dinner reservation while on road. Mobile internet through cell phones and the experimenting of delivering advertising messages via cell phones are few of surprises we will be witnessing in the coming days.   Internet is not only a provider of innumerable services rather that itself has emerged as a powerful business.    Technology (internet service) provides an easy way for customers to learn and research e.g.; 20,000 web sites are currently offering health related information. Internet service has enabled global reach for many more services. Technology has provided new ways to deliver service e.g.; technology has provided new ways to deliver service e.g.; customer service function of bill payment, verification of bank accounts, tracking of purchase orders, speed post, courier services, etc.  Further, self service technologies are growing across industries e.g.; online checking of bank accounts, applying for loans, money transfer, etc. have made customer employee relationship more effective.


b. Banking Reforms and Changing Behavioral Dynamics



The balance of payments crisis of 1991 served as an eye opener to all.  The need for fiscal and monetary sector reforms came to be felt both the administrators and the regulators.  The Narasimhan Committee report in August, 1991 highlighted the need for financial sector reforms and fostering competition in the banking sector.  The report also came up with a road map to achieve the same.  The agenda of the reforms was simple enough: providing a necessary platform to the banking sector to operate on the basis of operational flexibility and functional autonomy, thereby enhancing efficiency, productivity and profitability.


       The major agenda triggered by the banking sector reforms initiated in 1992 has been one of deregulation of the financial sector, particularly banking sector, with greater autonomy in operations, consolidation of banking system and convergence to universal banking, restructuring of weak public sector banks, adoption of scientific tools for management of risks, etc.  Be it interest rate deregulation or Basel I compliance, prudential income recognition and asset classification norms or phased introduction of risk management systems, all the reform actions that have followed have been more or less in conformity with international practices  and standards.  These changes were followed by changes in the structure and ownership of public sector banks, such as Government of India’s ownership of 100% coming down to almost 51% in phases in the case of Public Sector Banks and introduction of newer delivery channels.  The second wave of reforms that were introduced from 1997 saw a greater emphasis on capital adequacy, removal of rigidities in the legal system, enhancing transparency in banks’ balance sheet, entry of new private sector banks, etc.


       Even as the process of liberalization was initiated in the banking industry, the entire process was devoid of any tangible efforts at consolidation.  Whatever mergers have taken place (with private banks being the ones merged, with the exception of New Bank of India) were all on account of the regulatory concerns for the depositors’ interests.  The need for a long-term consolidation was, however, gleaned from the merger of development finance institutions into banking (for example, IDBI and ICICI).   Some of the mergers in private sector have also been induced by financial performance while some mergers were a result of the need for compliance with minimum net worth requirement or norms on diversified ownership.


       It can, therefore, be summarized that consolidation per se is yet to set in the financial sector.  The mergers so far have been on account of the factors outlined and not on account of a thought out process for consolidation.


C. Consolidation in Indian Banking and Neo-Consumerism


The current year (2007-08) will also see foreign banks and Indian banks with international presence complying with Basel II norms while the other banks will gradually move into the Basel II regime by March, 2009.  The next few years will see sea changes in the Indian banking sector.   Foreign players are set to enter the industry by March, 2009 with Foreign Disinvestment in India capped at 74% in banking.  The capital account convertibility of the Indian rupee, if it materializes, will bring about wholesome changes in international banking and forex operations by banks.  The foreign players will enter Indian banking with the twin advantages of large capital base and the cutting-edge technology.  The emerging scenario requires Indian banks to have a very strong capital base and develop a competitive framework that would enable them to compete with international banks.


D. Transparency Measuring Instrument


         A new measuring instrument was developed by the investigator.   Major attributes taken into consideration with respect to transparency are viz; Quality of Customer Information, Business Ethics, Commitment (To Improvement), Responsive Dialogue, Nature and Disposition of Advertisements and Business Propaganda/Publicity.


       Instrument Characteristics: This Instrument was developed by the investigator. For each and every item on the scale, Item validity is seen by valid bi-serial correlation coefficient which is a reflection of Item (question) discriminating power. 


       It comprises of 31 questions on Transparency related aspects. Its Reliability Coefficient is 0.94 which is significant at above 0.001 level


Results and Discussion


         An examination of the results   reveals that Transparency scores of the respondents have a positive correlation to Consumer Loyalty in respect to the  Banking group as well (n =  175).  The coefficient of correlation was 0.65 which is significant at 0.001 level.  It indicates that a highly positive correlation exists between Transparency and Consumer Loyalty in Banking group as a whole.


                   With regard to the results of the three banking service sector organizations viz;  ANDHRABANK, SBI & ICICI, the correlations found between Transparency and Consumer Loyalty are as follows.


                   In the  Andhra Bank Limited,  the correlation is 0.76 and it is significant at 0.001 level.  This wants a conclusion that a highly positive and significant correlation exists between Transparency and Consumer Loyalty  (n = 48).


                    In the State Bank of India Group (SBI/SBH),  the correlation is 0.66 and it is significant at 0.001 level.  This wants a conclusion that a highly positive and significant correlation exists between Transparency and Consumer Loyalty (n = 67).


                   In the ICICI,  the correlation is 0. 73 and it is significant at 0.001 level.  This wants a conclusion that a highly positive and significant correlation exists between Transparency and Consumer Loyalty (n = 60).


                   Among all the three banking service sector organizations, ANDHRABANK has got the highest degree of correlation.   Even for the remaining two service sector organizations also, it is found that there is a positive and high correlation between Transparency and Consumer Loyalty.  It may be recalled that the correlation for the total banking customer population (n = 175) is also highly positive.


       An examination of the results on the impact of Transparency on Consumer Loyalty calls for a conclusion that there is a highly positive correlation between these two variables.


       A gradual positive increase in the Transparency is influencing and changing the Consumer Loyalty level in positive direction.  This is true in all the three banking service sector organizations.  It is therefore felt that an increase in Transparency level will certainly help promote Consumer loyalty and helps reduce Customer switching  (Customer Exodus or Customer Migration as is called in Management Jargon).       




           Increasingly positive image of business transparency is associated with favourable attitude to Consumer Loyalty in Banking Service Sector Organizations.  This is true in all the three banking service sector organizations. Hence it is felt that an enhanced positive transparency image will help reduce customer churn and/or customer migration.