GITAM Institute of International Business

Visakhapatnam

A Report on
“Evaluating the buying behavior of customers in the
shipping industry ”
HCL Infosystems, Visakhapatnam.

Submitted by
Krishna Chandra. E

1226109220

Section-B

MBA (International Business)

GITAM INSTITUTE OF INTERNATIONAL BUSINESS

Submitted to

Functional guide
Industrial guide

Mr. Kameshwar Rao

Ms. Lubza Nihar

GIIB
GIIB

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 DECLARATION

I (Krishna Chandra. E) hereby declare that this project work on

“Using the concepts of Game Theory and Demonstration Effect to
increase market share in shipping companies” is done by me and
this project submitted by me, is my own work and has not been
submitted to any other university or institute or published earlier

Krishna Chandra. E

MBA (IB)

GITAM INSTITUTE OF INTERNATIONAL BUSINESS

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 ACKNOWLEDGEMENT
At the outset, I would like to thank GITAM Institute of international business
for giving me an opportunity to expand the horizon of my knowledge about
office automation industry. I am grateful to the manager, Mr Ramakrishna
Mondal and Mr. V. Dileep (Business Development Executive) of HCL
Infosystems for their encouragement and generous assistance

I am deeply indebted to my faculty guide Mr. Kameshwar Rao, coordinating

the project work and giving personal encouragement and gracious
contributions of time, counsel and materials.

A heartfelt thanks to respondents surveyed whose ideas, critical insights and

suggestions were invaluable in the preparation of this report.

Krishna Chandra. E

MBA (IB)

GITAM INSTITUTE OF INTERNATIONAL BUSINESS

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 CONTENTS

Topic
Page number

 Chapter -1 Introduction 06
 Chapter-2 Review of concepts 08
 Chapter-3 Research Methodology 18

 Chapter-4 Data Analysis and Interpretation 24

 Chapter-5 Findings, Suggestions and Conclusion 30

 Reference 34

 Annexure 35

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EXECUTIVE SUMMARY

In the present scenario, competition is a major factor for companies. As more and more
companies are getting into the market, the pie keeps getting smaller. It is important that
companies not only look for new markets, but also ensure that they are able to increase their
market share in the existing markets.

Demonstration effect is one of the tools that can be used to try and find out the factors that
influence customers in purchasing a specific product. It tells us whether a customer is influenced
by his peers when purchasing a particular product, and if that is the case, then this phenomena
can be used to try and get more customers. Game theory is a concept that can be used to
formulate a strategy to ensure that the competition can be beaten in spite of what the competitors
do.

In this report, it was found that shipping companies do not look at what their peers are using
while purchasing office automation products. But shipping companies look at low costs and
brand loyalty while purchasing their products. So HCL Infosystems should ensure that
information regarding its products and their features are easily available in the market so that
when companies are looking to buy any office automation product, HCL would be the first
choice and easily available.

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[CHAPTER 1]
Introduction

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HCL Infosystems Ltd is India’s premier hardware, services and ICT systems Integration
Company offering a wide spectrum of ICT products that includes Computing, Storage,
Networking, Security, Telecom, Imaging and Retail. HCL is a one-stop-shop for all the ICT
requirements of an organization. India's leading System Integration and Infrastructure
Management Services Organization, HCL has specialized expertise across verticals including
Telecom, BFSI, eGovernance & Power. HCL has India's largest distribution and retail network,
taking to market a range of Digital Lifestyle products in partnership with leading global ICT
brands, including Apple, Cisco, Ericsson, Kingston, Kodak, Konica Minolta, Microsoft, Nokia,
Toshiba, and many more.

For Imaging Solutions and Equipment, HCL Infosystems Ltd. has partnered with the best in the
industry like Toshiba, Infocus, Duplo, etc to bring truly world class imaging solutions. To be
able to reach maximum number of customers, HCL Infosystems Ltd. sells through a network of
direct and indirect channels spread throughout India. The company is a pioneer in the field of
Office Automation, being the first to introduce equipment like photocopiers and digital
duplicators in India.

For Printing Solutions and Equipment, HCL Infosystems Ltd. has partnered with the best in the
industry like Konica Minolta, Kyocera, Toshiba, etc. There's a Duplo digital duplicator for all
usage levels - from small offices to professional printing environments. Duplo's digital
duplicators require no heat or pressure fusing systems and operate without toners or developers,
ensuring a clean, safe printing environment. Additionally, all models incorporate advanced-
designed features including PC or Macintosh compatibility; a highly reliable, three-roller feeding
system; air-assisted sheet separation; patented master disposal system; automatic background
recognition; confidential lockout; and optional color cylinders available in a myriad of unlimited
custom colors.

Telecom division, a part of HCL Infosystems Ltd deals in Voice, Videoconferencing, Audio
Conferencing and Broadcast solutions It provides the customized solutions from small to big
business houses. Partnering with the major players in the industry HCL provides the state of art
solutions for the enterprises in communication, video conferencing and audio.

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[CHAPTER 2]
Review of Concepts

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GAME THEORY:

Stanford Encyclopaedia defines game theory as the study of the ways in which strategic
interactions among economic agents produce outcomes with respect to the preferences (or
utilities) of those agents, where the outcomes in question might have been intended by none of
the agents. What it essentially means is that game theory is a study of the ways in which
decisions taken by one person will affect the outcome and decision-making of another person so
that the final outcome would be something that wasn’t intended in the first place.

Game theory can be useful in helping marketers understand the external environment,
particularly the way in which firms can deal with competitors. It uses the metaphor of a game to
describe this situation, and the participants are referred to as players. In a marketing context,
game theory’s usual references to players will instead be companies, and the possible gain will
be in terms of profits or sales. A game may consist of a single set of decisions, or a round, or it
may consist of many rounds. Although such games cannot reflect all aspects of real life, they can
give managers useful insights into the strategies that may work in the real world and an
understanding of why some courses of action may be more effective than others.

The assumptions made by game theory are as follows:

 Players are self-interested in that they try to maximise their own payoff from the game.
 Players are rational – they can calculate pay-offs correctly and will select the ones that
maximise individual reward.
 The optimum decision for a player will depend on how the other player(s) will react and,
therefore, it requires a dynamic and interactive approach to strategic decision-making.
In a marketing context, the objective is to identify marketers’ optimal decisions under conditions
of uncertainty and interdependence. Games consist of the following characteristics and
conditions, which are known to the firms involved:
 a defined set of possible courses of action for the firms
 identifiable preferences of each firm among the possible outcomes of the game
relationships whereby outcomes are determined by firms’ choice.

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Firms within a game choose strategies by rationally examining available information, and by
considering the actions open to them, the expected pay-offs and their expectations of other
players’ decisions.

Each player in a game faces a choice among two or more possible strategies. A strategy is a
predetermined ‘programme of play’ that tells him what actions to take in response to every
possible strategy other players might use. A crucial aspect of the specification of a game involves
the information that players have when they choose strategies. The simplest games (from the
perspective of logical structure) are those in which agents have perfect information, meaning that
at every point where each agent's strategy tells him to take an action, she knows everything that
has happened in the game up to that point. A board-game of sequential moves in which both
players watch all the action (and know the rules in common), such as chess, is an instance of
such a game. By Contrast, consider this example. Suppose first that you wish to cross a river that
is spanned by three bridges. (Assume that swimming, wading or boating across are impossible.)
The first bridge is known to be safe and free of obstacles; if you try to cross there, you will
succeed. The second bridge lies beneath a cliff from which large rocks sometimes fall. The third
is inhabited by deadly cobras. Now suppose you wish to rank-order the three bridges with respect
to their preferability as crossing-points. Your task here is quite straightforward. The first bridge
is obviously best, since it is safest. To rank-order the other two bridges, you require information
about their relative levels of danger. If you can study the frequency of rock-falls and the
movements of the cobras for awhile, you might be able to calculate that the probability of your
being crushed by a rock at the second bridge is 10% and of being struck by a cobra at the third
bridge is 20%. Your reasoning here is strictly parametric because neither the rocks nor the cobras
are trying to influence your actions, by, for example, concealing their typical patterns of
behaviour because they know you are studying them. It is quite obvious what you should do
here: cross at the safe bridge. Now let us complicate the situation a bit. Suppose that the bridge
with the rocks was immediately before you, while the safe bridge was a day's difficult hike
upstream. Your decision-making situation here is slightly more complicated. You would have to
decide whether the cost of the long hike was worth exchanging for the penalty of a 10% chance
of being hit by a rock. However, this is all you must decide, and your probability of a successful
crossing is entirely up to you; the environment is not interested in your plans.

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However, if we now complicate the situation, it becomes much more puzzling. Suppose that you
are a fugitive of some sort, and waiting on the other side of the river with a gun is your pursuer.
He will catch and shoot you, let us suppose, only if he waits at the bridge you try to cross;
otherwise, you will escape. As you reason through your choice of bridge, it occurs to you that he
is over there trying to anticipate your reasoning. It will seem that, surely, choosing the safe
bridge straight away would be a mistake, since that is just where he will expect you, and your
chances of death rise to certainty. So perhaps you should risk the rocks, since these odds are
much better. But if you can reach this conclusion, your pursuer, who is just as rational and well-
informed as you are, can anticipate that you will reach it, and will be waiting for you if you
evade the rocks. So perhaps you must take your chances with the cobras; that is what he must
least expect. But, then, if he expects that you will expect that he will least expect this, then he
will most expect it. This dilemma, is general; you must do what your pursuer least expects; but
whatever you most expect him to least expect is automatically what she will most expect. You
appear to be trapped in indecision. All that might console you a bit here is that, on the other side
of the river, your pursuer is trapped in exactly the same quandary, unable to decide which bridge
to wait at because as soon as he imagines committing to one, he will notice that if he can find a
best reason to pick a bridge, you can anticipate that same reason and then avoid him. This
example illustrates a game of imperfect information, since the fugitive must choose a bridge to
cross without knowing the bridge at which the pursuer has chosen to wait, and the pursuer
similarly makes his decision in ignorance of the choices of his quarry.

Some games may contain mixes of sequential and simultaneous moves. For example, two firms
might commit to their marketing strategies independently and in secrecy from one another, but
thereafter engage in pricing competition in full view of one another. If the optimal marketing
strategies were partially or wholly dependent on what was expected to happen in the subsequent
pricing game, then the two stages would need to be analyzed as a single game, in which a stage
of sequential play followed a stage of simultaneous play. Often, however, a player's utility is
optimized through use of a mixed strategy, in which he flips a weighted coin amongst several
possible actions. Mixing is called for whenever no pure strategy maximizes the player's utility
against all opponent strategies. Our river-crossing game exemplifies this. As we saw, the puzzle
in that game consists in the fact that if the fugitive's reasoning selects a particular bridge as

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optimal, his pursuer must be assumed to be able to duplicate that reasoning. The fugitive can
escape only if his pursuer cannot reliably predict which bridge he'll use. Symmetry of logical
reasoning power on the part of the two players ensures that the fugitive can surprise the pursuer
only if it is possible for him to surprise himself.

Demonstration effect

Demonstration effect is theory which is popularly used in the areas of

economics, political sciences, sociology. This theory can be viewed in terms
of growth in domestic markets and division of labour. This theory is often
used by the marketers to build their brands in the global markets.

Demonstration effect can be defined as:

Revolutionary events in one place may act as a catalyst for a revolutionary

process at other place at approximately same amount of time. It is actually
based on the observation of actions made by others and their consequences.
Consumers in developing countries try to imitate consumers in developed
countries comparing with their life styles, consumption behaviour, buying
patterns etc.

Consider the example when the I-phone, a brand of Apple is released. The phone is first released
in U.S and the marketers made it so popular that many of the people who wanted to buy, waited
for the product to release and made advanced bookings for the product to become early adapters.
It was first released in U.S in 2007.

If we consider the situation in Indian context at the same time when I-phone was released in U.S,
there were lot of speculations and talks about the phone, its features and its release dates in India.
The product is segmented for niche class in India. It became very popular in India also even
before it is released here. It’s because that the customers shown a lot of interest and the brand

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were successful over there. This raised a lot of talks and speculation about the prices, release date
and features of the same product which was successful in those countries. Some people even felt
that it’s a status symbol to buy an I-phone when it is released in the beginning. But, after some
time, the sales of the product were not as booming as the manufacturers expected.

If we observe carefully, I-phone is not the only brand available in India. It has many competitors
in the niche and business class segments like Nokia, Samsung, HTC, Black berry, etc which are
already established in India. All these companies when released their brands, customers were
neither so enthusiastic about the release of the product nor there were so many speculations about
the product. All this happened because the Indian customers were trying to imitate the situation
which arose in the countries where the phone was originally released. Since, the company Apple
was well established in U.S and there were many brands before which emerged as the most
successful brands in those markets, the customers naturally some enthusiasm in buying the I-
phone too. But it is not the same case in India. Not many were used to the products of Apple in
India. Seeing that the product is successful in U.S, the customers in India too perceived the
product as a valuable brand and almost the same situation is imitated here.

This example of I-phone can be taken as a suitable example for explaining the theory of
demonstration effect where the Indian customers also shown some enthusiasm in buying the
product comparing themselves with the customers in U.S. Also there is affect of media in this
scenario. There were lots of talks in the news channels about the product and its features. It can
also be observed that there are not many advertisements made directly for I-phone. Not many
television ads were telecasted about the product.

This kind of scenarios can be seen for many other products in the daily life. Some marketers
even use this theory to market their products and build brands without any mass media
advertisements.

Demonstration effect used is only indirect way of the actual theory which is from economics
where it is used in analyzing the consumer behaviour and division of labour. Many marketers
have seen the effect of consumer behaviour under demonstration effect and made it a tool for
developing their marketing strategies.

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As already discussed, the customers in developing countries try to imitate the life styles, way of
living etc. of the developed nations. This imitation will result in the increase in the consumption
levels in the domestic market. This results in the increase in the growth of domestic markets.

With the entry of the foreign brands into the domestic markets, brand building and increase in the
market competition takes place and the prices and quality of the products will be greatly affected.
This will result in persuasion of the customers to buy more (also the capital acquirement and
inflow of FDI’s will increase with increase in customer buying behavior – this is one dimension
of explaining demonstration effect in economics). This also in turn results in higher level of
product specialization. Thus, the customers can choose from different brands available.

But at the time of recession or when the market is at a higher rate of inflation, the similar
customer buying behaviour will not be there. In this period the average consumption will be
decreased. This will result in the reduced buying behaviour of the customers. This is the time
where sales for some niche branded products will be reduced. Also in this period the customers
have a perception that the branded products have higher prices than the domestic non branded
products though it is not always true.

Also there will be an effect of per capita income on the customer buying behaviour. If, the
individual per capita income is lower than the average per capita income he will try to reduce his
consumption and increase his savings. In this case the individual customers try to imitate the
trend followed by the people in the society and change their buying patterns.

Thus, it can be said that “demonstration effect” raises the marginal utility of consumption in the
period when the average consumption raises. Also the “demonstration effect” is stronger when
the individual consumption is uncertain. This is because the individual always tries to follow the
trends in the society. Particularly the trends in the life styles, electronics, accessories etc certainly
changes at a rapid pace. Any individual living in that society will have to adopt for those changes
and behave accordingly. Many companies used this logic for developing their brands. The
companies created need for the customers and persuaded them to buy their products using
demonstration effect.

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Effectiveness of communication networks:

The communication network also plays a vital role in affecting the demonstration effect. The
points of hinterlands where the people have direct access with the people of other countries
demonstrate more than the people in the domestic areas. For example consider the hypothetical
example of the people of the metropolitan cities like Mumbai, Bangalore, Chennai, Hyderabad
etc have more access to the people of other countries either in professional way or in the family
terms. Thus, these people know the trends of the other countries quickly than in the rural areas.
Thus, they try to follow the trends. The people in the rural areas observe these people in the
metropolitan cities and try to imitate them. The latter imitation will be less than the former one.
But with the increasing global networks like media, internet, phone calls the rural people can also
know the information quickly.

Also consider the phenomena of local residents adopting the styles and manners that they
observe from different foreign tourists who visit the place. This can be considered as a direct
example of effect of communication networks in the demonstration effect.

Apart from the above mentioned factors various other factors such as religious beliefs, ethnicity,
technology, language, aesthetics etc affect directly or indirectly the demonstration effect.

Brand building strategies:

Different brand building strategies are being used by various companies to sustain in the highly
competitive markets and to gain the maximum market share possible. Some of the brands
building strategies which are through demonstration effect directly and indirectly are discussed
below.

Opinion leaders and word of mouths:

Almost all the individual customers directly or indirectly are influenced by the word of mouth
and opinion leaders. Opinion leaders are those who influence the individual customer’s buying
directly. They can be the mentors for individuals, mentors, superiors etc. every individual
customer will try to take suggestions from some others who are more knowledgeable in order to
gain confidence in their decisions.

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Word of mouth is referred to as passing of information from one person to other person. These
play a major role in the buying behaviors of customers. Both opinion leaders and word of mouth
are the examples of demonstration effect.

In the global world with the increase in the communication networks, word of mouth has become
so affective that it can influence any big brand. Word of mouth can not only through direct
meeting between two persons, it can be trough online or even through where everyone writes
their own opinions. With this popularity of internet the word of mouth has developed from single
linear word of network to a very complex multimode network. The information here will spread
with high speed.

The promotion of the brand is also done indirectly without the influence of the companies in the
case of word of mouth thorough online. This could either help the brand to gain new customers
or even degrade the brand.

If the companies focus on the consumer satisfaction and build the strategies like starting the
online community and offer its customers to comment on the product and their personal feeling
about the product. Many of the companies are already doing it. The companies are asking to
share the feelings of the customers about the products online. This will help the company in both
ways in terms of giving their customers more satisfaction and the online word of mouth passed
by them will bring more customer base to buy the product. This is the long term strategy
developed by the company as the brand loyalty will increase in the customers. Thus, this strategy
will increase the customer base along with retaining the old customers.

Apart from the online word of mouth the companies are using the retailers to communicate
positively about the product and promote their products. Here retailers become the word of
mouth as they suggest the customers about a particular brand with their own personal experience.
Thus, companies are also focusing on maintaining the positive long term relations with the
distribution channels in specific with the retail networks.

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Event management:

Event management is also one of the tools for the companies to promote their brand. It is an
indirect way of using the demonstration effect in promotion of brands.

Event management means the enterprises try to attract media, social organizations, consumer’s
interests and attention by interfering in or planning some newsworthy events by themselves in
order to improve their reputation and popularity. This establishes good image and finally form
the ways and methods for their products and services sales.

In the cases of the events where the companies sponsor like sports tournaments, the
demonstration effect is through the teams which the brands are sponsoring.

Print and electronic media advertisements:

The advertisements in the print and electronic media will be the most effective means for the
brand building and promotion. These ads directly attack the customers and even influenced by
the demonstration effect indirectly.

The paper advertisements given for a particular brand will be showcased in such a way that the
customers get attracted to the products. The customer’s wants use the products in the unique way
they were projected in the ads. The marketers target the customer’s perceived value. Here also
the marketers focus on selecting the brand ambassadors for their products which is suitable
according to their products and their market segmentation.

Thus, the theory of demonstration effect became one of the vital tools in understanding the
customer buying behavior. It also helped marketers to formulate strategies for their products in
building brands and gaining customer loyalty. Thus, it became key for the branding of products
and sales promotion both in the short run and long run.

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[CHAPTER 3]
Research Methodology

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OBJECTIVE OF THE STUDY

The objectives of the Project are:

 To formulate strategies to increase market share of HCL Infosysytems in the shipping

industry
 To find out if there is any demonstration effect while purchasing office automation
products

METHODOLOGY OF THE STUDY

The data used for the study has a primary and secondary character to it. The primary data was
collected through questionnaire method. The secondary data was composed through the
reference of books, websites, and interviews with various executives in different
organizations of the sample. The procured data was analyzed by using SPSS Package.

SCOPE OF THE STUDY:

The scope of the study is confined to the city of Visakhapatnam. The study is done only on a
few shipping companies that are present in Visakhapatnam.

LIMITATIONS OF STUDY

 The study was conducted in the Visakhapatnam area only.

 The survey was taken for only 28 companies

Research Problem:
The need for the study was to assess how game theory and demonstration effect can be used
to improve the market share for HCL Infosystems.

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Sample Selection:
There are several shipping companies in Visakhapatnam and most of them are in the field of
exporting and importing cargo. There are around 60 shipping companies in Visakhapatnam
of which 28 companies were the respondents to the questionnaire.

Method of Data Collection:

Primary Data: The major tool used was interview with Agents and staff of the branch office,
questionnaire was developed focusing various aspect.
Secondary Data: Literature reference, Internet Web Portals, Company Brochures.

3.8 Statistical Tools:

• Statistical Package for the Social Sciences ( SPSS )

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