CB Estrada Pawnshop: Customer Satisfaction

Background of the Study

Business is an organization or an enterprise entity that involves in
commercial, industrial or professional activities. A company negotiates their
activities through good production, services offer or retail of manufactured
products. Businesses most often form after the development of a business
plan, which is a formal document detailing a business's goals and
objectives, and its strategies of how it will achieve the goals and objectives.
Business plans are almost essential when borrowing capital to begin
operations. There three types of business the merchandising, manufacturing
and service business. The pawnshop is a type of service business because
they offer similar products. Pawnshop loans are small, short-term,
collateralized loans typically used by low-income consumers. Despite their
small principal, however, pawnshop loans are an important tool that many
customers use to manage their monthly finances during financial shortfalls.
Service business is providing work performed in an expert manner by
an individual or team for the benefit of its customers. The typical service
business provides intangible products, such as accounting, banking,
consulting, education, insurance, treatment, and transportation services.
Just like sari-sari store, pawnshop is one of the business services because it
has very little government control and it provides a service, not a tangible
product. The items having been pawned to the broker are themselves called
pledges or pawns, or simply the collateral. While many items can be
pawned, pawnshops typically accept jewelry and many others.
Pawn shop is a store which offers loans in exchange for personal
property as equivalent collateral. If the loan is repaid in the contractually
agreed time frame, the collateral may be repurchased at its initial price plus
interest. If the loan is not paid within the time period, the pawned item will
be offered for sale to other customers by the pawnbroker. Other pawnshop is
willing to trade their own items to items brought by customers to their shop.
Pawnshops have to be careful to manage how many new items they accept
as pawns: either too little inventory or too much is bad. A pawnshop might
have too little inventory if, for example, it mostly buys jewels and gold that it
resells or smelts or perhaps the pawnshop owner quickly sells most items
through specialty shops.
The benefits given by Pawnshops to their customers is no impact on
your credit rating; no matter how many times you take a pawn loan, your
items are securely stored while in pawn with 24/7 security, the interest is
repaid you get your item of value straight back and they provide the fastest
way to pawn a jewelry/electronics and it is the quickest way to address an
urgent need for relatively small amounts of cash compared with banks,
pawnshops do not impose as many documentary requirements before
releasing cash to customers.
But despite the essential role these financial-service providers play,
pawnshops still suffer from a bad reputation of preying on middle and low-
income. Until now, there is still the negative view that pawnshops prey on
consumers. We want to help the industry change its image. The perception
remains that pawnshops have a tendency to take advantage of people in
need of cash through profiteering, and that many of them are fly-by-night
operators that steal pawned jewelry.
The researchers want to study this because the pawnshop is very
popular since then and the researchers want to know how the customer
satisfied with their service. The researcher also wants to study this because
pawnshop play important role in communities by providing people an easy
fast way to borrow small money by putting up their own collateral. Not only
are transaction costs on the part of the borrower very minimal, loans are
also easily obtained provided an item of value can be presented as collateral.
With their rapid expansion in the provinces.

Statement of Problem

This study was designed to know how CB Estrada Pawnshop satisfies

its customers.
Specifically, this research sought to answer the following questions:

1. Who are the target costumers of pawnshop according to:

A. Age
B. Gender
C. Standard of living
D. Occupation
2. What are the problems encountered by CB Estrada Bayambang
Branch?

3. What proposed measures should CB Estrada Pawnshop do to solve

the problem they encountered?

Significance of the study

Most people believe that money is everything. In our generation, the

pawnshop is one of the reliable sources to loan money. So that, the
importance of this study is to find out the benefits that the customers can
get when they offer loans in exchange for personal property as equivalent
collateral.

The researchers believe that this study will help the costumers to see
the importance of CB Estrada Pawnshop even though there is some bad
reputation arisen about the business. Furthermore, the result of this study
will hopefully help the customer to understand how the pawnshop works,
and how the pawnbroker charge interest to the item that customer pawn in
CB Estrada Pawnshop Bayambang Branch.

The generalization of this study would be a great contribution to

deepen the awareness of customers. Vital results of this investigation could
be highly significant and beneficial specifically to the following:
Owner. This refers to the professional owner who takes lead in running a
service company. This study will be helpful to them to have a better
understanding about customer’s satisfaction.

Students. In this study, the paper will become beneficial to the students
because they can use this to become more attentive and be inspired to
create their own paper. This paper will serve as reference and guide if they
want to create their own paper.

Teachers. The teachers who takes the course of marketing can use the
study as a teaching material for their discussion about related topics.

Scope and Delimitation Study

This study is all about pawnshop and it was conducted in CB Estrada

Pawnshop Bayambang Branch. The researchers focused on how the
pawnshop satisfies their customer by their service. There are many people
out there who wants to loan in pawnshop rather than bank. This research
aims to extend the knowledge of customers about the conditions of CB
Estrada Pawnshop to avoid complains and to earn satisfaction of their
service from customers.

This study is only concentrated on CB Estrada pawnshops in

Bayambang, Pangasinan since the researchers are near the area. It will be
easy for the researchers to ask questions from pawnbroker and gather
enough data for their research paper.

Definition of terms

Customer service - is the process of ensuring customer satisfaction with a

product or service. Often, customer service takes place while performing a
transaction for the customer, such as making a sale or returning an
item. Customer service can take the form of an in-person interaction, a
phone call, self-service systems, or by other means.

Financial services - can be defined as the products and services offered by

institutions like banks of various kinds for the facilitation of various
financial transactions and other related activities in the world of finance like
loans, insurance, credit cards, investment opportunities and money
management as well as providing information on the stock market and
other issues like market trends.

Loan – is a money, property or other material goods that is given to another

party in exchange for future repayment of the loan value amount along with
interest or other finance charges. A loan may be for a specific, one-time
amount or can be available as an open-ended line of credit up to a specified
limit or ceiling amount.

Pawnbroker - a person who lends money in exchange for objects that he or

she can sell if the person leaving the objects does not pay an agreed amount
of money in an agreed time.

Interest Rate- is the rate amount charged, expressed as a percentage of

principal, by a lender to a borrower for the use of assets. Interest rates are
typically noted on an annual percentage rate (APR). The assets borrowed
could include cash, consumer goods, and large assets such as a vehicle
building.
Chapter 2 Review of Related Literature

Related Studies

Local

For many Filipinos, pawning jewelry at a neighborhood pawnshop has

been the most common and quickest way to address an urgent need for

relatively small amounts of cash. Compared with banks, pawnshops do not

impose as many documentary

requirements before releasing cash to customers. Moreover, the latter are m

ore accessible, as they may be found even in remote areas where banks do

not operate. But despite the essential role these financial-service providers

play, pawnshops still suffer from a bad reputation of preying on middle- and

low-income Filipinos. The perception remains that pawnshops have a

tendency to take advantage of people in need of cash through profiteering,

and that many of them are fly-by-night operators that steal pawned

jewelry.The Bangko Sentral ng Pilipinas, which has a division dedicated to

regulating pawnshops, agrees that the pawnshop industry continues to suffe

r a stigma. It admits that it receives complaints involving pawnshops from

time to time, usually in terms of operator’s that suddenly disappear without

notifying customers about how they could get their pawned assets back. The

BSP, however, says the proportion of erring pawnshops to the total number

of industry players is miniscule. Ma. Belinda Caraan, officer-in-charge of the

central bank’s integrated supervision department, says the number of

pawnshop branches that have been the subject of complaints is equivalent

to less than 5 percent of the industry’s network. The pawnshop industry has
a network of nearly 17,000, which include head offices and branches. Of the

number, about 10,000 are engaged solely in the pawning business. The rest

also operate auxiliary businesses, such as money changing, remittance

facilitation, and bills payment facilitation. According to Orpilla (2013) “Until

now, there is still the negative view that pawnshops prey on consumers.

We want to help the industry change its image.”

The BSP likewise holds training seminars for pawnshop operators and

their staff. She says such training is conducted at least once a month by

BSP personnel all over the country. The training covers a wide range of

topics, including ethical business behaviours, valuation of assets, and

detection of money-laundering activities, among others. According to Caraan

“Training helps improve the manner of service delivery by pawnshops, we

like people to develop a positive view of pawnshops. We want the public to

perceive Pawnshops not only as accessible, bust as reliable and trustworthy

providers of financial services.” For many Filipinos who are short of cash,

pawning is the easiest way to solve their problem. It is much easier to raise

money through pawning than securing a bank loan. For instance, if there is

an urgent requirement for house repair and I fall short of cash, all I have to

do is visit the nearest pawnshop, “It is not a devisable to go to a bank and

try meeting all its requirements if what you need is just a small amount of

money (Janet n,d). Because of their wide reach, pawnshops are identified by

the BSP as entities for financial inclusion. The term refers to the act of

making various financial services (such as payment facilitation,

remittance facilitation, money changing, micro loans, and micro insurance)

accessible even to people in far-flung areas. They serve the important role of

making financial services and even more kinds of such services in the future

reach the poor and those who reside in remote areas. Indeed, pawnshops

are important to the economy, If you think about how much you have to pay

for interests of pawned items, you may just choose not to pawn at all.

Pawnshops charge around 4 to 5 percent monthly interest rates on average.

Paying for high interests is a sign that you’re getting into bad debts. It

means you’ve

not planned your finances properly for you to resort to drastic measures. If y

ou can avoid it you should if you are in dire need of cash, you may want to

consider your alternatives before heading to a pawnshop. The wise thing to

do is to prioritize those options that will pay the lowest interest first.. It’s not

a bad idea to approach your friends and relatives to borrow money. If you

have a good enough reason to borrow, you’re friends and don’t want that.

Relatives may be more than willing to help you out. They’ll probably not

accept any interest payments. But just make sure that you pay them as you

promised. Or else you’ll get a bad reputation for not keeping the promises

you make. You another option is to consider other lending institutions.

Personal loans offered by banks, credit cooperatives and other government

institutions may have favourable loan terms better than what pawnshops

have. What you need to do is calculate the interest rate you’re going to pay

considering these alternatives. Always remember that your best option is the

one that has the lowest interest rate in it. But however you might have

planned for the future, there are times when pawning will be your only best

option. Or if you’re a guy who is still trying to recover from a bad financial
mess, you may need to pawn some of your valuables to get the cash you

need. Whatever reason you may have, pawning is an option that you should

take with careful study. Before you pawn anything, it’s important that you

assess your ability to pay the loan on time. Are you expecting some cash by

the time the loan payment falls due? Or do you expect any other sources of

fund in the near future? Answering these questions will help you assess

whether you can really repay the loan or if you’re just being overly optimistic

about it. If you’re not sure about your cash flow, be cautious about the

items you pawn. Consider the very real possibility of not being able to repay

the loan on time. Thus, you should only pawn items you are willing to lose.

These items should not include things that may have sentimental values

such as family heirlooms. Things that you know you can’t replace by buying

another one like it shouldn’t be pawned. Another important consideration is

to make sure you check out all the pawnshops near you to know which one

offers the best deal. Pawnshops, of course, compete with each other by

offering the cheapest loans they can provide. But if you’re too lazy to check

out all your options, the price is yours to pay. Talking to your friends who

have experienced pawning their valuables can also be a source of invaluable

insights. They can tell you their honest assessment of how their own

experience went. With all these knowledge, you will be able to decide

properly if and when pawning will work for you.

Foreign
Related literature

Foreign

A number of studies have examined the factors affecting the locations

of AFSPs. Caskey (1991) “uses 1987 state-level data to study the

relationship between the number of pawnshops per million capita and

various regulatory and demographic characteristics.” Considering only the

28 states that had usury ceilings on interest rates, he finds that pawnshops

per million capita is positively related to both the level of the state’s interest

rate ceiling and the share of the state’s population below the poverty level,

and negatively related to the share of the state’s adult population with at

least four years of high school education. Shackman and Tenney (2006) “use

2003 data to extend Caskey’s work to all 50 states plus the District of

Columbia.” Like Caskey (1991), “they find a positive relationship between

pawnshops per million population and both the poverty rate and the interest

rate ceiling and no significant relationship between pawnshop density and

the return requirement.” However, contrary to Caskey (1991), “they do not

find any significant relationship between pawnshops per million populations

and the share of the adult population that are high school graduates.”

Graves (2003) “examines the locations of payday loan stores and bank

branches in seven metropolitan parishes in Louisiana, and in Cook County,

Illinois.” He finds that payday lenders tend to locate in neighborhoods

(Census block groups) that are poorer and have higher concentrations of

blacks than the county in which they are located as a whole, while banks

tend to locate in neighborhoods that are wealthier and have lower

concentrations of blacks than countywide averages. Burkey and Simkins

(2004) “examine the determinants of the locations of payday lenders and

bank branches in North Carolina, using Zip Code Tabulation Area (ZCTA)

level data for 2000.” They find that ZCTAs with higher concentrations of

blacks, younger populations, lower median incomes, and lower education

levels are associated with a higher number of payday lenders and a lower

number of banks. At the same time, they find a strong positive relationship

between the number of payday lenders and the number of traditional banks

in a ZCTA. This likely reflects the fact that ZCTA population is a strong

determinant of the locations of both payday lenders and banks. Damar

(2009) “uses ZCTA-level data to look at the determinants of the locations of

new payday lending offices in Oregon in 2002-2004.” He finds that payday

lenders are more likely to locate in areas that have more bank branches,

larger populations, and higher percentages of Hispanics. Unlike Graves

(2003) and Burkey and Simkins (2004), “he does not find evidence that

payday lenders are more likely to locate in areas with higher concentrations

of blacks.” Temkin and Sawyer (2004) “use census tract-level data to

investigate the locations of payday lenders, check cashers and pawnshops in

seven metropolitan counties distributed across the country and in

Washington, DC.17 They find that AFSPs are disproportionately located in

minority and low-income neighborhoods, while banks are disproportionately

located in non-Hispanic white and higher-income neighborhoods.” At the

same time, they find that the majority of AFSPs are located in

neighborhoods that are also served by banks. Apgar and Herbert (2004)

“examine factors that explain the locations of AFSPs and bank branches in
Dallas, Texas in 2003.” They find that check cashers, pawnshops and

payday lenders are most likely to be found in census tracts with median

incomes between $23,000 and $45,000 and in tracts where a large fraction

of the population is Hispanic or of mixed race; however, they find that

citizenship is a stronger predictor of AFSP presence than race or ethnicity.

They find that banks are least likely to locate in census tracts where a high

fraction of the population is black or Hispanic and most likely 17 The seven

metropolitan counties are associated with the following cities: Chicago, IL;

Atlanta, GA; Houston, TX; Kansas City, MO; Los Angeles, CA; Miami, FL;

and Memphis, TN. 13 to locate in tracts with median incomes between

$45,000 and $63,000. They also find a positive relationship between the

presence of bank branches and the presence of AFSPs. Fellowes and

Mabanta (2007) “analyze data that they collected over the 2006-2007 time

period containing the street addresses of approximately 108,000 bank and

credit union branches and 48,000 check cashers, payday lenders, and

pawnshops throughout the U.S.” They find that more than 90 percent of

AFSPs are located within one mile of a bank or credit union branch, and

that there are more bank and credit union branches per capita in low-

income neighborhoods than in high-income neighborhoods. Based on these

findings, they suggest that low- and moderate-income households could

accumulate considerable wealth by substituting lower-cost bank and credit

union products for higher priced products obtained from AFSPs.

 Submitted by:
Bryan Bugarin
Angelo Perez
Rusty Lance Natividad

Submitted to:
Miss Jamilla Mohammed Iqbal Karim