rural consumer behavior full

8/12/2019 Rural Consumer Behavior Full

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Introduction

The world of today is changing fast. India is no exception. Especially after the opening up of the

economy, the pace of change that India and its people are experiencing in their socio-cultural

milieu is mind boggling. India, with its wide diversity, offers a fascinating scope to study thehost of changes which developmental activities have brought about in its social & economical

framework. hile it is possible to get some estimates of the macro changes taking place in India,

it is impossible to get any accurate measures of the sub!ective experiences that proceed,

accompany or follow such changes. "owever, the fact remains that the profile of the Indian

market is vastly different from what it was earlier. #lthough these changes are difficult to

measure at the micro level, nevertheless, they have been of great significance to marketers. #ny

marketer is keen in closely monitoring the changes in terms of numbers and specially keeping

regular track of the changing pattern of consumers$ aspirations and competitive actions. In our

country %' of the total population lives in villages. (evolution and economic reforms in India

have brought out several changes in the whole market environment, especially in rural market.

It is widely acclaimed that India is one of the largest consumer market in the world. Estimation

signs that the Indian consumer market is likely to grow four times by ))*. +cinsey (eport -

The (ise of Indian /onsumer arket0. Indias overall retail sector is expected to rise to 123

455 billion by )65 and to 123 6.5 trillion by )64, at a /ompound #nnual 7rowth (ate

+/#7(0 of 6 percent.

Real India lives in villages. #bout %* percent of Indian population lives in rural area. In the

country we have 8.9* lacs villages out of which only 65 percent villages have population above

). ore than * percent of the sales of :/7 and ;urable companies come from the ruralareas. The cinsey (eport on e of today$s urban Indian market and

estimated the si>e of the rural market at 3*%% ?illion.

Rural Market Products

The @(7 2urvey +)660 indicated that the ma!or items which accounted for about 9*-* percentof the rural market were washing soaps, cleaning materials, toiletries and food and beverage .?utthe survey also observed that the growth rate was very significant in certain items like cosmetics

and toiletries over the period of five years. The growth rate observed in the case of cosmeticsindicated that the rural women were not lagging behind their urban counterparts. It also mentionsthat many rural consumers in rural areas lack the pre!udices that make their urban counterpartsresistant to change. To some, consumer behavior is synonymous with marketing. (obertson andassar!ian +6AA60, for example, define consumer behavior as Bthe scientific study of consumeractions in the marketplace . "owever, others view consumer behavior as independent of marketing or any particular discipline. Cacoby +6A%80, for example, defined consumer behavioras Bthe acDuisition, consumption and disposition of goods, services, time and ideas by decision


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making units. #rndt +6A%80 suggested that consumer behavior encompasses the problemsencountered by members of society in the acDuisition and reali>ation of their standard of living.They are keen to experiment with new products, new services and new process. Thepsychologists developed the hierarchy of effects model, which proposes that behavior iscomposed of three dimensions cognitive, affective and behavioral +Favidge and 2teiner, 6A860.

The cognitive dimension involves developing awareness and knowledge, the affectivecomponent relates to developing feelings and attitudes, and the behavioral dimension involvesdevelopment of conviction or intention and actual behavior, such as purchase decision makingtechniDue. +Favidge and 2teiner, 6A860. In the marketing literature, individuals with a high needfor cognition have been shown to process and evaluate advertising information more thoroughlythan those with a low need for cognition. They tend to be influenced by message relevantthoughts rather than peripheral cues such endorse attractiveness +"augtvedt and Getty, 6AA)0,spokesperson credibility +Getty and /acioppo, 6A480, humour +Hhang, 6AA80 or the number ofarguments presented +/acioppo et al., 6A450. In an extensive literature review of the sub!ect,/acioppo et al. +6AA80 found that individuals with a high need for cognition tended to processinformation more thoroughly and tended to engage in more extensive information search than

those with a low need for cognition. This suggests that individuals with a high need for cognitionmight use a wide range of information sources, which reduces their relative preference forinterpersonal sources. @n the other hand, individuals with a low need for cognition are lessmotivated to gather and process extensive raw information and are more likely to accept alreadyprocessed information given to them by trusted personal sources. urray and 2chlacter +6AA0defined perceived risk as a multi dimensional construct. It represents consumers pre purchaseuncertainty related to the type and degree of expected loss resulting from the purchase and theuse of a product or service. Gossible loss categories are financial loss, performance loss,psychological loss, social loss and convenience loss +#rndt, 6A8%bJ ?ansal and Koyer, )0.Gast research has consistently recogni>ed perceived risk as a fundamental concept in consumerinformation search +#rndt, 6A8%bJ /haudhuri, )J urray and 2chlacter, 6AA0. #rndt, forexample, found that Lto cope with the ha>ards of buying, consumers tend to develop riskhandling strategies. @ne such strategy would be to seek additional information from a number ofsources +6A8%b 550. ?ansal and Koyer +)0 found a negative influence of product expertiseon perceived risk, and a positive influence of perceived risk on word of mouth informationactively sought.

Indian Consumer Survey Report 2013


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Consumer optimism still falling. The decline in Indian consumer optimism observed in )66intensified on the back of continued adverse macro conditions. /ompared to )66, more peopleexpect lower salary increases and expect personal finances to worsen, making it a bad time forlarge-ticket purchases. @nly *' of consumers we surveyed expect inflation to fall. /onfidence in

the government is also waning.M Signs of don!trading in discretionary items. Not surprisingly there was a temporaryreversal in )6) of the up-trading trend observed in )66. The preference for purchasingunbranded products again rose. :ewer people bought smartphones and more now want to buy anentry-level car. This trend is reflected in the commentary of many companies who operate indiscretionary consumption categories and are indicating a growth slowdown.

M Rural doing "etter t#an ur"an. 2pending patterns show a significant divergence across ruraland urban India. hile the mean household income of urban India declined 5', it increased 8'in rural India. /ar penetration has stagnated in urban India, but doubled in the past two years inrural. onthly #(G1 in urban India fell O6*', but showed a small increase in rural.

M $o penetration "odes ell for long!term grot#. #nother silver lining for the long-term

growth potential of India is low penetration across categories. @f the eight countries surveyed,ownership of cars, smartphones and electronic items is the lowest in India. They are among thelowest consumers of items, such as beer, spirits, meat and cigarettes. hile spending oneducation has come off this year, at O6' of household income it is still pretty high compared toother countries. This, combined with the greater participation of rural India and lower incomecategories, bodes well for India$s consumption story.

S%&%R'$ M()* '+,-) )*% R-R'$ S%C),R

The belief that rural people do not buy brands.

P The belief that rural customer buy cheap products. In reality they seek value for money.P The belief that the rural market is homogenous mass. In fact it is fascinatingly heterogeneous.The census of India defines rural as any habitation with a population density of less than 9 persDuare kilometers where at least %*' of male working population is engaged in agriculture &where there exists no municipality or board leaning aside "industan 1niliver Fimited & IT/,most companies in the :/7 sector would define rural as any place with the population up to),. (ural consumers are fundamentally different from their urban counterparts & differentrural geographies display considerable heterogeneity calling for rural specific & region specificstrategies e.g. a farmer in rural Gun!ab is much more progressive than his counterpart in ?ihar. #farmer in arnataka is far more educated than one in (a!asthan & so on.#n urban individual is free to take independent purchase decision. In a village, because of strong

social structure, including caste consideration and low literacy level, community decisionmaking is Duite common. /ompanies face many challenges in tackling the rural markets.arketing is all about


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life of the rural India has been the sub!ect of animated discussions in the corporate suites, withthe urban markets getting saturated for several categories of consumer goods and with risingrural income. :or example, Tata chemicals ran a chain called )ata isan endra which offeredservices ranging from agriculture input to financing to advisory services. "industan Fevers isoffering deals to farmers to cover operation from the pre harvest to post harvest stage. ahindra

& ahindra limited, India$s largest farm eDuipment company & its subsidiary ahindra2hubhlabh services has operated in eleven states with % lacs strong ahindra tractor customerbase& 9Q dealers provide a complete range of products and services to improve farmproductivity and establish market linkages to the commodity market chain.

+-(I/ +%*'&I,R@nce the marketer has insured both economic and physical access to its product it needs toevaluate the buying behavior of consumers in rural areas.To understand the buying behavior of rural consumers, we must go to the factors that influencetheir buying behavior. The factors include6. 2ocio-economic environment of the consumer

). /ultural environment5. 7eographic location

9. EducationRliteracy level

*. @ccupation8. Exposure to urban lifestyles%. Exposure to media and enlarged media reach.4. The points of purchase of products.A. The way the consumer uses the products6. Involvement of others in the purchase.66. arketers effort to reach out the rural markets

2ome of these points are discussed in some detail belowI/$-%/C% , C-$)-R%

/ulture and tradition influence perception and buying behavior. :or example, the preference inrespect of color, si>e and shape is often the result of cultural factors. (ural consumers$perception of products is strongly influenced by cultural factors.%,R'P*IC $,C')I,/S

(ural consumer behavior is also influenced by the geographic location of the consumers. :orexample, nearness to feeder towns and industrial pro!ects influence the buying behavior ofconsumers in the respective clusters of villages. e are discussing this aspect in detail in thesection on market segmentation in rural markets. To cite one more example of how geographiclocation affects buying behavior, we can point out the fact that the lack of electricity in many

rural households acts as a barrier to the purchase of certain consumer durables.%P,S-R% ), -R+'/ $I%S)($%S

Extent of exposure of rural consumers to urban lifestyles also influences their buying behavior.#n increased exposure and interaction with urban communities has been the trend in recentyears.)*% 4'( )*% C,/S-M%R -S%S )*% PR,5-C)SThe situation in which the consumers utili>e the product also influences their buying. Theexample of lack of electricity affecting buying behavior illustrates this point as well. Fack of


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electricity automatically increases the purchase of batteries by rural consumers. 2imilarly, sincerural consumers cannot use washing powdersRdetergent powders that much, as they wash theirclothes in streams or ponds, they go in more for washing bars and detergent cakes.P$'C%S , P-RC*'S%?uying behavior of rural consumer also varies depending on the place of purchase. ;ifferent

segments of rural buyers buy their reDuirements from different placesRoutlets. 2ome buy from thevillage shopkeepersJ some from village marketsRfairsJ others buy from the ton that serves as thefeeder to the rural area. It is also seen that the same buyer buys different reDuirements fromdifferent places. :or understanding the buying behavior of the rural consumer correctly, themarketer must ask the Duestion here from do they buy the products and whySI/&,$&%M%/) , ,)*%RS I/ )*% P-RC*'S%

Involvement of others in the purchase in the purchase decision is yet another relevant factor inthis regard. There has been a change here in recent years. In the past, the head of the family usedto make the purchase decision all by himself. In contrast, the involvement of the other membersof the family in the purchase decision has been growing in recent years. #n increase in literacycoupled with greater access to information has resulted in this development. The marketer has to

reckon the role of the influencers while si>ing up the buying behavior of rural consumers.M'R%)%RS %,R)S ), R%'C* ,-) )*% R-R'$ M'R%)In recent years, many corporate companies have been trying hard to develop a market for theirproducts in the rural areas, investing substantially in these areas. This has brought about somechange in the way buyers purchase different products. ;evelopmental marketing has createddiscriminating buyers and hitherto unknown demand in the rural market.#ll the above factors influence the buying behavior of rural consumer and hence their responsesto the marketing mix variables, and the reference points they use for purchase decisions.+R'/5 %6-I)(

?rand eDuity is another aspect of perception. 2ome of the brands like /olgate, arlboro arepopular brands in rural areas. It might therefore be advantageous to retain these brand names andpackaging in rural areas, although companies might want to use the local language on thepackage itself.PRIC%!6-'$I)( R%$')I,/S*IP

The next aspect of perception is price Duality relationship. ostly rural area consumers rely onword of mouth communication more than price as a means to !udge Duality.

C,MP'R')I&% S)-5( , R-R'$ '/5 -R+'/ C,/S-M%RS


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Location. 1rban consumers prefer location as the ma!or factor for choosing the particular storeas compared to rural consumers because it reduces the commuting distance, so heRshe choosesretail store in hisRher nearby locality.Reference (eferences from family & friends plays ma!or role in choosing a particular store forrural consumers than for urban consumers, because of their economic conditions, they don$t goin search of the information related to the retail store so they go by word of mouth.Brand name ?rand name is widely considered by urban consumer but it$s not of muchimportance to a rural consumer as urban customer is more brand conscious, he goes in search ofa particular brand in choosing a retail store and brand is considered as status symbol amongsturban consumer.

Discounts ;iscounts on commodities attract rural consumers more wherein the urban consumeris not distracted by the discounts because of their income factor. The per capita income of ruralcustomer is low compared to urban customers.Service "aving 2ervices like :ree home delivery, pay by card, retailer$s loyalty card is of primeimportance for 1rban consumer where as rural consumer doesn$t give much importance to thefactor because he !ust goes & gets the products due to ignoranceRliteracy.Comfortness Ease of shopping like getting all the products or different brands at one place is thefactor which attracts urban customer rather than rural customerProduct variety # variety amongst products is paid attention eDually by both rural & urbancustomers.Parking Facility 1rban customers perceive a retail store with parking facility as the bonus for

their tension free shopping than their rural counterparts because in a city like ?angalore parkingis the biggest challenge for the customers and the urban customer doesn$t want to go in search ofparking place which is very time consuming.Others opinion Grevious buying experiences of their fellow rural consumers are of primeimportance for rural consumers.Product vaila!ility Groduct #vailability plays important role for 1rban /ustomers than therural customers. The urban customer makes sure about the availability of product beforetravelling to the retail store, so that his efforts doesn$t go in vain in reaching the retail store.


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population , to provide electricity to 6,)*, villages and to construct six million houses in ruralareas, and to connect telephonically all habitants. The infrastructure development attracts themarketers in rural areas. The rural enterprises, especially non-farming has doubled )* millionbetween 6AA-))*, absorbing an ) million workforce largely in services like trading andtransportation, and social services, which have emerged as rapidly grow in sectors in rural areas.

@ut of the total of 96.4 million enterprises in the country, )*.* million +86'0 are located in therural areas. These are the driving force of demand base for the rural people.(ural markets are also very viable targets for marketers as a young populationJ rising income andlow penetration of many consumer durables imply that they are a strong source of demand.oreover, the consumption pattern in rural areas is witnessing a shift from necessities todiscretionary products. The survey has revealed that about one in every two rural householdsnow has a mobile phone and around 9) per cent of rural households owned a television in )A-6, up from )8 per cent in )9-*. Internet and mobile revolution has given rural India acomplete makeover. (ural areas offer a great potential for growth in internet usage with thenumber of claimed internet users in these spaces to be reached at 9* million by ;ecember )6),according to the recent I(? survey, conducted !ointly with the Internet and obile #ssociation

of India +I#I0... Economy models and lower prices of mobile phones have facilitated thepenetration of mobile devices in rural India. The penetration of the computer literates among therural population is 4.9 per cent while the penetration of claimed internet users has grown from).84 per cent in )6 to 9.8 per cent in )6). The penetration of active internet users hasenhanced from ).65 per cent in )6 to 5.% per cent in )6).(ural market offers significant growth potential. 7rowing adaptability to innovative products isincreasing in the minds of rural customers. The following points important to notice in thisrespectP The ma!or Indian consumer base present in rural areas, the :/7 sales have grown at 8-%percent over the last couple of years, and rural markets contribute about 9-* percent ofrevenue, which is very impressive. The demand for the personal care products grew faster inrural areas than urban areas. ost of the :/7 corporations have increased their hiring in ruralIndia in order to establish a rural contact and increase visibility. The rural market will be a keygrowth driver for :/7 ma!ors planning to expand their domestic business. It is estimated thatmore than two-thirds of the next generation youth will come from rural India.P The rural retail market is currently estimated at 12 3 66) billion, or around 9' of the 123)4 billion Indian retail market. There has been a greater shift from purchasing nearby townstowards purchasing locally. This phenomenon has important implications for the rural marketers.The marketers can reach the rural customers by effectively utili>ing the rural retail system.P The rural market volume is an indication of the market attractiveness and this is influenced bythe market si>e and also the market profile. The large base of population and increasing incomemake the rural market an attractive proposition for marketers. The market volume is captured bythe consumption expenditure.

C#allenges of Rural Market in India

The rural market offers a vast untapped potential, it should be recognised that it is not easy tooperate in the market, because of several attendant challenges. (ural market remains untappedbecause of mainly three challenges-distance, diversity, and dispersion. #s much as (ural Indiapresents a great opportunity, there are still many challenges that have to be overcome. ;ispersedpopulation and trade, large number of intermediaries in the value chains leading to the higher


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costs, scarce bank and credit facilities for rural customers and retailers, highly credit drivenmarket and low investment capacity of retailers are the other roadblocks. Thus, there are severalroadblocks that make it difficult to progress in the rural market. arketers encounter a number ofproblems like dealing with physical distribution, logistics, proper and effective deployment ofsales force and effective marketing communication when they enter into the rural segments.

60 The large population base and number of households indicates a widely spread out market andit is a challenge for the marketer to service this dispersed market. The number of the villages ismore than five lakhs and is not uniform in si>e. Nearly half of the population lives in middlesi>ed villages which have a population ranging from 6 to * persons. These types ofdistribution of population warrants appropriate distribution and promotion strategies to decidethe extent of coverage of rural market.)0 The rural per capita income is low as compared to urban area. Fow per capita income leads tolow purchasing power. This apart, the distribution of income is highly skewed, since thelandholding pattern, which is basic asset, is itself skewed. Thus, rural market presents a highlyheterogeneous scene. Therefore few challenges arise in this respect, likeJ off-taking of anyproduct by rural consumer, maintaining of inventory levels, distribution system options, and

freDuency of distribution. This aspect should be carefully considered by the marketers.50 There are lacks of proper physical communication facilities in rural areas. Nearly half of thevillages in the country do not have all-weather roads. Therefore reaching these villages is veryphysically taxing. "ence, distribution efforts put up by the marketers prove to be expensive andineffective.90 The rural market, by and large, are characteri>ed by underdeveloped people and conseDuentlyunderdeveloped market. # vast ma!ority of rural people is not financially stable and is tradition-bound, fatalistic, mired in age-old customs, traditions, habits, taboos, and practices.1nfortunately, the impact of agricultural technology has not been felt uniformly throughout thecountry. The large segments of rural population have remained untouched by technologicalbreakthroughs.*0 There are vast variations in the levels of literacy amongst rural people. #round two-fifth of therural population is illiterate and only one-fifth holds a matriculate or higher degree. #lso, literacylevels vary hugely among different states. These variations pose a challenge to easy and clearcomprehension of the message by all sets of rural audience. The limited reach of mass media inrural areas and its regional and state variations pose limitations on a universal approach tocommunication for rural consumers. #lso different perceptions, traditions, and values acrossstates and in some case within a stateJ are other obstacles in communication development.80 The distribution of products continues to pose an immense challenge to marketers becausereaching of %.4 million retail outlets spread across 8,9, villages and feeding a retail networkof villages shops is a distribution nightmare. The challenges for the suppliers is the small si>e ofeach villages with low throughout per outlet, coupled with the high cost of distribution sincethese villages are some distance away from distributors. These factors make high Dualitydistribution unviable. The distribution of any product in the rural areasJ agricultural inputs,consumables or durables, should necessarily follow a seasonable pattern. The demand pattern inthe rural areas is seasonable. The distributions in the rural areas are freDuent and not uniformthroughout the year. The rural market in India is undergoing a massive change. These changeshave resulted in shifting the marketable battlefields from urban to rural. ost of the companiestreat rural market as a dumping ground for the lower end products designed for urban audience.?ut, this scenario is slowly changing and importance is given to the need of the rural customer.


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/onsidering the emerging issues and challenges, government support is necessary for thedevelopment of marketing. The government may ad!ust suitable budget allocations to ruralinfrastructure plans, and proper supervision for effective plan implementations. arketers shouldunderstand these challenges and then making strategies in the light of these challenges to facethem and to tap the rural Indian market and importance is given to the need of the rural customer.

/onsidering the emerging issues and challenges, government support is necessary for thedevelopment of marketing. The government may ad!ust suitable budget allocations to ruralinfrastructure plans, and proper supervision for effective plan implementations. arketers shouldunderstand these challenges and then making strategies in the light of these challenges to facethem and to tap the rural Indian market.'nalysis of Rural marketing Scenario


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Reference

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ridanish Cha,= # 2tudy @n The (ural /onsumer ?uying ?ehaviour In ?ihar=, InternationalCournal of arketing, :inancial 2ervices & anagement (esearch I22N ))%%- 58)) Kol.), No.), :ebruary +)650

Gardeep umar,= /hallenges and @pportunities of Indian (ural arket=, International Cournal ofarketing 2tudiesJ Kol. *, No. 5J )65 I22N 6A64-%6AU E-I22N 6A64-%)5

;r. N. (atna ishore,= (ural /onsumer behaviour towards /onsumer ;urable goods in India=,International Cournal of #dvance (esearch in /omputer 2cience and anagement 2tudies

Grof. 2hruthi K. ., Grof. (oopa arnam,

rural consumer behavior full

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