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IMPLICATIONS FOR MARKETER 
Understanding Chinese rural consumers
 Alex Mari 
University of Lugano
(USI), Switzerlandvisiting student at
Central University of Finance and Economics
(CUFE), Beijing, China
ABSTRACTPurpose – 
The current study aims to examine the purposes that modern literature suggests to marketerswith respect to consumption patterns of Chinese rural consumers, their sources of product information,communication's channel status and successful ways to advertise products and services.Considering the great interest that rural areas development has for national and multinational companies,can be significant to analyze current academic theories on the topic pointing out concrete and remarkabledifferences between urban and rural society.As the rural consumers adopt the consumption patterns of urban consumers, more and more opportunitywould be explored. In a future perspective, a substantial business opportunity is represented by theinfluences that younger generations will have upon their families. For that reason particular emphasis will be addressed on media and advertising consumption of rural children and their perception of brands.In addition, many studies underline the lack in research in this area. Western theories applied to deal withrural consumers obtained scarce results during the past. In this respect, I personally assume that an in-depthanalysis of the actual consumer behavior contest is necessary to develop further marketing strategiestargeting rural consumer.Beijing, Jenuary 2008
Course of International Management
 
An executive summary for managers and executivereaders can be found at the end of this article.
Literature Review
In 1979 thanks to Open Policy established by VicePremier Deng Xiaoping, Chinese economy hasenjoyed a rapid growth. At that time, most of theresidents of the rural areas were engaged in farmingactivities. Recent findings show that agriculture'sshare of employment dropped steadily from 69 percent in 1980 to 45 percent in 2005 (StateStatistical Bureau, 2007).Despite two decades of economic growth, Chinastill face a deep-rooted economic divide betweenurban and rural areas. Even do, higher quality lifestandards were verified in both rural and urbanareas, there is an increased gap related to personalincome. By 2005, the annual per capita income of urban and rural Chinese have been 10.493 Yuan(about 1175 €) and 3.254 Yuan (365 €) respectively.The urban-rural income inequality has beenattributed to Chinese government's decades-longrestrictive policy on rural-urban migration (thehousehold registration system,
 Hukou
) and itscontinuous urban-biased welfare polices (Yao,1999). In addition to income inequality, thedifference in quality of education children receivealso affects their ability to seek and accessinformation. One of the main consequences of poor educational system in rural China is that childrenmay not be able to access information in an activeway. As researchers found, the direct consequenceis that they rely more heavily on personal sources inobtaining market information (Chan and McNeal,2007).Lu and Peng (2000) analyzed the rural consumptionstructure noticing a significant improvement inliving standards. This was demonstrated by the factthat rural households are spending greater share of income on food items, housing, education andrecreational services. The Engel coefficient, i.e. the percentage of expenditures on food in totalconsumption expenditures, was 37 percent for urban households and 46 percent for ruralhousehold (State Statistical Bureau, 2007).After survival has been assured, rural consumer  begin to spend more and more of their income onnon-necessities and cultural/educationalconsumption goods and services.In order to maintain stable economic growth andminimize negative effects of the actual worldfinancial crisis, the ultimate government's goal isrely more on domestic consumption.According to Global New Wire, China has beenshifting the focus of its proactive fiscal policy fromstimulating investment to strengthening low-incomeearners' purchasing power.As China's rural economy continues to develop, anincreasing number of multinational corporations(MNCs) will expand from urban areas into ruralregions. China promises many opportunity of fastexpansion, however, the presumption of China as ahomogeneous market often makes it difficult toaccess market demand and enact effective strategies(Cui and Lui, 2000).
Chinese rural life profile
Chinese government defined rural areas as a population of 780 million people among which, in2006, there were 210 million children under age 15.A rapid rate of urbanization can be noticed analyzingthe changes reported by United Nation. According tothem, urban population increased from 31 of thetotal in 1995 to 41 percent in 2005. In that year,urban residents contributed two-third of the totalretail sales (6.7 trillion Yuan).Even do, it is China urban areas that are producingmost of its economic growth, the ten largest citiesare made up by only 4 percent of the total China population, accounting for approximately 22 percentof earning power.This disparity in consumption is not only attributedto inequality in income, but also to poor retailingdistribution network, insufficient after-sale service,and slow income growth (Zhang, 2003).According to Rogers (1960), urban and rural societydiffer in family, group relationships and values. One particular aspect of rural families is that they aremore likely to see children as economic assets. Infact, while profiling the rural families, emerged that12.2 percent of them tended to export their familymembers to the urban are as cheap labour so that thewhole family income, and subsequently livingstandards, could be improved (Chen, 2008). This phenomena should be kept in mind considering thevast migrant population that already influence theattitudes of their local culture. Therefore, beingopinion leaders they represent a segment that need to be targeted. Moreover, rural families are more likelyto retain educating, entertaining, religiousorientations and protection function.
 
Source: Chan, K. And McNeal, J (2006)
Sources of product information in rural China
According to the findings of a recent surveyconducted by Chen Qimei and He Yi, to effectivedeliver commercial messages to rural consumerswe need primary to understand their mediaconsumption and their sources of productinformation. The analysis showed that most of thefamilies (96 percent) hold a television. As aconsequence rural Chinese consumer ranked TVcommercials as the top source of information(77.58 percent in 2001 as compered to 37.5 percentin 1987), see
 figure 1
.On the other hand, the importance of both personalcommunication (i.e. 'family') and direct experiencewith the product (i.e. 'oberving at market') haddiminished (Chen, 2008).Commercial messages delivered through Internetand new media have low penetration inconsideration of the fact that only 2,8% of households owned a computer. In addition, it has been proved that different information sources issignificantly related to product-specific contexts.As you can see from
table 9 (Appendix),
TVcommercials are still top choice across all the product categories but other information sourcesvary across the four product categories took intoconsideration. Although, 96 percent of the ruralfamilies owned a TV and 77.58 percent use the TVcommercials as primary source of information, only22.62 percent trust these messages. As we will seelater on, trustworthy of TV commercial decreasewith age and for that reason youngsters representthe most strategic segment for marketers.Differences in perception of sources credibility aremainly due to the nature of product category andlifestyle. For example, for soft drink purchase half of rural Chinese consumers trusted their personalexperience while for dietary products is needed anexternal source (only 2.17 percent of consumerslearn by themselves). Since the perceived risks for these kind of products are quite high, consumers relyupon their in-group for the most trustworthy productinformation.I assume that for highly involved purchase category,urban consumers rely more on several informationsources like Internet or salespersons, while in ruralsociety peers' recommendation becomes the mostcredible source. Hence, the assumption that world of mouth communication should be used as strategictool to promote products high in social risk.
Attitudes toward the whole marketing mix
A recent study on rural consumption patterns showsthat urban and rural consumer are different in termsof attitudes toward the whole marketing mix: product price, product promotion, brand names and product distribution. This obvious consideration isdue to the lower levels of hierarchy of needs thatrural consumer occupy. As a result, the difference inneeds among these two societies drives toward theusage of different product to reflect the improvementof their living standards. For example, ruralconsumers listed houses (29.2 percent), color TVs(22.2 percent), telephones (4.8 percent) and cars (3.5 percent) as products considered to reflectimprovement of living standards. Differently, for urban consumers soon after houses (33.6 percent)were indicated: PCs (9.3 percent), air conditioners
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veron17

Your views are scholarly. I just wanna ask if do you have write ups about urban development as well as rural that failed? Please if you can have can I ask for it? Thanks. Veronica

reply01 / 19 / 2009
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