Unit II 20

Rural Marketing Challenges And Opportunity, Rural Consumer: Characteristics, Significance

Of Consumer Behavior, Factors Influencing Decision Making Process Of Rural Consumers,
Rural Consumers Buying Decision Process, Shopping Habits Of Rural Consumer.

1. Rural Marketing Opportunities and Challenges

Opportunities

Almost 70% of the Indian population lives in villages and rural areas. Rural India consumes almost
60% of the total goods manufactured in India with majority of the products coming from FMCG
sector. Products like shampoo or skin moisturizer was never affordable to people in the rural areas
because the price was too high. CavinCare, came out with an innovative idea of manufacturing small
packets of shampoo priced at 50 paisa. Suddenly shampoo which was not at all a popular product in
rural areas had high demand in the market. This model was soon followed by the other FMCG
companies where re-packaging of products like shampoos, soaps, toothpaste, detergents was done
in the form of small packets with a low price range. But due to the poor infrastructure in the rural
areas marketing the products are a big headache for the FMCG companies.

A marketing strategy which is hugely untapped by most of the companies is employing the villagers
themselves to market the products. HUL has been the pioneer in this form of marketing by the
launch of the campaign HUL Shakti where women in villages are employed to form a distribution
network of HUL products in the rural areas. Employing local people for marketing especially in areas
where it is difficult to transport and commute was an innovative way to increase accessibility and
marketing of the Bottom of the Pyramid (BoP) products. Considering the huge market share that
FMCG products holds in the rural areas more companies should follow this strategy to market their
products and have a larger reach. On a different note the electronics companies can also follow the
BoP product structure followed by the FMCG companies in manufacturing low end small variants of
refrigerators and air coolers/conditioners. Though electricity is one of the major hindrances in rural
areas the problem can be overcome by extensive use of solar energy.

With FDI in retail making an entry in the Indian market agro-based companies can follow the
structure adopted by ITC in e-Chaupal. ITC e-Chaupal follows a three layered structure which aims
for profit maximization of farmers by cutting down on the involvement of the middlemen. ITC has
successfully used this model for manufacturing “Aashirvaad Aata” by directly procuring high quality
wheat from the farmers. Companies can follow this model in obtaining farm products directly from
the farmers across India and sell them in the urban super markets which will be beneficial for the
farmers as well as the consumers. An ad on advantage of this system is the use of the structured
model in marketing other products in the rural market. For example with the help of the 3-layered e-
Chaupal structure ITC was able to form a distribution system for the low priced cigarettes it
manufactures in the rural market.

In rural India marketing of a product mainly happens by the word of the mouth and by peer
experiences of use of the product, due to the comparative less use of television and almost no
access to internet. Research has also proved that rural consumers do not change their products
frequently if they are satisfied with the product. Brand loyalty is high. Therefore the primary aim of
any firm should be to position their brand in the mind of the rural population well, during the
launching phase which will enable them to have a permanent and long lasting presence in the
market. They should try to associate a good-will with their brand. For example, non-availability of
drinking water is one of the major issues in rural India. A company can launch a campaign of building
tube-wells in the water hit villages in some parts of the country and try to emotionally connect with
the people. Likewise a company can open their customer care/business processing units in the rural
areas of the country. With growth of education in the rural areas there are enough people available,
especially the youth who can be employable. Apart from creating a good-will this will also result in
cost saving for the company as the cost of employment in rural India is much less compared to the
cities.

With increase in per capita income due to use of superior quality of seeds and fertilizers and also
due to the fact that there are a lot of rural schemes introduced by the government of India for the
rural population the standard of living has improved. The following sectors can cache in on this
development to extend their market to the BoP population of the country.

 FMCG

 Automobile (2 wheelers)

 Telecom

 Electronics

Firms which deal in renewable energy, especially solar energy, also can have a huge market in rural
India. With better quality and low priced photovoltaic cells being manufactured today, making solar
lamps at a very reasonable price is not a demandable job. FMCG companies like Coca-cola, Cadbury
or electronics companies selling low-end refrigerators or air-coolers can go into a partnership with
renewable energy firms in such a project. It will be a two way benefit project where the FMCG and
consumer goods companies can also find new market in rural India due to availability of electricity.

Challenges:

Although the rural market does offer a vast untapped potential, it should also be recognized that it is
not that easy to operate in rural market because of several problems. The major issues faced by
companies are as follows:-

1. Low Literacy: It is difficult to educate the potential consumers in rural market about products due
to low level of literacy.

2. Seasonal Demand: Monsoon being the harvesting season in India and agriculture being the
primary occupation of majority of the rural population the demand for goods is majorly restricted in
during the monsoons when the income is comparatively high.
3. Transportation and Distribution: The poor state of rural infrastructure is one of the major
concerns of most of the companies planning to invest in this sector. Though the rural population is
vast it is not possible to form an effective distribution system and reach out to a considerable
number of target consumers.

4. Many Languages and Dialects: The presence of local languages causes major difficulty for
companies in promoting their products in rural market. People are not educated enough to know
one common language like Hindi or English and it is difficult for the companies to prepare
promotional advertisements in every local language.

5. Availability of duplicate and cheap brands: Customers in rural India are very cost sensitive.
Therefore the existence of duplicate brands, which are quite common in rural parts, at lesser prices
gives considerable competition to the firms.

Conclusion

In spite of having so many challenges in rural marketing the companies have shown considerable
interest in the rural India and have tried to market themselves using the 4A model (acceptable,
available, affordable, awareness) which says that the products marketed should be acceptable by
the rural population, the products should be easily available, they should be affordable and most
importantly an awareness drive should be created to educate people about the products.

2. Rural Consumer:

Consumers who do not reside in urban areas, but resides in rural areas is known as Rural consumer.
Rural markets are dominated by agricultural products, cottage industry’s products and FMCGs from
urban or semi urban whole sellers. Most of the premium products like tractors, televisions,
motorcycles, etc., are available only in urban areas. For most villages, the nearest cities can be as far
as 50 kms away. Most of these cities are district towns. Rural consumers go to the ‘local market’
which is normally around 5-10 km. from their villages to buy the daily household requirements like
sugar, tea, vegetable oil, etc.

Rural Consumers are different from urban consumer in-terms not only of location but factors like
literacy, income, awareness, technology, telecommunication, occupation, infrastructure, traditions,
beliefs, etc.

2.1 Characteristics

1. The rural consumer has a very high involvement in any product purchased.

2. He purchases products more often (mostly weekly), usually in small quantities.

3. He is very quality conscious but value for money is of prime importance.

4. He looks more for functionality of the product rather than frills associated which
he cannot use but for which he will have to pay extra.

5. He is brand loyal. Once loyalty formed is difficult to dislodge.

6. He understands symbols and colours better, and looks for endorsement by local leaders or icons.

7. The source of information is critical for him, as he is influenced by information received and
opinion formed through various resources in his purchasing decisions.

8. Purchasing decisions are usually taken by the eldest member of the family.

9. Brisk buying is done after the harvesting period. Major purchasing is done during
the festivals.

10. In many cases, the buyer is different from the user.

2.2 Significance of Consumer Behaviour

A study of consumer behaviour is significant (or rather imperative) for the following
reasons:

(i) Realistic Implementation of the Marketing Concept:

The modern marketing concept is consumer-oriented. To give a realistic implementation to

this concept, a study of consumer behaviour is imperative. More specifically, a study of
consumer behaviour is a must for developing an ideal marketing-mix; which is the
cornerstone of the concept of marketing.

It is, in fact, very true to state that unless the marketer knows what consumers buy and
why; it is not possible to design and implement a successful scheme of marketing-mix to,
beat the completive elements.

(ii) Planning Product Differentiation and Market Segmentation:

For planning product differentiation strategies (i.e. making the product so differentiated and
unique that consumer may be tempted to buy only that product due to its unique features);
a study of consumer behaviour is very significant or necessary.

Again, for designing schemes of market segmentation (a process of dividing a potential

market into distinct sub-markets of consumers with common needs and characteristics), a
study of consumer behaviour is very necessary.

As a matter of fact, the success of marketing management depends on designing schemes of

product differentiation and market segmentation, the background data for which is
furnished by a study of consumer behaviour.

(iii) Selection of Distribution Channels:

A study of consumer behaviour not only includes what consumers buy; but also the source
from where they buy’. For example, men of status in society may never buy things from
ordinary shops and ordinary markets. They may prefer to buy from prestigious stores and
markets; even though they may have to pay a higher price and so on for various categories
of consumers.

Thus a study of consumer behaviour guides the marketer to select suitable channels of
distribution, to provide maximum convenience and satisfaction to different groups of
consumers.

(iv) Designing Promotional Techniques:

Promotional techniques include advertising message and media, personal selling

approaches and special sales promotional devices. Designing promotional techniques is
much facilitated by a study of consumer behaviour; which may throw light on the
psychology of people as to the factors which affect their buying decisions.

Those factors which affect consumers’ buying behaviour may be suitably incorporated into
the promotional techniques of the organisation.

(v) Trade-Off between Price and Quality:

A study of consumer behaviour is likely to reveal whether target consumers of the

enterprise emphasize more on the price of the product or its quality. On this basis, the
marketer can device suitable pricing strategies and programmes aimed at upgrading the
quality of organisation’s products to suit the needs, habits and behaviour of consumers.

2.3 Factors Influencing Decision Making Process Of Rural Consumers

The various factors influencing the decision making process of rural consumers are

1. Sociocultural

2. Technological

3. Economic

4. Political Environment
1. Socio- Cultural Factors:

(a) Culture: (Behavior, Norms, Belief, Values and Customs)

1.Collective Process: Collective Social Sanction (Wisdom of elders, advice of educated,

suggestion of leader’s)

2. Values: They value simplicity, honesty, unity and hard work (Escorts Villages, Nirma
Villages)

3. Customs & Traditions: Local Myths, Belief in religion and Worship, marriage systems,
joint family systems

4. Social Norms: “Respect for elders", "Save for future", "Don’t Lend or Borrow", "Be Simple
and honest", "Service to humanity is Service to god",

Implications:

1. Conservative in their outlook

2. Take longer time to get influence

3. Traditional ceremonies and social norms can be regarded as opportunities

4. Occasions for purchases must be utilized

(b) Social Class (Rural Customers are Heterogeneous Based on their incomes)

1. Lower income Group: (Leased Land Farmers and Labors):- Buy's Essential commodities
“Food, Clothing, Shelter"

2. Middle Income Group Members: (Shop Keepers and Small Business man):- Sewing
Machines, two-wheelers, Mixer-Grinder and refrigerator or a piece of land (Income Yielding
asset)

3. Upper Middle Income Group: (Govt Teachers, Doctors, Engineers, Officer) Close
Substitutes of Premium Products.

4. Higher Income Group: (Sarpanch, Landlord’s, Contractors)

Implications:

1. Make Them Spend On Consumables

2. Providing Value for money products

3. Improvement of lifestyle rather than spending on assets like gold and jewelry

4. Stimulus is created with the help of Media.

2. Technological Factors

 Biotechnology Development’s: BT Crops have increased per hectare and reduced

the cost of seeds. Monsanto India is providing G.M. seeds and various other
services to farmers.
 Digital and satellite technologies: Increased penetration of FM Radio, TV’s, Video
Cameras, Cameras are slowly becoming part of rural world
 Information and communication technology Revolution: Today more than 15
million villagers know about internet. People Seek various information from internet
like Govt. Schemes, Job Opportunities, Career Counselling, Land Records Etc.
 Modern technology has been implemented in agriculture in the form of tractors,
harvesters, GM seeds, pesticides, fertilizers, pump sets, generators, etc.
 Lifestyle has also changed due to technology such as use of toothpaste, two-
wheelers, mobilephones, etc.

3. Economic Factors

 The entire economic environment shows a much improved prosperity due to new
and improved techniques, higher quality of inputs and increasing awareness and
education on agriculture.
 Banking is reaching out to the door steps of more and more farmers. Finance is now
more readily available and so is credit.
 Impact of globalisation
 Influence of competition
 Influence of recession
 Impact of inflation
 Availability of micro credit

4. Political Factors

 The fortunes of rural people are greatly influenced by the decisions of ruling party.
 Schemes launched by government has led to the development of rural areas.
 The government of india is empowering the panchayti raj and other village
institutions by making available developmental funds. This has resulted in major
purchases of equipment and materials needed for infrastructure development.
  30% compulsory representation of women in local bodies is leading to the
empowerment, encourage in rural India to explore income generation and
entrepreneurial activities.

2.4 Rural Consumers Buying Decision Process

Buying decision process describes the fundamental stages that a customer goes through
when deciding to buy a product. Buying decision of rural consumer depend on lifestyle and
personality of consumer which consists of

o Traditions
o Customs
o Values

Consumers pass through 5 stages while making a purchase decision. These are:

1. Problem/ need recognition

2. Information search

3. Evaluation of alternatives

4. Purchase decision

5. Post-purchase behaviour

1. Problem/ need recognition

 Consumer first tries to find the need of product which primarily depend on cost in
rural area.
 Need may be triggered by internal and external stimuli.
 Marketer should help consumers identify their current and future problems/need in
this stage.
 To do so marketers have to research on consumer need and problem.
 By so doing marketers can design products/services capable of meeting those
needs/problems and develop marketing strategies that can trigger consumer interest
in those products or services.

2. Information search

 Consumer try to find information pertaining to their want satisfying product to make
the right choices.
 consumer searches for internal or external information.
  Information gathering may be passive or active.
 Passive information gathering occurs when an individual or group simply becomes
more attentive to a recognised solution to a given need.
 In Active information search the person looks for reading material, phones friends
and engages in other activities to know more about product.
 Information sources could be from
o Personal source – family, friends, work colleagues, neighbours, etc.
o Public source – mass media
o Commercial source – promotional materials, technical journals, consumer
magazines, ecommerce sites, etc.
o Experience – handling, using the product, etc.

3. Evaluation of alternatives

 At this time the consumer compares the brands and products that are in their
evoked set.
 The process of evaluating alternatives depends on consumer and the buying
situation of an individual.
 Customers evaluate product attributes and features that are most relevant to their
needs.
 Models used for evaluation:
o Expectancy model
 identifies necessary attributes
 evaluates relative importance of each
 arrives at overall brand impression for further comparison

o Conjunctive model
 Consumer selects product that satisfies the integral attributes

o Disjunctive model
 A brand is selected which that has satisfying levels of a chosen
attribute.
o Lexicographic model
 Attributes arranged in order of priority.
 Selection made if first attribute is satisfactory.
 If not, second attribute forms the basis for evaluation.
4. Purchase decision

 Evaluation process lead to purchase intention (A plan to purchase a particular good

or service in the future).
 Two factors can intervene between the intention and the purchase decision:
o The attitude of others
o Unanticipated events

 Three possibilities of purchase decision:

o From whom to buy (policy, sales, past experience)
o When to buy (time, atmosphere)
o Don’t buy

5. Post-purchase behaviour

 Marketing continues into the post-purchase period.

 The aim of marketing is not to make a sale but to create a long term relationship
with a customer.
 The buyer feels satisfied when the perceived product performance is close to his/
her expectations.
o If it exceeds the expectation the customer is delighted.
o If it falls short of the expectation the customer is disappointed.
 The buyer’s post-purchase actions will provide necessary feedbacks to the
marketers.
 Post-purchase action – The satisfaction or dis-satisfaction with the service will
determine subsequent performance of the service in the market.

Urban Buying Process Rural

High-involvement in product,
comfort, status, drive,
consumer’s recognition for
need
First hand information from
TV, internet, Newspaper,
consults with friends using
the product.
Educated, aware,
understands, analyses,
technical specifications, test
drives
Need recognition High-involvement in product
– productivity drives
consumer’s recognition for
need.
Information search First hand information from
a fellow owner and nearby
dealer at district town.
Evaluation of alternatives Lower education and
awareness. More
importance to fellow owner
and illustration of dealer.
Consults opinion leader like

Normally buyer makes final
decision. Family influences
colour and looks.
Higher satisfaction or
dissonance because of
greater risk factor. Higher
risk taking ability because of
wanting experimentation.
After sales service no issue
Purchase decision
Post-purchase behaviour
progressive farmers. Live
field demonstration.
Collective decision by buyer,
adult son, mechanic and
progressive village farmer.
Higher satisfaction, lower
dissonance. Because risk-
taking is lower and
expectation level is low. Low
risk-taking ability because
products are chosen based
on serving a purpose and not
for luxury, lack technical
know how, low confidence
on after sales services.

2.5 Shopping Habits of Rural Consumer.

 Companies are working of the marketing tools to tap the rural market. They are finding new
ways to find more information about the rural market. By knowing the profile of consumer it
is enough for them to tap the market, it is in need to know more about their shopping
habits. It will be good if they catch the exact thing of shopping at rural market.
 The shopping habits may depend upon the market also. If the market is good enough then it
may change. Companies are trying to reach the rural markets by trying to understand the
shopping habits of rural consumers.
 The shopping habits may depend on factors such as
o Retailers
o Product/ service availability
o Opinion leaders
o Information, etc.
 All these are the factors which may have direct or indirect impact on the shopping habits.
Rural consumers look into different factors when they buy a product. The main deciding
factor is price, quality and usage of the product. They do not look for brand and its features.
 They prefer small and medium packaged products rather to go for high end products. As
there is more number of daily earning people than the salaried ones. Therefore they prefer
to buy products that come in small packages on a daily or weekly basis. The packaging and
pricing should be provided to them on the need basis in order to help maximise the sales of
the companies. Eg, HUL, Coca cola, ghadi detergent, tide, Britannia, etc.
 Apart from these the major player is the retailer in rural markets. He has good relationship
with the customers and also provide them with credit facilities. People have a lot of faith in
them. According to research it shows that about 35% of purchasing decision gets influenced
by the retailer in the rural market. Product availability also plays a vital role. Hence
companies need to work on that.
 Before buying the product they try to gather information from different sources. But when it
comes to making purchase decision they ask the opinion leaders. They take the suggestion
of the opinion leaders to buy the product. In the past they used to consult elderly people,
but it has changed to consulting educated youth for purchasing decision.
 By looking at the advertisement in Television channels they do not go to buy the product,
they need to touch and feel the product buying purchasing it. Once they are satisfied with
their choice they make a long term commitment to the product. The decision also depends
on who is giving the information. For eg: for healthcare products it will be good if the
information (advice) comes from a doctor, for pesticides and fertilizers it will be good if it
came from agricultural scientists and researchers.
 Hence depending on all these rural consumers prefer to buy the products. They look at
different opinions and purchasing power to buy a product. Hence it is better for the
companies to work on the exact need of them.