Project MBA

TERM PAPER
ON
“The Race to catch it:
FMCG Sector in Rural India”
Submitted in Partial Fulfillment for the Requirement of MBA

Programme of Study
Supervised by : Submitted BY:

Dr. Aditi Sharma Saurabh Mishra
Assistant Professor (CUHP) CUHP19MBA94
MBA (2019 – 2021)
May 2021
School of Business & Management Studies
Central University of Himachal Pradesh
(Established under Central Universities Act 2009)
DHARAMSHALA, DISTRICT KANGRA – 176215, HIMACHAL PRADESH
DECLARATION
I, Saurabh Mishra, declare that this term paper entitled “The Race to catch it: FMCG Sector in Rural India”
represents my original work. No part has been extracted from any other source except the ones specified in
references.
Date: 15- 04-21

Place: Palampur
Saurabh Mishra
MBA (2019-21)
School of Commerce & Management Studies
Central University of Himachal Pradesh

Acknowledgement
I am very much thankful to almighty for giving me strength, courage and ability to accomplish the project work
as well as form a report in a scheduled time in spite of various complications. It gives me immense pleasure to
thank a large number of individuals for their cordial cooperation and encouragement which has contributed
directly or indirectly in the preparation of this report.
I would like to thank my project mentor Dr. Aditi Sharma, Assistant Professor, School of Commerce and
Management Studies, Central University of Himachal Pradesh for her worthy guidance and feedback which
aided me to complete this report. She kept me on track to complete this report and her suggestions and feedback
were very dynamic in making this report as fruitful as possible.
I will be thankful to my family and friends who directly or indirectly helped me completing this project and
always supported me in my endeavors.
Table of Contents
Contents
List of Charts ........................................................................................................................................................................... 6
EXECUTIVE SUMMARY..................................................................................................................................................... 8
Chapter – 1 .............................................................................................................................................................................. 9
Introduction ......................................................................................................................................................................... 9
Chapter 2 ............................................................................................................................................................................... 11
Literature Review.................................................................................................................................................................. 11
Chapter -3.............................................................................................................................................................................. 12
Objectives of the study.......................................................................................................................................................... 12
Chapter – 4 ............................................................................................................................................................................ 13
Research Methodology ......................................................................................................................................................... 13
Sampling and its techniques:............................................................................................................................................. 14
Statistical tools: ................................................................................................................................................................. 14
Chapter – 5 ............................................................................................................................................................................ 15
Limitations of the study ........................................................................................................................................................ 15
Chapter 5 ............................................................................................................................................................................... 16
FMCG Industry – An overview ............................................................................................................................................ 16
Chapter – 6 ............................................................................................................................................................................ 20
Rural market—a new opportunity......................................................................................................................................... 20
Chapter –7 ............................................................................................................................................................................. 27
Problems of Rural marketing ................................................................................................................................................ 27
Chapter – 8 ............................................................................................................................................................................ 29
Strategies for selling in rural India ........................................................................................................................................ 29
Chapter-9............................................................................................................................................................................... 33
Data Analysis and Interpretation........................................................................................................................................... 33
Chapter – 10 .......................................................................................................................................................................... 51
Results and Findings ............................................................................................................................................................. 51
Chapter – 11 .......................................................................................................................................................................... 53
Conclusion ............................................................................................................................................................................ 53
Chapter – 12 .......................................................................................................................................................................... 54
References ............................................................................................................................................................................. 54
Annexure ............................................................................................................................................................................... 55
List of Charts
Chart Number Chart Title Page Number
Chart 1 Age of respondents 32
Chart 2 Gender of respondents 33
Chart 3 Education level of respondent 34
Chart 4 Income level of Household 35
Chart 5 Factors affecting purchase decision 35
Chart 6 Format used for purchases 36
Chart 7 Reasons for purchase in a format 37
Chart 8 Effect of promotional Schemes 37
Chart 9 Awareness of Skin Care Brands 38
Chart 10 Awareness of Hair Care Brands 39
Chart 11 Awareness of Detergent Powder 40

Brands
Chart 12 Awareness of Cold Drink Brands 40
Chart 13 Awareness of Toothpaste Brands 41
Chart 14 Customer View on Branded 42

Products
Chart 15 Time using Above Brands 43
Chart 16 Search for Schemes 43
Chart 17 Type of Scheme 44
Chart 18 Brand Switching 45
Chart 19 Reasons for Brand Switch 46
Chart 20 Customer Reaction on Non- 47

Availability of Brand with retailer
Chart 21 Influence on Brand Preference 48
Chart 22 Role of advertisement on Brand 49

Chart 23 Effect of Advertisement 50
Chart 24 Price difference Between Rural and 50

urban Areas
EXECUTIVE SUMMARY
At least 40 per cent of the world’s markets are rural markets. They represent more than three billion people whose
current consumption is estimated to be at least four trillion dollars per year. Rural markets have been traditionally
ignored by most multinationals from advanced countries, as well as by local large-scale manufacturers of packaged
branded products, for several reasons such as a lack of modern infrastructure, including roads, electricity, banks, and
media, make accessibility to rural markets very difficult and expensive.
All of this is now changing, and changing rapidly due to several reasons such as rural markets are growing faster than
urban markets and with better profitability, as urban markets have become more mature and intensely competitive,
especially after the liberalization of the Indian economy. Rural markets, which used to be neglected by branded
manufacturers, are now becoming the core of a company’s growth strategy for both multinationals such as Nestlé,
Colgate and Unilever, and for Britannia biscuits.
The increasing interest of rural consumers in acquiring branded products, especially those that symbolize educated or
modern lifestyles. Watches, jeans, cell phones and T-shirts, bottled water, shampoo and toilet soaps, as well as
education and healthcare, are part of this list. In other words, rural consumers in India today are less resistant to change.
In fact, they seem eager to enter the world of modern consumption, especially those for daily use.
Finally, as rural markets become more strategic, companies will learn to innovate and experiment with their traditional
approaches to the four Ps of marketing: product, price, place, and promotion. There are several success stories in India’s
rural markets as well. Indeed, it is not an exaggeration to assert that companies that succeed in rural markets with non-
traditional approaches to products, prices, promotion, distribution, and service will gain a competitive advantage over
those who do not, or could not, succeed in rural markets. Reverse innovation from rural markets to urban markets is the
key to future growth and profitability.
This Term paper analysis the FMCG industry India along with the scope for major companies in rural areas. This paper
also attempts to find out the barriers faced by the companies while operating in rural markets. In addition to, it this
paper also attempts to present the marketing strategies followed by few companies to successfully cater this vast
untapped market.
Chapter – 1
Introduction
The Census of India (2001) defines any region with a population density of less than 400 per sq. km, having about at least
75 per cent of the male population is engaged in agricultural activities and where there exists no municipality is present as
a rural habitation. Thus, the rural population consists of 800 million inhabitants, accounting for 70 percent of India’s
population.
As per the 2011 Census, India has more than 20,000 villages whose population ranges from 5,000–10,000. The FMCG
sector is one of the essential pillars of Indian economy. The sector includes food & dairy products, packaged food
products, household products, drinks etc. This sector provides employment to almost 5 million people in the country.
These products are consumed daily by each household regardless of social strata, income level etc. This industry is highly
profitable because of low penetration, larger Indian rural customer base and easy productions process of most of the
products resulting in low capital requirement as compared to other sectors.
This industry is highly competitive due to the existence of large number of MNCs, some of national companies and the
presence of regional brands. The major part of the rural market is captured by regional brand and some of the unorganized
players selling unbranded and cheap products, unpackaged products. This market is also full of fake and counterfeit
products. More than half of the revenue collected by these FMCG companies comes from the items packed in sachets or
small packs which are of worth around one to ten rupees. In the past decade the unorganized and regional players are
giving neck throat competition to national and global brands. Between 2007 – 2017 the market share of unorganized
players is increased to 27% as compared to 17% increase of global brands.
According to ASSOCHAM India organizations like HUL, Dabur an Patanjali are generating half of their profits from
rural India.
The rural consumer is emerging from the poverty affected, illiterate society, with a resistant to change and unwillingness
to invest. Today’s rural consumer is looking for value in the products. They may purchase the product if it adds value in
their life. Literacy level in the rural India is rising, and exposure to the same advertisements and displays as urban
consumers has set up a demand for urban products and services. Villagers living in rural houses are willing to adopt new
products or services if they are able to see the benefits provided by the product. Improved road connectivity due to several
government initiatives has led to increased mobility, with people travelling more often and further in search of pleasure,
fun in the form of cinema, and not just for visiting family or pilgrimages.
The change has been greatest amongst the rural youth. They are the most educated and most savvy of all rural consumers,
emulating their urban cousins and demanding the same high quality in the products and services they require. They are the
key drivers for expenditure on personal care items, and food items in rural areas, leading to an improved quality of life. In
some households, it is the young children who are the only educated members of the family. In this capacity, they play a
large role in decision-making for a variety of products and services, including food and personal care. For example, rural
children’s ‘pester power’ has become a driver for the purchase of Horlicks, a health drink, in many households, although
mothers are the decision-makers for this product category in urban areas. Children are also the educators of their mothers
where health and sanitation messages are concerned, influencing behavioral changes affecting the whole household.
Traditionally, males were the decision-makers for all family purchases, but now women do participate in decision-making
for the items they use, such as cooking utensils, food items, and soaps, as a result of greater exposure. The greater level of
exposure of the women towards the advertisement in rural areas influences the purchase behaviour for the complete
household and creates a willingness to try out new products, services, and brands. Some of the organizations like HUL,
ITC have identified this sizeable new market segment and are designing appropriate communication to create awareness
for their brands.
Companies have to focus on creating awareness of their products and have to make efforts to provide value in their
products. The companies have to make efforts in attracting the young youth, women and children, rather than focusing on
the older generations which bound to traditional values and are more resistant to change, if they are to make presence in
rural markets.
Chapter 2
Literature Review
The rural market is full of local brands who provides low price products to a rural consumer. The main focus of these
brands is on price while not much conscious about quality. Therefore, it provides the opportunity for several national
brands and global brands to serve this vast market with their world class products at affordable price. Thus, we can say
that rural market is the future of FMCG products.
According to research study by Purba Basu (Asst. Prof, ICFAI business School), the behaviour of rural consumer is
changing. She finds that rural market and marketing in rural India is become the latest trend among FMCG organizations.
She discussed about the strategies by major FMCG companies like HUL, ITC, Coca-Cola, Marico to attract this market.
She considers the study of NACER (National Council for Applied Economic Research) which estimates that the size of
rural consumers is expected to be double as that of Urban population by 2012.
In the report, “The marketing mastermind (2003), Hindustan Lever Limited (HLL) initiative by “A Mukund”.
Marketing mastermind has given the viewpoint in which HLL has approached the rural market. The promotion of
products in rural areas require special consideration. Due to traditional mindset of rural consumer the personal selling has
a very challenging part to play in this regard. The word of mouth is important while making promotion in these areas. In
fact, the opinion leaders are playing the crucial role in most of the purchase decisions. Also, the mass media is very
relevant promotional tool in rural India.
The article published in “The Economic Times (2003), “The Rural market likes it strong” the strength of rural
market for Indian companies. The Financial Express on 19 June 2000, the strategy about FMCG major, HLL,
Marico and Colgate Palmolive have formula had for rural markets. These articles revealed that strong Indian brands
have advantage over MNCs i.e., they have strong dealer network, having strong Brand equity which have been created
over a longer period of time. The companies have know identified that rural consumer income is now increased. The
marketer has to understand that affordability is one of the major factors in rural markets.
According to Pradeep Tognatta (former VP of LG), the growth in Indian agricultural sector is growing at a faster rate.
This makes a huge demand of products in rural markets. Some of the factors which needs to take care are Psyche of rural
consumer, strong distribution network of the companies in these areas and awareness of this vast market are one of the
important factors which are to take care of before entering into this market. The HLL several years ago popularized the
idea of selling products into small packets which are of great demand in Indian rural markets. Britannia has come up with
low priced Tiger biscuit brand which has gain huge success in rural market.
In a research paper “Rural marketing – A critical Review” by Miss P. Pirakatheeswari, Lecturer in commerce (Sri
Sarda college of women), she added that success in the rural market is unpredictable. It always has been difficult to
penetrate in rural market. Only few brands have been successful to make their presence in this market while many brands
have failed. Therefore, the companies need to understand the social dynamics and the mindset of rural consumer. The
future is very promising for those who have been able to understand the dynamics of rural markets.
Chapter -3
Objectives of the study
Today marketers have realized the power of rural market which is ignored for many years by the Global players. But it is
not a simple task to easily penetrate this market and grab a huge market share. The companies may not rely on the strategy
that they have made for urban market. Here, the companies have to come up with a multiple innovative strategy and have
to make certain efforts to understand the mindset of rural consumer. This study aims at bringing a holistic understanding
of rural market and the scope of FMCG companies in the rural market.
This term paper consists of following objectives:
➢ To examine the rural market environment.
➢ The potential for FMCG companies in the rural market.
➢ Analysis of Strategies adopted by major FMCG companies in rural market.
➢ Major challenges faced by companies in rural market.

➢ To study the level of brand awareness of some popular FMCG Brands.
➢ To study the customer’s view regarding advertisements of FMCG Brands.
Chapter – 4
Research Methodology
Basically, it is a search for Knowledge, it is scientific and systematic efforts to gain some information about the topic or
about a special problem. As per Redman & Moorey, “Research is application of tools, techniques to find out the solution
for the problem in a systematic way. The research methodology may include surveys, interviews, and other research tools
& techniques and can include both present and past information.
Steps used in research process:
➢ Formulation of problem.
➢ Defining the problem.
➢ Review of Literature.
➢ Research Design.
➢ Data collection.
➢ Data Analysis.
➢ Findings and conclusion.
RESEARCH DESIGN USED IN THE STUDY:
In this research report the research design used is descriptive in nature. Descriptive research was used in this study
because it will make sure that there is less biasness and data collected is more reliable in nature. Basically, descriptive
research is that research where we define the population, it is based on surveys, fact finding, enquiries etc. Finally, we can
say that it post fact research. The objective of my research is to describe thing as market potential for FMCG products or
the attitude of consumers who buy it.
Methods of data collection:
Data collection is the backbone of the research. The whole analysis of the research is based on the basis of data
thus almost care should be taken while gathering it. Data collected in the preparation of this report is both primary
and secondary nature. The primary data is collected is in the form of Questionnaire method where a standard set of
questions are selected and the respondents are asked to choose a particular answer. The secondary data is also used while
making of this term paper. The secondary data collected from various articles, magazines, websites, books, research
reports etc.
Sample size:
A total of 80 respondents was selected from a Rural area of the HP. The questionnaire was circulated through online
medium to the people all around the Himachal Pradesh and responses were recorded for the same.
Instrument of research:
The instrument used for this research is digitally formed Questionnaire.
Sampling and its techniques:

It is not possible as well as feasible for the researcher to conduct the research on entire population. Thus, small set is taken
by the researcher to conduct the researcher. This small set is known as sample. There are various techniques of sampling.
In this study I have used purposive sampling.
Statistical tools:
Simple statistical tools like: Simple percentage methods, mean, maximum and minimum value and MS Excel and google
sheet etc. has been used for data visualization and analysis of data for results and findings.
Chapter – 5
Limitations of the study
➢ The efforts for this study are limited as country is fighting against a global pandemic, so sample size is
small for the study.
➢ The respondents are random from all over the state of Himachal Pradesh, so credibility of the
responses can’t be verified.
➢ The study on retailers and dealers FMCG sector can’t be included into this study as the state is under
strict lockdown protocols, if I could have added those in the research too, the results might be clearer
and more promising.
➢ Very few brands of FMCG category were added into this study as questionnaire could have been more
lengthier and people might not respond to a lengthy study.
Chapter 5
FMCG Industry – An overview
The fast-moving consumer goods (FMCG) industry, also known as CPG (Consumer Packaged Goods) industry, deals
mainly with the manufacturing, distribution as well as marketing of packaged goods for all consumers.
3.1 Categories of products and players:
Table 1: FMCG Categories and Players
Segment Products Major Players
Household care Fabric (laundry soaps and detergents); HUL, Godrej Consumer Products,
household cleaners (dish/utensil ITC, P&G, Dabur and Reckitt &
cleaners, floor cleaners); air Coleman
fresheners, insecticides and mosquito
repellents, metal polish and furniture
polish.
Personal care Oral-care, hair-care, personal wash Colgate–Palmolive, Dabur, Lakme,

(soaps), deodorants, cosmetics and CavinKare, Marico, Fem Care,
toiletries, perfumes, female hygiene Emami, P&G, Himalaya, ITC and
products, and paper products Godrej consumer products
Food Staples/cereals, bakery products Parle Agro, Britannia, ITC, Nestlé,

(biscuits, bread, cakes), snack food, Dabur, Cadbury India, PepsiCo
chocolates, ice-creams, branded Flour,
branded sugar, branded rice, ready-to-
eat packaged foods, etc.
Beverages Health beverages, soft drinks, tea, Dabur, GlaxoSmithKline, Radico,

coffee, bottled water, juice, liquor etc. Pepsico, Coca-Cola, United Breweries,
United Spirits, Khaitan, etc.
Some of the leading FMCG companies all over the world are Sara Lee, Nestle, Unilever, Procter & Gamble, Coca-Cola,
Carlsberg, Kleenex, General Mills, Mars, etc. Th e major players and the value of major FMCG categories are as given
under:
■ Personal care: In this category we find the large number of brands i.e., Lux, Lifebuoy, Patanjali Soap, Fair & Lovely,
Vicks and Ponds. HUL has 11 brands aggregating Rs 37.99 billion or 54 per cent of total market value.
■ Foods: The foods category in the FMCG market is dominated by Amul, Nestlé, HUL, ITC, Godrej, Britannia and
others. This category has 18 major brands, aggregating Rs 52.07 billion. Amul, India’s largest packaged food company
and has a good presence in the rural market with its ice-creams, curd, milk, butter, cheese, etc. Britannia is also major
player in the FMCG sector with brands dominating the biscuits category and has many products at various prices. Nestle
and Amul slug it out in the powders segment. The food category has also seen innovations like softies in ice-creams,
chapatis by HUL, ready-to-eat rice by HUL and pizzas by both GCMMF and Godrej Pillsbury.
■ Cigarettes: Cigarettes are the major products items and accounts for 17 percent of the top 100 FMCG sales, and is
ranked just below the personal-care category. ITC acquires the larger about 60 per cent market share by volume and
70 per cent by value of all filter cigarettes in India.
■ Household care: In this segment Godrej and Reckitt are the two big players. GoodKnight from Godrej is worth more
than Rs 2.17 billion, followed by Reckitt’s Mortein at Rs 1.49 billion.
■ Hair care: In the shampoo category, HUL’s ClinicPlus and Sunsilk make it to the top 100, although P&G’s Head and
Shoulders and Pantene are also trying hard to reach the top. Clinic’s market share is nearly double the size of Sunsilk’s.
■ Herbal products: Dabur is the major player in the herbal products category. Dabur has brands like Dabur Amla hair oil,
Dabur Chyawanprash, Hajmola and Real juice.
■ Confectioneries: Cadbury India is the market leader in the chocolate confectionery market with a 70 per cent market
share and is ranked number two in the total food and drinks market. Its popular brands include Cadbury’s Dairy Milk, 5
Star, Eclairs and Gems.
The market size of Indian FMCG industry is about USD 43.08 billion in 2015 according to a report by ASSOCHAM
India. The Indian FMCG industry is expected to cross USD 100 billion by 2021. The FMCG sector generates 5 percent
employment in the country and about 4 million people are employed in this industry, especially in small towns and rural
India. There is a fierce competition between the national Players and the local regional brands.
Source- TechSci research
The fast growth in organized retail sector is one of the major reasons of growth in the Indian FMCG industry. Food &
Beverage contributes maximum share to FMCG industry. India has the second rank in production of food and only have
left behind from china and has the potential of being acquire the number one spot in a time frame of five years. The
personal care products items have estimated to reach about 13USD billion in 2020. Personal care items consist of
Deodrants, hair care, skin care, cosmetics etc.
Figure1: Market Share of FMCG sector
The larger organizations are growing at a faster rate and small-time companies are also trying to catch up with them as
well. From the research done by AC Nielsen, In the top 100 FMCG brands, 62 are of MNCs. These 62 brands are owned
by 15 companies, out of which about 27 are of Hindustan Unilever.
The success of the Indian FMCG industry lies in low price of products, Image building in rural areas, better advertising
and promotions and offering products that adds value to the lives of the Indian households.
The FMCG companies also have to focus on developing new strategies. The role of Internet in the industry is critical in
upcoming few years such as in logistics and managing the supply chain. The initiatives taken by the government and the
telecom companies in the development of fast internet in the backward areas is opening a new opportunity for the global
players.
3.2 Recession & Reactive strategies:
FMCG is a recession-proof industry. “By definition, FMCG addresses a very core need in the consumer’s life and so it is
less prone to economic swings than high-ticket items such as televisions or even apparel,” said Mr Hemant Kalbag,
principal, AT Kearney.
The economic recession has not impacted the performance of the companies that have manipulated their marketing
strategies intelligently. Adi Godrej, chairman of the Godrej Group and Harsh Mariwala, chairman of Marico Ltd, opined
that there will be strong growth both by value and by volume because of value-for-money products. The beverage industry
in India is estimated to grow at 17 per cent despite the slowdown in the economy. On the personal-care front, deodorants,
shampoos and talcum powders could see double digit growth. For instance, CavinKare registered 23 per cent sales growth
in 2008–2009 and anticipates 30 per cent growth this year, according to Mr Vineet Trakroo, vice-president (marketing),
CavinKare. Different companies have reacted in different ways to sustain and increase sales.
➢ Price increases – Some companies like HUL resorted to price increases. They have also been well-absorbed by
the market.
➢ Price cuts – Companies like P&G and Godrej resorted to price cuts.
➢ Innovations – Some companies resorted to new product launches and brand extensions. The extensions of brands
such as Navratna cool oil and Boroplus are examples for this.
➢ Focus on rural markets – With the urban market reaching near saturation, companies developed strategies for
penetrating deeper into rural and semi-urban markets.
3.3 Prospects of FMCGs:
According to a research analyst at RNCOS, a leading market research and information analysis company, “Increasing
penetration of the FMCG companies in rural areas is leading to the development of rural India over the last few years.”
However, to grow strongly and rapidly, rural areas should effectively address widespread and fundamental problems such
as developing infrastructural facilities and improving education levels.
The future outlook for FMCGs is very promising. The following factors are responsible for the growth in the industry: -
■ The middle class and the rural market segment of the India are the most emerging market for FMCGs, and there is an
opportunity to convert them as buyers of branded products.
■ The per capita consumption of almost all products in the country is among the lowest in the world.
■ Technology is advancing to facilitate innovations that are affordable to the middle and BoP segments of the Indian
market.
Growth is possible if companies focus on innovation of quality products at affordable prices and design effective
marketing strategies.
3.4 SWOT Analysis of FMCG sector:
Strengths: Weaknesses
• Low cost of operations. • Inflexibility in technology levels
• Brands with good Image. • Less innovative abilities and systems
• Strong Distribution network
Opportunities Threats
• Growing markets—domestic markets, especially • Competition, especially from fake products

the rural markets
• Entry of MNCs with liberalization
• Export potential
• Excise duties and taxes imposed by the
Government.
Chapter – 6
Rural market—a new opportunity
According to a research study commissioned by the Associated Chambers of Commerce and Industry in India, rural areas
are propelling the demand for FMCGs, passenger cars, two-wheelers and organized retail goods at a comparatively faster
pace than the urban areas and thus, leading to a healthy increase in the revenue of companies despite the global recession.
“The FMCG sector in rural areas is believe to rise by 40% as against 25% in urban areas,” stated ASSOCHAM. However,
no time frame for these predictions has been given by the Association. With current estimated value of over Rs 5,600
billion, or nearly 40% of the total retail market valued at Rs 14,000 billion, the rural retail market will remain the potential
area for growth. Several FMCG firms, including ITC and DCM, have been registering faster and higher growth in the
sales of their goods in the rural markets as compared to the urban markets. This has significantly added to their bottom
lines.
There has been a paradigm shift in the rural market environment. There has been a significant growth in purchasing
power, change in lifestyle, increase in brand consciousness, change in consumption patterns, improvement in
infrastructural facilities, and spread of the communication network. The “GO Rural” seems to be the latest trend.
4.1 The Rural Environment: -
The rural environment comprises of demographic, economic, social, cultural, political, and technological environment of
rural market.
Demographic environment:
■ Growth in the rural population – The rural population has grown by over 200 million over the last two decades (see –
Table 4.1). The proportion of rural households continues to be 70 per cent, and is expected to stabilize in the event that the
rural thrust continues.
■ Change in the rural family structure -Traditionally, households in rural India were joint families. But with the rise in
population, the resulting pressure on land, and several other socio-economic factors (education, separate sources of
income, migration, etc.), joint families are now breaking apart.
Table – 2. Rural population in India

■ Education – The literacy rate has gone up from 53 per cent in 2000 to 65 per cent in 2011 (see Table 4.2). The literacy
rate is higher in the southern region of the country as compared to the north.
Table – 3. Literacy level among Individuals:
■ Occupation – Agriculture was the principal occupation in rural India. It is now being replaced by non-traditional
occupations, including shop/trade, skilled work, and salaried jobs. Rising literacy levels, improved and upgraded skill sets,
and new technology have encouraged rural people to take up new occupations.
The social and Cultural Environment:
■ Gender-wise distribution – Sex ratio (the number of females per 1,000 males) for India is 933 females per 1,000
males. Women and men are almost in equal numbers in many of the states.
■ The Caste System – Indian society had a definite scheme of social gradation, with the Brahmins at the head of the
hierarchy, followed by Kshatriyas (warriors) and Vaishyas (business class and traders), and then the Shudras (involved in
low-skilled and odd jobs) at the bottom. Individual castes themselves are further divided into sub-castes, each claiming
social supremacy over the other. However, over the last few years the influence of the caste system appears to be
reducing. Now we can see mixed hamlets, with Brahmins and Kshatriyas living at the same place in villages.
Untouchability is also phasing out, except in a few states like Rajasthan, where it is highly prevalent. As the impact of the
caste system has diluted, it is no longer of much importance from a marketer’s point of view.
Political Environment and Development Initiatives:
Historically, the panchayat and the village radhan/sarpanch had represented rural India. Dominated largely by the upper
castes, they lorded over the political scene until the panchayats became part of the administrative machinery of the
Government of India. Under the Panchayati Raj system, all government departments (education, health, agriculture, rural
development, social justice, livelihoods) form an integrated approach for the development of rural areas. Addressing the
challenge of unemployment in the rural areas of the country is central to the development of the rural sector for
ameliorating the economic condition of the people. Wage employment is provided in rural areas under the National Rural
Employment Guarantee Act (NREGA).
➢ The Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA).
➢ The Swarnjayanti Gram Swarozgar Yojna (SGSY).
➢ The Pradhan Mantri Rojgar Yojna.

The Technological Environment:
■ Rapid Mechanization -There has been a sustained increase in the adoption of mechanization to ensure greater returns
on investment (RoI) and sustainability of agriculture. Mechanization, primarily driven by the increased use of tractors, is
replacing manual and animal labour. The share of animal power has declined from 16 to 7 per cent, and the share of
tractor power has increased from 46 to 65 per cent. India is the world second largest manufacturer of tractors in the world,
with annual sales of 342,000 tractors (2009–10). There are 16.7 tractors per 1,000 hectares at present. All these factors
have resulted in better productivity in agriculture.
■ The IT revolution – The evolution of the computer, Internet, and mobile phones has had a tremendous impact on the
lives of rural people. It is connecting farmers to food retailers, enabling them to sell the produce at high farm gate prices
without delay. They receive market information at the touch of the button. Today’s rural children and youth will grow up
in an environment where they have ‘information access’ to education opportunities, exam results, career counselling, job
opportunities, government schemes and services, health and legal advice, worldwide news and information, land records,
mandi prices, weather forecasts, bank loans, and livelihood options.
The Rural Economic Environment:
The rural economy has changed from a slow-growth, agriculture economy to a fast-growth economy. Economic
liberalization and government-led infrastructure development have opened up the rural economy. Better access to goods,
markets, and funds has kickstarted the more resilient non-farm sector. This, combined with better farm earnings due to a
sharp minimum support price (MSP) increase for crops and crop diversification, has led to more money for rural pockets,
which transformed the rural economy into a vibrant and growing economy with rapidly rising incomes.
Figure: - 4.1.3 Change in Trend from Farm to Non- Farm activities
Source – Mart Knowledge Centre
4.2 Selecting and attracting the rural market:
Before entering into any market there is need to identify the market and an understanding of their differences with respect
to affordability, accessibility, acceptance and availability. In fact, in the face of competition, companies thrive on the
ability to spot differences and fine-tune a differentiated marketing strategy that matches the diffused preferences of target
customers effectively. Today companies are developing differentiated offers in terms of products (brands with different
names, in different pack sizes and with different formulations), prices (at different price points), promotions (with
different communication campaigns) and places (traditional channels, haats, melas, e-choupals, rural retail outlets, Shakti
groups, etc.) to win over consumers in different market segments. Both companies and market research agencies are
engaged in research to learn more about the characteristics of consumer markets in terms of geographic, demographic,
psychographic and behavioural aspects to obtain rich and reliable data and to develop indices to take segmentation
decisions. Based on such intelligent decisions, marketers are focusing on attractive segments to reach and serve them
effectively and achieve desired results.
Selection of market involves three key decisions—segmentation, targeting and positioning.
■ Segmentation is the process of dividing the market into different groups based on one or more variables.
■ Targeting involves selecting the market segments that can be served efficiently and profitably. It involves making
decisions on market coverage strategies.
■ Positioning is a market attraction strategy that involves placing the brand in the minds of the customers in the target
market.
4.2.1 Bases for Segmenting Rural Consumer Markets: -
Geographic segmentation: -
Rural customers can be segmented according to geographic factors like region, state, district, villages, and climate. The
country is divided into four zones: North, South, East, West.
Village Population and density: -
The Census of India has categorized villages into different strata on the basis of their population. The rural lifestyle
changes with the size (population) of the village due to a variation in the level of infrastructural and economic
development. So far, most companies have targeted villages with a population of more than 2,000, which have better
infrastructural facilities and high purchasing power. What marketers need to do is to segment the village markets on the
basis of development indicators relevant to the product category, and target them accordingly.
Culture: -
In the early 1970s, Rashiduddin Khan segmented the country into 56 socio-cultural regions (SCRs). Cultural identities
have diluted to some extent in urban areas due to the influence of Western culture, but it is largely intact in rural areas.
Demographic Segmentation: -
Rural customers can be segmented on the basis of demographic factors like age and lifecycle, family structure,
landownership, occupation, income, socio-economic class, religion, and caste.
Age and Lifecycle: -
With the changing lifecycle stage, consumers need for products and brand preferences also change. This phenomenon is
true for both urban and rural consumers.
Table 4: Products for different age groups
Age segment Products Brands
Children Toothpaste, confectionery, sports Pepsodent, Britannia, Parle, Atlas,

cycles, story books, magazines Hero
Adults Magazines, shoes, TV, music systems, Adidas, Reebok, Philips, Sony,
computers, scooters Samsung, HCL, Compaq, Bajaj,
Elders Briefcases, spectacles, suiting, Mobile VIP, Samsonite, Ray-Ban, Bosche and
phones, Cars Lamb, Raymond, Park Avenue, Tata
Cellular, Magic
Family size: -
As the family size increases, so does the consumption of products. In such a case, the family pack or the economy refill
pack works very well. Similarly, large families have more breadwinners, which translate into higher family income and,
thus, greater consumption of products. This often leads to multi-brand consumption of a product category among different
family members.
Income: -
Unlike urban India, where income for the majority of people is regular (on a monthly basis), in rural India the flow of
income is mostly seasonal (postharvest for farmers) or weekly/daily (for wage earners). The salaried class with a regular
monthly income constitutes a very small segment of rural consumers.
Occupation: -
The major occupations in rural India are—self-employment in agriculture, laborer (agriculture/non-agriculture), self-
employment in non-agriculture, and regular salary/wages. The variation in the major occupational groups necessitates the
segmenting of rural markets on a different basis.
Psychographic segmentation: -
While geographic and demographic segmentation depict the visible characteristics of consumer markets, the true
dynamics of purchase behaviour can be assessed only on the basis of the psychographics of the rural consumer.
Lifestyle: -
Lifestyles are defined by AIO (activities, interests and opinions).

Today, the rural consumer’s brand choices are not that different from his urban counterpart’s. However, while the brand
choices tend to converge, packing preferences don’t. By and large, the rural preference is for smaller packs.
One way of lifestyle classification is:

■ Trendsetters ■ Traditionalists ■ Chameleons
Personality: -
Personality refers to the set of psychological and physical characteristics of an individual that determine individual
behaviour. These characteristics are unique, making individuals different from one another. Personality can be defined
with the help of characteristics such as self-confidence, sociability, adaptability, assertiveness, autonomy, creativity,
sensitivity, etc.
Behavioral segmentation: -
Occasions: -
Consumers become enthusiastic to make purchases when there is an occasion to celebrate. Like the Baisakhi season in
Punjab and Diwali and Dussehra in most parts of the country are important festival occasions.
Usage rate: -
Based upon the size of their consumption, consumers may be categorized as follows: -
■ Light users ■ Medium users ■ Heavy users
Pack sizes are designed differently to meet the requirements of different users.
Loyalty status: -
A market can also be segmented on the basis of consumer loyalty to brands, stores and companies. In rural areas, brand
loyalty is higher as decisions are collectively made. It is reported that there are Colgate villages, Escorts villages and
Nirma villages.
Table 5. Loyalty status an implication for marketers
Loyalty status Goal Marketing action

Strong To retain Improve the features and
promotions
Weak To attract Identify weaknesses and fortify
brand support with good promotion
Non-loyal To convert Heavy sales promotion campaign
Source – Rural marketing Text and cases by C. S. G. Krishnamacharyulu
Once segmentation has been done, the marketer needs to evaluate each segment to decide which segment to target.
Targeting involves three aspects—evaluation, selection, and coverage.
During the evaluation of market segments, two factors are to be considered, the overall attractiveness of each market
segment and the objectives of the company and its resources. The attractiveness of a segment is measured on the bases of
size, growth rate, accessibility, profitability, scale economics, and low risk. During the evaluation in rural areas there are
many factors that are needed to consider.
After evaluating, segments are selected by rating them on a predetermined scale with respect to evaluation factors. Post
this, the marketer can choose any of the three alternative coverage strategies that suits his segmentation approach. It could
range from a very broad to a very narrow targeting approach—undifferentiated, differentiated, and concentrated.
Undifferentiated marketing considers the common aspects among the consumers and tries to include it in the offer. A
differentiated market strategy analyses and identify the differences among segments, and tries to satisfy the need of each
segment. Concentrated marketing involves focusing on only one or a few market segments. As companies put so much
effort and investment into reaching rural markets, they should have a multi-segment strategy rather than a single segment
one in order to receive adequate returns on investment.
Once a marketer decides which segments to target, he must then decide on its differentiation and positioning strategy.
Positioning involves three major steps—identification of the unique feature of the product (USP) as well as differences
between this offer and that of a competitor; selecting the differences that have greater competitive advantage; and
communicating such advantages to the target audience.
Some of the critical factors that should be considered while positioning a brand are:
■ Attractive. Does it provide value to the customer?
■ Distinctive. Is it different from the products of its competitors?
■ Pre-emptive. Is it very difficult for competitors to copy it?
■ Affordable. Can buyers pay for it?
■ Communicable. Can the difference be clearly expressed? Is it visible? Is it understandable?
An important aspect in identifying USP is constructing a visual map of the customer’s mind, which depicts the exact
position where his brand is placed. This helps the marketer to know the ideal value-point for the customer, and then
design and communicate the right positioning concept.
Chapter –7
Problems of Rural marketing
Companies entering rural markets need to prepare themselves for some surprises and shocks. The media reports are
contradictory—some report stark poverty in rural areas and others showcase the urban style of living. The truth obviously
lies somewhere in between. That’s why companies should exercise caution while taking entry decisions. There are some
of the problems that inhibit the successful operations of companies in the rural market.
Uneven development:
There is uneven development in many regions of rural India. The poor villager continues to be ignored. He suffers from
lack of proper information and awareness. Inadequate infrastructure such as the non-availability of gas supply, frequent
power cuts, improper sanitary conditions, etc. are common problems in many villages. There are many households which
are under BPL category. There are remote villages which are not touched by the economic and social reforms.
Occasionally, we see media reports on suicides of farmers and weavers.
Highly Scattered market:
Most of the villages in rural India have a population of less than 5000. Thus, the population density in rural India is very
low whereas in urban India the population density is very high. Therefore, the companies may face distribution problems
severe a vast rural market.
Low-income:
However, the income of rural consumers increases in recent years due to various government initiatives and the
developments in farm and agriculture. But still the rural consumers have low disposable income. According to National
Council for Applied Economic Research (NCAER), we know that 18.7 % of the rural population is below the poverty
line.
Access difficulty:
During the recent years many of remote villages get access to nearest feeder town. Large number of villages are now
connected with State highways and national highways. But still there is lots of developments are needed in this area. This
is one of the major problems for companies who wants to serve this market.
Limited awareness and acceptance:

The awareness as well as acceptance levels for branded products and services have been low among rural consumers. This
is due to the low level of education of the rural people on the one hand and less focused and less creative educative
campaigns of corporations on the other.
Fierce Competition:
Cut-throat competition pressurizes the margins of big firms such as HUL, Dabur, ITC, P&G, Britannia, Coca-Cola and
Pepsi. This neck throat competition is due to the presence of global Brands, National Brands, Regional Brands and fake
brands.
It is estimated that FMCG companies lose more than 100 Billion rupees due to counterfeit products, an black marketing of
products.
Channel Partner Problems:
In a large scattered market like Rural India, it is not easy to find eligible wholesalers and dealer. There are also problems
because retailers promote regional brands because they provide them good margin than national and global players.
Advertising Problems:
Due to fragmented rural market, cultural differences, low education, low media penetration etc., there are problems faced
by marketing agencies in communication and advertisement products.
Failure of some companies:
It is true that some companies had earlier failed to make a dent in rural markets. This can be attributed to their half-hearted
efforts and faulty tactical approaches. Many FMCG companies had applied faulty tactical approaches. They are not able to
understand the behaviour of rural consumer. Very little effort to tailor the communication to suit the local audience or fit it
with the overall campaign initiatives in the mass media was made. They considered that rural consumers are like the urban
consumers and that is the main reason of the failure of these companies.
Chapter – 8
Strategies for selling in rural India
To cater the needs of the rural people and to serve the rural market effectively you can can’t go alone with the 4P
approach which was designed for urban markets. Here you require something different to penetrate successfully the rural
market. Therefore, Prof Jagdish Seth had given the 4A approach which is successfully meant for the rural market.
4 A’s of Rural marketing – Affordability, Availability, Awareness, Acceptability.
Affordability:
The income of the rural consumers is very less as compared to the urban consumers. Therefore, it is essential for the
marketers to create an affordable product. But here affordable product doesn’t mean that offering a low-priced product
with low quality. It is vital to design a product or service that caters to the needs of the rural consumers in their unique
environment and provides value as perceived by them. Rural consumers are driven by the value proposition, and not just
by cost. Affordability here simply means that it should be within their purchasing capacity. For example, Sachet
packaging by shampoo marketing companies with offering same quality shampoo at the price Rs 1.
Availability:
According to census of India 2001, India’s has a network of about 640,867 villages which are spread over 3.2 million sq.
km. If the product is not available in a market, it cannot be purchased. However, some FMCG companies have design a
creative and innovative approaches like-HUL’s Shakti model and Colgate’s bicycle entrepreneurs—to overcome this
problem.
Awareness:
Low literacy level of rural consumers creates a hindrance for any communication message for rural consumer. However,
due to the collective efforts by various NGOs and government schemes, the literacy level is rising. Also, the penetration
of mass media like Television, radio is higher in rural India. Therefore, rural consumers are exposed to same
communication message as that of urban counterparts. There are various alternatives such as wall paintings, vans, road
shows which can serve as effective tool for the communicating with rural consumers.
Acceptability:
The acceptability of a product is very critical in case of rural consumers. The product is accepted by rural consumer if it
provides them value. Products that show greater versatility and adaptability to rural conditions have an advantage over
others. We have seen this in case of Chinese mobile handsets, The Chinese mobile handsets instant hit in rural markets
without any advertising or promotion as they are low cost, durable, easy to use, have a built-in torch, and loudspeakers for
playing music. So, the mobile phone transforms into a personal portable entertainment system operable in ‘no electricity’
conditions.
8.1 Pricing Strategies by FMCG Companies in Rural Market:
In urban markets, the urban consumers look for aspirational product, they want branded products and want to highlight the
particular brand which they have purchased. However, in rural India it is not the case they look for products that adds
value in their lives. Historically, companies believed that they can offer the low-priced product to rural consumer by
compromising with the quality and paid the price.
Rural consumers may be more demanding on the price parameter. However, it would be wrong to assume that they are not
quality conscious. Marketers need to customize and innovate to create products that are relevant and affordable for the
rural consumer. If a marketer wants to develop an effective pricing strategy for a quality-conscious market, then, he must
know whether the price–quality relationship holds good for the market.
There are some specific pricing strategies adopted by marketers in rural markets. These strategies have helped shift
consumers from unbranded, loose products to branded, packaged in low-unit packs.
As the majority of the rural people are daily wage earners, they never have sufficient money on any given day to invest in
large SKUs, as they have to purchase a variety of daily-need items with their limited earnings. Therefore, companies need
to introduce low-point price packs so that their product is included in the daily basket of purchases of the wage earner.
Chik Shampoo was the trendsetter in the sachet market many years ago, when it introduced shampoo sachets at INR 1 to
penetrate the rural market. This gave the company an edge, and the low price point helped in better market penetration.
Other fast-moving consumer goods (FMCG) players like HUL, Godrej, and Dabur have also tried this route for different
products, at different price points. Today, HUL sells the maximum number of its products (ranging from shampoo to hair
oil) in sachet packs in rural areas.
The cost of a product can be brought down by using low-cost packaging materials that are durable and aesthetic. The
packaging need not be very sophisticated as rural people may not be willing to pay higher prices for fancy external
appearances. Since they are more interested in the sturdiness and utility of the product, simple packaging can be adopted.
A good example is of Britannia’s Tiger biscuit.
Products are made available in refill packs so that marketers can add value pricing to it. Products like edible oils, health
drinks, and coffee are available in refill packs.
The coinage pricing strategy is mostly used in rural markets for FMCG brands. For the convenience of retailers and
consumers, companies adopt this kind of pricing in order to avoid the problems caused by a shortage of change. These
packs are small in size and are normally meant for one-time consumption (shampoo sachet), or a day’s consumption (tea
bag), or a week’s consumption (bathing or washing soap). Coinage pricing has been found to be easy to communicate to
consumers. For example, Coca-Cola has effectively used the communicated price point (INR 5) of their small bottle to
attract new segments.
8.2 Innovative strategies by companies to capture Rural market:
Strategy adopted by HUL:
Project Shakti
Rural distribution was the main problem that are faced by FMCG companies, because to reach to fragmented village
market of rural India is not a easy task and it also increases the product cost. Therefore, to overcome this problem HUL
launched project shakti in a small area of Andhra Pradesh in 2000. Under Project Shakti, SHG women in remote areas
were appointed as local dealers of HUL products, providing them with a sustainable micro-enterprise opportunity while
HUL gained access to previously untapped remote rural markets. Under Project Shakti, distribution has been organized
through a comprehensive, three-tier network: first by a CFA at the state level, then by the Rural Distributors (RDs) at the
district level, who delivers the stocks at the doorsteps of Shakti Dealers (SDs) in remote villages. The Shakti dealers then
distribute not only in their own village, but also in three to four surrounding villages. Through this system the products get
access to a far situated villages of rural India. The packaging of products is also be kept small which are to be easily
affordable by rural consumer.
Strategy adopted by ITC:
ITC e-Choupal
ITC has initiated an IT-based procurement system called e-Choupal for the products which are used as raw material in its
offerings like tobacco, soya, wheat etc. In this system ITC places computers with Internet facility in rural farming
villages. At harvest season ITC offers farmers to buy their crops. The farmer then transports his crop to an ITC processing
centre, where the quality and weight of crop is checked. The farmer is then paid for the crop and is also given a transport
fee. In this way, the e-Choupal system bypasses the government-mandated trading mandis. Farmers selling directly to
ITC receive a 2.5 per cent higher price over the mandi rate. E-Choupals are also used for ordering seeds, fertilizers, and
other products such as consumer goods from ITC or its partners, at prices lower than those available from village traders.
Pioneer of Hub and spoke Model:
Strategy adopted by Coca-cola
To reach out to rural markets, companies have to cover large areas, resulting in disproportionately high logistics costs.
Availability continues to be the biggest challenge in rural markets. Traditionally sold in returnable glass bottles, soft
drinks cannot be sold through conventional FMCG channels. Coca-Cola India have followed a strategy in which rather
than transporting beverages directly from bottling plants to retailers, it is first transported to a hub, and then to nearby
spoke centres for order filling. This approach reduces distribution cost for supplying cold drinks. Through this strategy
Coca-Cola also able to increased its penetration in rural market.
Chapter-9
Data Analysis and Interpretation
1. Age of the respondents: -
Age Group Frequency Percentage
Below 20 5 6.25%
20 - 30 54 67.50%
31 - 40 14 17.50%
Above 40 7 8.75%
Total 80 100.00%
Table 6: Age group of respondents
Interpretation:
In the above table, there are 80 respondents out of which 5 respondents are below the age of 20 years, 54 respondents
are between age 20 – 30, 14 respondents are between 31-40 age group and 7 respondents were above the age of 40
years.
Inference: Majority of respondents lies between 20 – 30 age group.
Chart 1:
2. Gender of respondents: -
Gender Frequency Percentage
Male 54 67.50%
Female 26 32.50%
Total 80 100.00%
Table 7. Gender of respondents
Interpretation:
The above table shows that out of 80 respondents there were 54 male and 26 female respondents.
Inference: - Majority lies with male respondents by 54.
Chart 2:
3. Education level of Respondents: -
Education Frequency Percentage

School Level 6 7.50%
Degree/
Diploma 33 41.25%
PG 41 51.25%
Total 80 100.00%
Table 8. Education level of respondents
Interpretation: From the above data, out of 80 respondents, 6 respondents have studied up to school level. 33
respondents have done degree/ diploma and 41 respondents have done post-graduation in respective fields.
Inference: Majority of respondents (41) have studied up-to PG level.
Chart – 3: -
4. Income level of the family(Monthly):
Income level Frequency Percentage
₹ 5000 to 50000 30 37.50%

₹51000 to 100000 17 21.25%
₹100001 to
300000 15 18.75%
₹300001 to
500000 11 13.75%
Above ₹500000 7 8.75%
Total 80 100.00%
Table 9. Income of the Family
Interpretation: This table shows that majority of the household about (37.50%) monthly income of the respondents is
between Rs 5000-50000. 21.25% of the households have monthly income between Rs 51000 – 100000, 18.75% of the
households have monthly income between 100001-300000, 13.75% households have income level between 300001-
500000 and 8.75% households have income level above 5 lakhs.
Inference: Majority of households monthly income lies between 5000-50000.
Chart-4: -
5. Factors Influencing the choice of a particular brand:
Factors Frequency Percentage

Advertisement 31 38.75%
Word of mouth 13 16.25%
Attractive
Packaging 10 12.50%
Shop Display 14 17.50%
Others 12 15.00%
Total 80 100.00%
Table 10. Factors influencing choice of a Brand
Interpretation: The above table shows that majority of the respondents about 38.75%, purchase decision is
influenced by the advertisement of a particular brand. 16.25% of the respondents purchase decision is influenced by
Word-of-mouth marketing, 12.50% of the respondents purchase decision is influenced by packaging of the Brand,
17.50% of the respondents purchase decision is influenced by shop display while 15.00% respondents purchase
decision depends on other factors.
Inference: Majority of the respondents purchase decision is influenced by advertisement of a particular brand.
Chart 5: -
6. Format used for Purchase of a Brand: -
Format Frequency Percentage

Kirana Stores 44 55.00%
Departmental stores 17 21.25%
Convenience Stores 9 11.25%
Supermarket 10 12.50%
Total 80 100.00%
Table 11. Format used for purchase
Interpretation: From the above table it is clear that 55% of the respondents make their purchases from local Kirana
Stores, 21.25% of the respondents make their purchases from departmental stores, 11.25% of the respondents make
their purchases from convenience stores while 12.50% of the respondents make their purchases from supermarket.
Inference: - Majority of the respondents of the respondents 55% make their purchases from local Kirana stores.
Chart 6: -
7. Reasons for making purchase in preferred formats:
Factors Frequency Percentage

Discount 16 20.00%
Variety 29 36.25%
Service 32 40.00%
Ambience 3 3.75%
Total 80 100.00%
Table 12. Reasons for making purchase in preferred format
Interpretation: From the above table, 20% of the respondents look for discount while making purchase. 29% of the
respondents look for variety in products while making purchases, 40% of the respondents look for quality services and
3.75% of the respondents preferred good ambience in the stores.
Inference: - Majority of the respondents about 40% considers service as a primary reason for making purchase in a
preferred format.
Chart 7: -
8. Effect of promotional schemes on purchase decisions:-
Effect Frequency Percentage

Yes 59 73.75%
NO 7 8.75%
May be 14 17.50%
Total 80 100.00%
Table 13. Effect of promotional schemes on purchase decision
Interpretation: - From the above table we see that 73.75% of the respondents believed that promotional schemes by
companies influence their purchased decsion. 7% of the respondents believed that promotional schemes does’nt affect
their purchse decision while 17.50% of the respondents purchase decision may or not get affected by promotional
schemes.
Inference : - Majority of the respondents about 73.75%, purchase behaviour is affected by promotional schemes.
Chart 8: -
9. Study on awareness of some popular Skin care Brands:
Brand Name Frequency (Out of 80 responses) Percentage
Fair & Lovely 52 65%
Ponds 45 56.3%
Nivea 56 70%
Garnier 44 55%
Himalaya 65 81.3%
Table 14. Study on awareness of famous skin care Brands
Data Interpretation and Inference:
Most of the respondents were aware about the famous Skin care Brands. Himalaya has most brand awareness with
81.3%; then Nivea with 70%, Fair & Lovely with 65% and Ponds and Garnier at 56.3% and 55% respectively.
Therefore, respondents were aware about most of the popular urban skin care brands.
Chart 9: - Awareness of Skin Care Brands:
10. Study on awareness of popular Hair care Brands:
Brand Name Frequency (Out of 80 responses) Percentage
Head & Shoulder 67 83.8%
Clinic Plus 48 60%
Pantene 40 50%
Sun silk 40 50%
Table 15. Study on awareness of popular Hair care Brands

Data Interpretation & Inference:
Head & Shoulder is the most popular brand among respondents with the vote of the 83.8% while the other brands
like Clinic Plus, Pantene, Sun Silk has a share of 60%, 50% and 50% respectively.
Therefore, Head & shoulder is the most Popular Brand among respondents.
Chart 10: - Awareness of Hair Care Brand: -
11. Study on awareness of popular Detergent Powder Brands: -
Brands Frequency (Out of 80 responses) Percentage
Surf Excel 66 82.5%
Ghari Detergent 40 50%
Ariel 34 42.5%
Wheel 50 62.5%
Tide 39 48.8%
Table 16. Study on awareness of popular detergent Brands
Surf Excel is most popular Brand among respondents with vote of 82.5% while the other brands like Ghari, Ariel, Wheel
and Tide have the vote share of 50%, 42.5%, 62.5% and 48.8% respectively.
Therefore, Surf Excel is the most popular brand in the detergent category among respondents however respondents are
also aware about other brands in this category.
Chart 11: - Awareness of Detergent Powder Brands:

12. Study on awareness of Cold Drinks Brands:
Brands Frequency (out of 80 responses) Percentage
Coca Cola 66 82.5%
Pepsi 47 58.8%
Fanta 41 51.2%
Catch 31 38.8%
Limca 60 75%
Table 17. Study on awareness of Cold drink Brands
From the above data, 82.5% of the respondents were aware about Coca Cola brands, 75% of the respondents were aware
about Limca Brand while Pepsi, Fanta & catch have the vote share of 58.8%, 51.2% & 38.8% respectively.
Therefore, Coca Cola is the most popular brand among respondents with 82.5% votes.
Chart 12: - Awareness of Cold Drink Brands:

13. Study on awareness of toothpaste Brands:
Brands Frequency Percentage
Colgate 67 83.8%
Close Up 45 56.3%
Pepsodent 40 50%
Patanjali 42 52.5%
Table 18. Study on awareness of toothpaste Brands
From the category of toothpaste Brands, Colgate is the most popular brand with 83.8% votes, while other brands like
Close up, Pepsodent, Patanjali have 56.3%, 50% and 52.5% vote share.
Therefore, Colgate is the most popular brand among respondents.
Chart 13: - Awareness of Toothpaste Brands:
14. Customer view on Branded products is better than Unbranded Products:
Variable Frequency Percentage
Yes 45 56.25%
No 6 7.5%
May be 29 36.25%
Total 80 100%
Table 19. Viewpoint on Branded products

From the above data, 56.25% believe that Branded products by companies are better than the unbranded products. 36.25%
of the respondents believed that branded products may or may not be better than unbranded products while 7.5% of the
respondents believe that branded products are not better than unbranded products.
Therefore, Majority of respondents agreed that Branded products are better than unbranded products.
Chart 14: -
15. Average time frame customers using above stated Brands:
Time Frequency Percentage
Last 6 months 6 7.5%
6 months to 1 year 5 6.25%
1 to 2 year 8 10%
More than 2 years 61 76.25%
Total 80 100%
Table 20. Time using above brands
From the above data, 76.25% of the respondents are using above brands for more than 2 years, 10% of the respondents are
using above brands for 1 to 2 years, 6.25% of the respondents are using above brands from 6 months to 1 year while 7.5%
of the respondents are using above brands from the past 6 months.
Therefore, Majority of the respondents are using above stated brands from more than 2 years.
Chart 15: -
16. Search for schemes before buying a product: -
Variables Frequency Percentage
Yes 67 83.75%
No 5 6.25%
May be 8 10%
Total 80 100%
Table 21. Search for schemes
Data Interpretation & Inference: -
From the above table, it is clear that about 83.75% of the respondents look for promotional schemes before purchasing a
product, 6.25% of the respondents will not look for schemes before buying a product and 10% of the respondents may or
may not look for schemes before buying a product.
Therefore, Majority of respondents 83.75% look for schemes various schemes before buying a product.
Chart 16: -
17. Type of Scheme which respondent may look before buying a product:
Type of scheme Frequency (Out of 73 responses) Percentage
Coupons 34 46.6%
Extra quantity 35 47.9%
Price off 56 76.7%
Bundling Offer 21 28.8%
Scratch Cards 22 30.1%
Table 22. Type of scheme which respondents may look before purchase
From the above data, 76.7% of the respondents look for price off on products before buying them, 47.9% of the
respondents look for extra quantity, 46.6% of the respondents look for Coupons in the products and 30.1% of the
respondents look for scratch cards in the products while 28.8% of the respondents look for Bunding offer before making a
purchase of product.
Therefore, Majority of the respondents look for Price off on the various products they purchase.
Chart 17: - Type of Scheme:
18. Customers viewpoint on Brand switching if they get Promotional scheme from competitor Brand: -
Yes 47 58.75%
No 8 10%
May be 25 31.25%
Total 80 100%
Table 23. Brand switching of customers
From the above data, we see that 58.75% of the respondents will shift to other brand if they get better Promotional
Schemes, 10% of the respondents will not shift their current Brand i.e., they are Brand Loyal while 31.25% of the
respondents may or not shift from their current brand.
Therefore, Majority of the respondents will shift to another Brand that means they have Brand stickiness.
Chart 18: -
19. Reasons for Brand switching: -
Reasons Frequency (Out of 80 responses) Percentage
Cost 50 62.5%
Quality 51 63.7%
Satisfaction 38 47.5%
More Benefit 39 48.8%
Seasonal change 13 16.3%
Table 24. Reasons for Brand Switching
From the above data, 63.7% of the customer will switch brand if they get more quality product from other brand, 62.5% of
the customers will switch brand if they get more economical product, 48.8% of the respondents will switch brand if they
get more benefit in other product while 47.5% of the customer will switch brand if they get more satisfaction from other
brand and 16.3% of the respondents will switch brand as a seasonal change.
Therefore, majority of respondents will switch Brand if they get better quality in competitor Brand.
Chart 19: - Reasons for Brand Switch:
20. Customer reaction If particular Brand is not available with preferred retailer: -
Reaction Frequency (out of 80 responses) Percentage
Drop the idea of buying Product 8 10%
Go to another retail outlet 46 57.5%
Try another Brand 41 51.2%
Table 25. Customer reaction on Brand availability
From the above data, 57.5% of the respondents will go another retail outlet if a particular Brand is not available with
existing retailer, 51.2% of the respondents will try another Brand and 10% of the respondents will drop the idea of Buying
that Product.
Therefore, Majority of the respondents will go to another retail outlet.
Chart 20: - Customer Reaction on Non-Availability of Brand with retailer:

21. Influence on Preference of Brand: -
Variable Frequency Percentage
Family 33 41.3%
Friends 23 28.7%
Advertisement 33 41.3%
Self 47 58.8%
Table 26. Influence on Brand preference
From the above data, 58.8% of the respondents Brand preference decision depends on their own decision making, 41.3%
of the respondents Brand preference decision depends on their Family and Advertisement each while 28.7% of the
respondents Brand preference decision influenced by their friends.
Therefore, Majority of the respondents make their own branding decision.
Chart 21: - Influence on Brand Preference:
22. Role of advertisement in Brand Preference: -
Yes 67 83.75%
No 2 2.5%
May be 11 13.75%
Total 80 100%
Table 27. Role of advertisement in Brand Preference

From the above table, 83.75% of the respondents believed that advertisement influence the Brand preference, 13.75% of
the believed that advertisement may or may not influence their Brand preference while 2.5% of the respondents believed
that advertisement does not influence their Brand preference.
Chart 22: -
23. Effect of Advertisement on consumer: -
Better Recall 18 22.5%
Interest 15 18.75%
Positive Impression 33 41.25%
Better Exposure 14 17.5%
Total 80 100%
Table 28. Effect of advertisement on consumer
From the above data, 41.25% of the respondents believed that advertisement develop positive impression of the Brand.
22.5% of the respondents believed that advertisement develop better recall of the brand, 18.75% of the respondents
believed that advertisement develops interest in the brand and 17.5% of the respondents believed that advertisement
provide better exposure towards the brand.
Therefore, Majority of respondents believed that advertisement develops positive Impression of the brand.
Chart 23: -
24. Perception on price difference between Rural and Urban areas: -
Yes 55 68.75%
No 10 12.5%
May be 15 18.75%
Table 29. Perception on price difference between rural and urban
From the above data, 68.75% of the respondents believed that there is price difference between the rural and urban areas
products, 12.5% of the respondents believed that there is no price difference between rural and urban area products.
18.75% of the respondents believed that there may or may not be price any difference between rural and urban area
products.
Therefore, Majority of respondents believed that there is price difference between rural and urban area products.
Chart 24.: -
Chapter – 10
Results and Findings
Results: -
Demographics:
• 67.50% of the respondents fall in the age group 20 -30.
• 67.50% of the respondents are male in the study.
• Majority of respondents are from rural areas.
• Majority of respondents are studied up to post-graduation level.
• Majority of respondents income level lies between 5000 – 50,000
Findings: -
After analysing the data and using the methods like data visualization I came to know about the following findings from
the study:
• Majority of the respondents purchase decision is influenced by advertisement of a particular brand.
• Majority of the respondents of the respondents about 55% make their purchases from local Kirana stores.
• Majority of the respondents about 40% considers service as a primary reason for making purchase in a preferred
format.
• Majority of the respondents about 73.75%, purchase behaviour is affected by promotional schemes.
• Most of the respondents were aware about the various Brands in the FMCG category.
• Majority of respondents agreed that Branded FMCG products are better than unbranded FMCG products.
• Majority of respondents 83.75% look for schemes various schemes before buying a product.
• Majority of the respondents look for Price off on the various products they purchase.
• Majority of the respondents will shift to another Brand if they get better offer from other Brand that means they
have Brand stickiness.
• Majority of respondents will switch Brand if they get better quality in competitor Brand that means consumer are
quality conscious.
• Majority of the respondents make their own brand choice decisions when purchasing FMCG products.
• Majority of respondents 83.75% agreed that advertisement influence the Brand preference decision and develops
positive impression about the brand.
• Majority of respondents agreed that there is price difference between rural and urban area FMCG products.
Chapter – 11
Conclusion
Results show that FMCG category market shares almost same attributes in rural and urban regions in the state.
People are better aware about the brands in both regions because of the reach of national and international
media as FMCG products are used on a daily basis in every household. There are various factors due to which
demand of FMCG products are rising day by day. Due to increase in income, shift from agriculture to non-
agricultural activities, Better distribution network increased the availability of FMCG products in rural areas.
Due to the many products in the urban market are in saturation stage and also due to tough competition between
the brands in the urban market, develops interest of various corporates towards the untapped rural market. But
there are many factors which needs to consider before entering from this market. In the past we have seen many
examples of companies doing well in the urban market but failed to make their footprints in the rural markets.
As the education level are rising people are becoming aware about the Foreign and national Brands. Due to
larger Youth population in the villagers, these products are becoming popular among this segment. There is also
a fact rural consumer is value conscious. Many companies offering low quality products at a low price failed to
win the rural hearts. Only those products survived this market which provide value to the rural consumer and
does not empty their pockets.
We seen the examples of many companies from HUL, ITC to Coca Cola designing innovative strategies for
rural consumers and find fruitful results. Thus, although there is fierce competition between the national, global
and regional Brands. But companies providing Valuable products and following creative strategies are able to
successfully penetrate this market.
Chapter – 12
References
Books: -
• Kashyap Pradeep, Rural Marketing (2012), Second Edition, Pearson Education, India.
• Krishnamacharyulu C S G and Ramakrishnan Lalitha (2011), Rural Marketing: Text and Cases, Second Edition,
Pearson Education, India.
• Kotler Philip, Keller Kevin Lane, Koshy Abraham , Jha Mithileswar. Marketing Management: A South Asian
Perspective, 13th Edition, Pearson Education, New Delhi. 2009
Websites: -
• www.CensusIndia.com
• - ibef.com
• - researchgate.net
• - academia.edu
• www.HUL .com
• www.P&G.com
• www.rural marketing.com
Annexure
Questionnaire:
A study of consumer behaviour on FMCG products in rural Areas:
1. Name?
2. Age?
3. Gender?
4. Educational Qualification?
5. Monthly income of family?
6. What influenced you to buy a particular Brand?
i) Advertisement
ii) Word of Mouth
iii) Attractive Packaging
iv) Shop Display
v) Others
7. Which of the following format you prefer to make purchase?
i) Kirana Stores
ii) Departmental Stores
iii) Supermarket
iv) Convenience Stores
8. Select the reason for making purchase in your preferred Store: -
i) Discount
ii) Variety
iii) Service
iv) Ambience
9. Do Promotional Schemes Affect your Choices?

i) Yes
ii) No
iii) Maybe
10. Are you Aware of these Brands?

Skin Care:
i) Fair & Lovely

ii) Ponds
iii) Nivea
iv) Garnier
v) Himalaya
Hair Care:
i) Head & Shoulder

ii) Clinic Plus
iii) Pantene
iv) Sun Silk
Detergent Powder:
i) Surf Excel
ii) Ghari Detergent
iii) Ariel
iv) Wheel
v) Tide
Cold Drinks:
i) Coca Cola
ii) Pepsi
iii) Fanta
iv) Catch
v) Limca
Tooth Paste:
i) Colgate
ii) Close Up
iii) Pepsodent
iv) Patanjli
11. Do you think Branded Products are better than Unbranded Products?
i) Yes
ii) No
iii) May be
12. How long you have been using above stated Brands?
i) Last 6 months
ii) 6 months to 1 year
iii) 1 - 2 year
iv) More than 2 years
13. Do you look for various schemes in the FMCG products?

i) Yes
ii) No
iii) Maybe
14. If, Yes which Schemes?

i) Coupons
ii) Extra quantity
iii) Price off
iv) Bundling Offer
v) Scratch Cards
15. Will you like to switch your Brand if you get some promotional scheme with another brand?
i) Yes
ii) No
iii) May be
16. Give Reason for the same?

i) Cost
ii) Quality
iii) Satisfaction
iv) More Benefit
v) Seasonal Change
17. If a particular Brand is not available with retailer you will: -

i) Drop the idea of buying product
ii) Go to another retail outlet
iii) Try another brand
18. Who influence your preference for Brands?

i) Family
ii) Friends
iii) Advertisement
iv) Self
19. Does advertisement play any role toward your brand preference?
i) Yes
ii) No
iii) May be
20. In what way advertisement had influenced you?

i) Better Recall
ii) Interest
iii) Positive Impression
iv) Better Exposure
21. Do you find any price difference between rural and urban area's products?
i) Yes
ii) No
iii) May be

Project MBA

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Project MBA

Uploaded by

Copyright:

Available Formats

TERM PAPER

“The Race to catch it:

FMCG Sector in Rural India”

Submitted in Partial Fulfillment for the Requirement of MBA

Supervised by : Submitted BY:

Date: 15- 04-21

Central University of Himachal Pradesh

Objectives of the study.......................................................................................................................................................... 12

Research Methodology ......................................................................................................................................................... 13

Sampling and its techniques:............................................................................................................................................. 14

Statistical tools: ................................................................................................................................................................. 14

Limitations of the study ........................................................................................................................................................ 15

FMCG Industry – An overview ............................................................................................................................................ 16

Rural market—a new opportunity......................................................................................................................................... 20

Problems of Rural marketing ................................................................................................................................................ 27

Strategies for selling in rural India ........................................................................................................................................ 29

Results and Findings ............................................................................................................................................................. 51

Chart Number Chart Title Page Number

Chart 1 Age of respondents 32

Chart 2 Gender of respondents 33

Chart 3 Education level of respondent 34

Chart 4 Income level of Household 35

Chart 5 Factors affecting purchase decision 35

Chart 6 Format used for purchases 36

Chart 7 Reasons for purchase in a format 37

Chart 8 Effect of promotional Schemes 37

Chart 9 Awareness of Skin Care Brands 38

Chart 10 Awareness of Hair Care Brands 39

Chart 11 Awareness of Detergent Powder 40

Chart 12 Awareness of Cold Drink Brands 40

Chart 13 Awareness of Toothpaste Brands 41

Chart 14 Customer View on Branded 42

Chart 15 Time using Above Brands 43

Chart 16 Search for Schemes 43

Chart 17 Type of Scheme 44

Chart 18 Brand Switching 45

Chart 19 Reasons for Brand Switch 46

Chart 20 Customer Reaction on Non- 47

Chart 21 Influence on Brand Preference 48

Chart 22 Role of advertisement on Brand 49

Chart 24 Price difference Between Rural and 50

Objectives of the study

This term paper consists of following objectives:

➢ To examine the rural market environment.

➢ The potential for FMCG companies in the rural market.

➢ Analysis of Strategies adopted by major FMCG companies in rural market.

➢ Major challenges faced by companies in rural market.

Steps used in research process:

➢ Defining the problem.

➢ Findings and conclusion.

RESEARCH DESIGN USED IN THE STUDY:

Methods of data collection:

The instrument used for this research is digitally formed Questionnaire.

Sampling and its techniques:

Limitations of the study

FMCG Industry – An overview

3.1 Categories of products and players:

Table 1: FMCG Categories and Players

Segment Products Major Players

Personal care Oral-care, hair-care, personal wash Colgate–Palmolive, Dabur, Lakme,

Food Staples/cereals, bakery products Parle Agro, Britannia, ITC, Nestlé,

Beverages Health beverages, soft drinks, tea, Dabur, GlaxoSmithKline, Radico,

Source- TechSci research

Figure1: Market Share of FMCG sector