You are on page 1of 5

FT405M

ConsumerBehavior andRuralMarketing
Module 14 RURALCONSUMERBEHAVIOR
Consumer Buyer Behavior refers to the buying behavior of final consumers individuals and householdswhobuygoodsandservicesforpersonal consumption.Allofthesefinalconsumers combinedmakeuptheconsumermarket.TheconsumermarketinthiscaseisRuralIndia.About 70%ofIndiaspopulationlivesinruralareas.Therearemorethan600,000villagesinthecountry asagainstabout300citiesand4600towns.Consumersinthishugesegmenthavedisplayedvast differencesintheirpurchasedecisionsandtheproductuse.Villagersreactdifferentlytodifferent products, colours, sizes, etc. in different parts of India. Thus utmost care in terms of understandingconsumerpsycheneedstobetakenwhilemarketingproductstoruralIndia. Thus,itisimportanttostudythethoughtprocessthatgoesintomakingapurchasedecision,so thatmarketerscanreachthishugeuntappedsegment. Factorsinfluencingbuyingbehavior ThevariousfactorsthataffectbuyingbehaviorofinruralIndiaare: 1. Environmental of the consumer The environment or the surroundings, within which the consumer lives, has a very strong influence on the buyer behavior, egs. Electrification, water supplyaffectsdemandfordurables. 2. Geographic influences The geographic location in which the rural consumer is located also speaks about the thought process of the consumer. For instance, villages in South India accept technology quicker than in other parts of India. Thus, HMT sells more winding watches in the northwhiletheysellmorequartzwatchesdownsouth. 3.Family itisanimportant buying decisionmakingorganization inconsumermarkets.Family size & the roles played by family members exercise considerable influence on the purchase decisions.Industryobserversareincreasinglyrealizingthatattimes,purchaseofdurablehasless todowithincome,buthasmoretodowiththesizeofthefamily&thatswhereruralIndiawith jointfamilystructures,becomesanattractiveproposition. 4. Economicfactors Thequantumofincome&theearningstreamareoneofthemajordeciding factors,whichdeterminetoagreatextent,whatthecustomerwillbeabletobuy.Manypeoplein theruralmarketarebelowpovertyline&forlargenumberofpeople,agricultureistheprimary

FT405M/ConsumerBehaviorandRuralMarketing/Prof. ArpitLoya

FT405M

ConsumerBehavior andRuralMarketing
occupation.Morethan70%ofthepeopleareinsmallscaleagriculturaloperation.Thesefactors affectthepurchasedecision. 5. Placeofpurchase (60%preferHAATSduetobetterquality,variety&price)Companiesneedto assesstheinfluenceofretailersonbothconsumersatvillageshopsandathaats. 6. Creative use of product ex Godrej hair dye being used as a paint to colour horns of oxen, Washingmachinebeingusedforchurninglassi.Thestudyofproductendprovides indicatorsto thecompanyontheneedforeducationandalsofornewproductideas. 7. Brandpreferenceandloyalty (80%ofsaleisbrandeditemsin16productcategories) Culturalfactorsinfluencingconsumerbehaviour Culturalfactorsexertthebroadestanddeepestinfluenceonconsumerbehaviour.Themarketer needstounderstandtheroleplayedby thebuyersculture.Cultureisthemostbasicelementthat shapesapersonswantsandbehaviour.InIndia,therearesomanydifferentcultures,whichonly goesontomakethemarketersjobtougher.Someofthefewculturalfactorsthatinfluencebuyer behaviourare: 1. Product (colour,size,design,andshape):Therearemanyexamplesthatsupportthispoint. a. Forexample,theTataSumo,whichwaslaunchedinruralIndiainawhitecolour,wasnot wellaccepted.Buthowever,whenthesameSumowasrelaunchedasSpacio(adifferent name)andinabrightyellowcolour,withalargerseatingcapacityandabilitytotransport good,theacceptancewashigher. b. Another good example would be Philips audio systems. Urban India looks at technology with the viewpoint of the smaller the better. However, in rural India, the viewpoint is totally opposite. That is the main reason for the large acceptance of big audio systems. ThusPhilipsmakesaudiosystems,whicharebiginsizeandgetacceptedinruralIndiaby theirsheersize. 2. Socialpractices :Therearesomanydifferentcultures,andeachcultureexhibitsdifferentsocial practices.Forexample,inafewvillagestheyhavecommonbathareas.Villagersusedtobuyone Lifebuoycakeandcutitintosmallerbars.Thishelpedlifebuoytointroducesmaller75gramsoap bars,whichcouldbeusedindividually. 3. Decisionmaking by male head : The male in Indian culture has always been given the designation of key decision maker. For example, the Mukhiyas opinion (Head of the village), in

FT405M/ConsumerBehaviorandRuralMarketing/Prof. ArpitLoya

FT405M

ConsumerBehavior andRuralMarketing
most cases, is shared with the rest of the village. Even in a house the male head is the final decisionmaker.Inruralareas,thistrendisveryprominent. 4. Changesinsavingandinvestmentpatterns Fromgold,land,to tractors,VCRs,LCVs 4AsapproachofIndianRuralMarket Theruralmarketmaybeappealingbutitisnotwithoutitsproblems:Lowpercapitadisposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions; poor roads; power problems; and inaccessibility to conventional advertisingmedia.However,theruralconsumerisnotunlikehisurbancounterpartinmanyways. The more daring MNCs are meeting the consequent challenges of availability, affordability, acceptabilityandawareness(thesocalled4As) Availability The first challenge is to ensure availability of the product or service. India's 627,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas, finding them is not easy. However, given the poor state of roads, it is an even greater challengetoregularlyreachproductstothefarflungvillages.Anyseriousmarketermust strive to reach at least 13,113 villages with a population of more than 5,000. Marketers must trade off the distribution cost with incremental market saturation. Over the years, India's largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong distribution system which helps its brands reach the interiors of the rural market. To service remote village, stockiest use autorickshaws, bullockcarts and even boats in the backwatersofKerala.CocaCola,whichconsidersruralIndiaasafuturegrowthdriver,has evolvedahubandspokedistributionmodeltoreachthevillages.Toensurefullloads,the company depot supplies, twice a week, large distributors which who act as hubs. These distributors appoint and supply, once a week, smaller distributors in adjoining areas. LG Electronics defines all cities and towns other than the seven metros cities as rural and semiurban market. To tap these unexplored country markets, LG has set up 45 area officesand59rural/remotearea offices. Affordability The second challenge is to ensure affordability of the product or service. With low disposable incomes,productsneedtobeaffordabletothe ruralconsumer,mostofwho are on daily wages. Some companies have addressed the affordability problem by

FT405M/ConsumerBehaviorandRuralMarketing/Prof. ArpitLoya

FT405M

ConsumerBehavior andRuralMarketing
introducingsmallunitpacks.Mostoftheshampoosareavailableinsmallerpacks.Fairand lovely was launched in a smaller pack. Colgate toothpaste launched its smaller packs to catertothetravellingsegmentandtheruralconsumers.Godrejrecentlyintroducedthree brandsofCinthol,FairGlowandGodrejin50gmpacks,pricedatRs45meantspecifically forMadhyaPradesh,BiharandUttarPradeshthesocalled`Bimaru'States.Hindustan Lever,amongthefirstMNCstorealizethepotentialofIndia'sruralmarket,haslaunched avariantofitslargestsellingsoapbrand,LifebuoyatRs2for50gm.Themoveismainly targeted at the rural market. CocaCola has addressed the affordability issue by introducing the returnable 200ml glass bottle priced at Rs 5. The initiative has paid off: Eighty per cent of new drinkers now come from the rural markets. CocaCola has also introducedSunfill,apowderedsoftdrinkconcentrate.TheinstantandreadytomixSunfill isavailableinasingleservesachetof25gmpricedatRs2andmultiservesachetof200 gmpricedatRs15. Acceptability Thethirdchallengeistogainacceptabilityfortheproductorservice.Therefore,thereisa need to offer products that suit the rural market. One company which has reaped rich dividendsbydoingsoisLGElectronics.In1998,itdevelopedacustomizedTVfortherural marketandchristeneditSampoorna.Itwasarunwayhitselling100,000setsinthevery firstyear.Becauseofthelackofelectricityandrefrigeratorsintheruralareas,CocaCola provides lowcosticeboxesatinboxfornewoutletsandthermocol boxforseasonal outlets.Theinsurancecompaniesthathavetailormadeproductsfortheruralmarkethave performed well. HDFC Standard LIFE topped private insurers by selling policies worth Rs 3.5 crores in total premium. The company tied up with nongovernmental organizations andofferedreasonablypricedpoliciesinthenatureofgroupinsurancecovers.Withlarge partsofruralIndia inaccessibletoconventionaladvertisingmedia only41percentrural households have access to TV building awareness is another challenge. Fortunately, however, the rural consumer has the same likes as the urban consumer movies and musicandforboththeurbanandruralconsumer,thefamilyisthekeyunitofidentity. However,theruralconsumerexpressionsdifferfromhisurbancounterpart.Outingforthe formerisconfinedtolocalfairsandfestivalsandTVviewingisconfinedtothestateowned Doordarshan.Consumptionofbrandedproductsistreatedasaspecialtreatorluxury. Awareness Brandawarenessisanotherchallenge.Fortunately,however,theruralconsumerhasthe

FT405M/ConsumerBehaviorandRuralMarketing/Prof. ArpitLoya

FT405M

ConsumerBehavior andRuralMarketing
samelikesastheurbanconsumer moviesandmusic andforboththeurbanandrural consumer,thefamilyisthekeyunitofidentity.However,theruralconsumerexpressions differ from his urban counterpart. Outing for the former is confined to local fairs and festivals and TV viewing is confined to the stateowned Doordarshan. Consumption of brandedproductsistreatedasaspecialtreatorindulgence. Hindustan Lever relies heavily on its own companyorganized media. These are promotionaleventsorganizedbystockiest.GodrejConsumerProducts,whichistryingto pushitssoapbrands intotheinteriorareas,usesradiotoreachthe localpeopleintheir language.CocaColausesacombinationofTV,cinemaandradiotoreach53.6percentof rural households. It doubled its spend on advertising on Doordarshan, which alone reached41percentofruralhouseholds.Ithasalsousedbanners,postersandtappedall the local forms of entertainment. Since price is a key issue in the rural areas, CocaCola advertisingstressedits`magical'pricepointofRs5perbottleinallmedia.LGElectronics uses vans and road shows to reach rural customers. The company uses local language advertising.PhilipsIndiauseswallwritingandradioadvertisingtodriveitsgrowthinrural areas. The key dilemma for MNCs ready to tap the large and fastgrowing rural market is whethertheycandosowithouthurtingthecompany'sprofitmargins.

FT405M/ConsumerBehaviorandRuralMarketing/Prof. ArpitLoya

You might also like