This document is a dissertation submitted by Anurag Singh Rathour to their dissertation guide Mr. Anurag Duggar at Jagran Institute of Communications & Management. The dissertation topic is "A Comparative Study of Brands in Rural India & The Brand Loyalty & Awareness of Rural Customers".
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Comparative Study of Brands in Rural India - By Anurag Singh
1. DISSERTATION TOPIC:
‘COMPARATIVE STUDY ON BRANDS IN RURAL INDIA’
DISSERTATION GUIDE:
Mr. Anurag Duggar
SUBMITTED BY:
Anurag Singh Rathour
Roll No‐ MCM2009023
PGDM‐C, (MCM)
JICM
2. DECLARATION
I Anurag Singh, studying in Jagran Institute of Communications &
Management, do hereby declare that this Dissertation titled “A
Comparative study of Brands in Rural India & The Brand Loyalty &
Awareness of Rural Customers”, has been prepared by me, under the
guidance of Mr. Anurag Duggar. This Dissertation embodies the result of
my original work and studies carried out by me and the contents of the
Dissertation do not form the basis for the award of any other degree to me
or to anybody else.
I further declare that this Dissertation report has not been submitted
earlier to any other University or Institute for the award of any degree or
diploma.
Anurag Singh Rathour
MCM‐2009’023’
PGDM‐MCM
3. ACKNOWLEDGEMENT
The satisfaction and euphoria that accompany the successful completion of
any task would be incomplete without mentioning the people who made it
possible, whose consistent guidance and encouragement crowned the
efforts with success.
I would consider it my privilege to express my gratitude and respect to;
Mr. Mani Shreshtha for having accorded me the opportunity to learn in
field of the Rural Markets and buying behavior.
I cannot forget the contribution of the staff of Jagran Institute of
Communications & Management,as I troubled them through my queries at
every stage of their work and I really appreciate the patience with which
they resolved my doubts amidst their busy schedule, I express my sincere
thanks to all of them.
I would express my thanks and gratitude to my Dissertation guides Mr.
Anurag Duggar, of JICM for their able guidance and support throughout the
tenure of the Dissertation. I am extremely thankful to them for making this
Dissertation worth.
Anurag Singh Rathour
MCM2009’023’
PGDM‐MCM
4.
TABLE OF CONTENTS:
SR. NO. DESCRIPTION PAGE NO.
Declaration 1
Acknowledgement 2
Executive Summary
Chapter‐1 Introduction of Dissertation 4‐18
1.1 Report Literature Review 11‐34
Chapter‐2 Research Methodology 46‐47
2.1 Methods of Data Collection 48
Chapter‐3 Data Analysis & Interpretation 49‐69
Chapter‐4 Findings 70
Chapter‐5 Conclusion & Recommendation
5.1 Suggestion & Recommendations 85
5.2 Limitation 86
Bibliography 87
8. determines the carrying out of business activities bringing in the flow of goods from urban
sectors to the rural regions of the country as well as the marketing of various products
manufactured by the non‐agricultural workers from rural to urban areas. To be precise, Rural
Marketing in India Economy covers two broad sections, namely:
• Selling of agricultural items in the urban areas
• Selling of manufactured products in the rural regions
Some of the important features or characteristics of Rural Marketing in India Economy are being
listed below:
• With the initiation of various rural development programmes there have been an
upsurge of employment opportunities for the rural poor. One of the biggest cause
behind the steady growth of rural market is that it is not exploited and also yet to be
explored.
• The rural market in India is vast and scattered and offers a plethora of opportunities in
comparison to the urban sector. It covers the maximum population and regions and
thereby, the maximum number of consumers.
• The social status of the rural regions is precarious as the income level and literacy is
extremely low along with the range of traditional values and superstitious beliefs that
have always been a major impediment in the progression of this sector.
• The steps taken by the Government of India to initiate proper irrigation, infrastructural
developments, prevention of flood, grants for fertilizers, and various schemes to cut
down the poverty line have improved the condition of the rural masses.
Building brands in rural india:
In a market where life has revolved around deep rooted community values, joint families,
and social customs and taboos (women, for example, are not allowed to wear trousers),
marketers realize that the traditional routes of market entry and brand building employed
in urban India are often not feasible. As Adi Godrej, Chairman of the Godrej Group, says,
“The challenge [for brands] is to understand the [psyche] of the rural consumer, create
better distribution, and [appreciate] the heterogeneity.”
In recent times, rural India has witnessed a wave of change. Dinesh Malhotra, general
manager of Linterland (rural arm of Lintas), points out, “With media exposure and
increasing literacy levels, people in rural India are now demanding a better lifestyle.” The
educated “rural yuppie” (males in the 15‐34 age group) is moving out to work in nearby
towns and cities, and sending money home to his family. This has created an indirect
increase in disposable incomes and a surge in demand for consumer goods. The rural youth
are slowly evolving as “opinion leaders” in influencing brand and product decisions in a
18. stock products. Dabur has created a training module ASTRA [advanced sales training for retail
ascendance] in several regional languages. A number of auto companies have launched rural‐
specific campaigns."
Gupta of ruralnaukri.com offers more examples:
• Affordability ‐‐ Godrej introduced three brands of Cinthol, Fair Glow and Godrej (soap)
in 50‐gram packs, priced at 10 cents; Adidas and Reebok increased their sales by 50% in
rural markets by reducing prices.
• Size and design changes ‐‐ Videocon introduced a washing machine without a drier for
US$60; Philips launched a low‐cost smokeless chulha (stove); DCM Shriram developed a
low‐cost water purifier especially for rural areas.
• Improving product acceptance ‐‐ LG Electronics developed a customized TV (cheap and
capable of picking up low‐intensity signals) for the rural markets and christened it
Sampoorna. It sold 100,000 sets in the first year; Coca‐Cola provided low‐cost iceboxes
as regular power outages meant families could not depend on refrigerators.
Perhaps the ultimate sign that rural India has arrived is in the allocation of talent. "In the old
days, the weakest people in organizations, the ones without a star career path, held the reins of
the rural marketing divisions," says Bijoor. "Today, things have changed. Sharper and sharper
brains from within the organization are being diverted to rural strategy formulation." When the
whiz kids go to villages, you know the cows have come home.
If we try to observe the buying behavior and buying decisions of rural populations then it is
centered around two critical components: the reference group or opinion influencer and the
flexible finance option.
Starting from a high investment decision of buying a tractor to a normal day‐to‐day purchase of
clothes, oil, etc., is derived by influence groups like Sarpanch/fellow farmers and flexible
finance providers like an adhatiya/commission agent.
This is evident from the fact that brand dominance of a tractor or two‐wheeler differs as we
cross a 50‐ to 75‐kilometer radius in any rural geography. This dominance is actually derived by
the fact that how many in that locality possess a specific brand and how much of a personal
touch is involved in communicating the benefits, after sales support and relationship.
This should work for an FMCG or a telecom product also. If we combine all of these tools then
what comes as a viable and workable tool is a multilevel marketing team of influencers with a
loyalty program attached to it.
20. Rural Consumer Behavior Analysis:
If we really want to understand the rural consumer then we need to start thinking from their
angle. According to the National Council of Applied Economic Research, the majority of rural
people’s main occupation is agriculture‐related. Rural consumers and their buying habits are
different from their urban counterparts. They mainly buy when they sell their crops in the
market. It means twice or sometimes thrice a year.
Rural consumers generally buy all their products from one or two stores, and they generally
don’t change unless a major problem arises. They also decide their budget before purchasing
any product or service.
Rural consumers are price‐ and solution‐oriented. They think value means, "What did I get for
the price I paid?”
When rural consumers buy any new category of product, their decision is strongly influenced by
opinion leaders, who are seen as credible people in an entire region. Well‐educated users of
new products act as opinion leaders.
Rural consumers are also brand‐loyal. When rural consumers purchase a product or service
they perceive the functional, physical and financial risk in it
Rural Needs:
Life in rural India was simple and not complicated. They lived a happy life by keeping their
needs to a minimum and being happy with what they had. Therefore, it was a pleasure to be
there in the villages of India. Haven't seen more smiling faces ... even among riches in
Mumbai/Chennai.
While there's not a doubt that rural India also needs quality products and services at
reasonable costs and which do not damage the fragile rural environment, let the consumerism
not spread there. Let companies focus on delivering value to rural India ‐‐ value products and
services that would keep their smile.
Rural market for FMCG on
upswing:
Fast moving consumer goods (FMCG) companies can rejoice as the Rs 27,369 crore rural market in
22. Oil/ghee/vanaspati 98 97 98 98
HH Universe
136043 138682 141321 143855
(000s)
Manoj K Menon, senior project director, IMRB International (media and panel group), says, “One of
the most significant changes includes growing preference towards branded products. For example,
in the food and beverages segment, penetration of branded atta has gone up year‐on‐year by 8 per
cent and branded salt by 3 per cent. The penetration of unbranded atta has decreased by 1 per
cent and salt by 3 per cent.”
FMCG companies Hindustan Unilever and ITC have worked on increasing rural penetration through
corporate social responsibility projects such as Project Shakti and e‐Choupal, respectively.
According to Vijay Sharma, head, Project Shakti, the growth in sales from the rural market has
been both in value and volume terms.
Speaking about his experience of the rural market, he said, “Through Project Shakti, the company
has been implementing programmes that aim at building the market by increasing usage of the
categories it is present in. The key here is to educate consumers about improving their lifestyle and
our brands play a role in enabling this. For example, Lifebuoy Swasthya Chetana is a rural health
and hygiene educational programme. Our Shakti network is growing and the company expects to
cover 600 million consumers across 5 lakh villages through one lakh Shakti entrepreneuers by
2010.”
Currently, Shakti has 45,000 entrepreneuers in the country.
Suchitra Potnis, associate director, Client Solutions (a Nielsen company), said, “Store density in
rural India is 5.4 stores per thousand persons compared with 10.1 in urban areas. The top‐20
categories account for around 70 per cent of the FMCG market. Categories such as batteries and
iodised salt have gained a slot among the top‐20 in the rural market since the consumption of
these categories is higher in rural than urban India.”
1.Introduction:Brand loyalty
Loyalty is dead, the experts proclaim, and the statistics seem to bear them out. On average,
the U.S. corporations now lose half their customers in five years, half their employees in four,
and half their investors in less than one (Reichheld, 1996). No, loyalty is not dead; it remains
27.
Sample size:
1. working people: 32%
2. college students: 29%
3. school students: 23%
4. senior citizens: 16%
Sampling region:
1. The researcher has selected BHOPAL, the Capital city of Madhya Pradesh as the area of
study.
2. He has chosen Sehore, Kolu khedi, Aashtha as her areas of research. In these areas she
can easily meet working people (both male & female), school students, college students
& senior citizens.
The population status of these areas can be shown in a tabulated manner, which is given as
follows:
Area Population
Sehore 12,97,570
Kolu khedi 8,12,230
Aashtha 8,75,640
Population is in approximate figures.
Source: http://www.mpgov.nic.in/mpinfo/census01/cen01‐1.htm
28. Note: As the examiner can see that the population of areas (areas that are chosen by the
researcher) is very large, therefore the researcher has stratified the area. She has chosen
various areas that come under these areas.
The Villages covered by the researcher are Baawadia kala, Dhaapi, karond. the population
level of these areas are:
Area: Population:
Baawadia kala 2,83,563
Dhaapi 3,93,768
karond 2,86,786
Source: Bhopal Development Authority
Note: the researcher took these areas because these areas are near to various school &
colleges. The researcher took school & college students as her sample unit.
Sampling procedure:
The researcher will take stratified random sampling as the sampling procedure.
Data collection method:
1. Primary data: it will be collected with the help of a self administered questionnaire.
This questionnaire aims to gather information related to various Branded products.
29. 2. Secondary data: it will be collected with the help of books, research papers, magazines,
news papers, journals, internet, etc.
Questionnaire design:
As the questionnaire is self administrated one, the survey is kept simple and user friendly.
Words used in questionnaire are readily understandable to all respondent. Also technical
jargons are avoided to ensure that there is no confusion for respondents.
Panoramic View
India has a population of over 1 billion & 4 climatic Zones. Several religious & personal
beliefs, 15 languages, different social customs & food habits categorize Indian consumer
class. Besides this, India is also different in culture if compared with other Asian countries.
Therefore, India has high distinctiveness in demand and the companies in India can get lot
of market opportunities for various classes of consumers. Consumer goods marketers’
experience that dealing with India is like dealing with many small markets at the same time.
Indian consumer goods market is expected to reach $400 billion by 2010. India has the
youngest population amongst the major countries. There are a lot of young people in India
in different income categories.
Consumer goods marketers are often faced with a dilemma regarding the choice of
appropriate market segment. In India they do not have to face this dilemma largely because
rapid urbanization, increase in demand, presence of large number of young population, any
number of opportunities is available. The bottom line is that Indian market is changing rapidly
and is showing unprecedented consumer business opportunity.
30. As the restrictions on foreign investments were relaxed in 1991, Multi‐National Companies
have been entering India since then.
Market Size in $
Market Share in %
million
Indian Indian
15 MNCs MNCs
Companies Companies
1992 2004 1992 2004
Breakfast
2 25 100 0 52 48
cereals
Wafers,
potato 6 35 100 0 37 63
chips
Washing
40 570 98 2 51 49
Machines
TV 630 3,030 97 3 49 51
1992 $=30 rupees
2004 $=45 rupees
Source: Center for Monitoring Indian Economy (CMIE)
With a population of 1 billion people, India is a big market for FMCG
companies. Around 70% of the total households in India reside in the rural areas. The total
number of rural households is expected to rise from 135 m in 2002 to 153 m in 2010, which
represents the largest potential market in the world.
31.
Rural and urban potential
Urban Rural
Population 2001‐02 (m household) 53 135
Population 2009‐10 (m household) 69 153
% Distribution (2001‐02) 28 72
Market (Towns/Villages) 3,768 627,000
Source: Statistical Outline of India (2001‐02), NCAER
Indian consumer class can be classified according to the following criteria:
1. Income
2. Socio‐Economic status
3. Age demographics
4. Geographical dispersion
32.
Income based classification
India has a population of 1.095 billion people, comprising of 1/6th of the world population.
India's population can be divided into 5 groups on the basis of annual household income. These
groups are:
1. Higher income
2. Upper middle income
3. Middle middle income
4. Lower middle income
5. Lower income
The income classification does not represent a real scenario for an international business
because the purchasing power of currencies differs significantly. The real purchasing power of
Indian rupee is higher than the international exchange value. In addition to that, income
classification is not an effective tool to ascertain consumption and ownership trends in the
economy.
Consumer Classification
According to National Council of Applied Economic Research (NCAER) there are 5 consumer
classes that differ in their ownership patterns and consumption behavior across various
segments of goods.
33. Consumer Classes Annual Income in Rs. 1996 2001 2007 Change
The Rich Rs. 215,000 and more 1.2 2.0 6.2 416%
The Consuming Class Rs 45‐ 215,000 32.5 54.6 90.9 179%
The Climbers Rs. 22‐45,000 54.1 71.6 74.1 37%
The Aspirants Rs. 16‐22,000 44 28.1 15.3 ‐65%
The Destitute Below Rs. 16,000 33 23.4 12.8 ‐61%
Total 164.8 180.7 199.2 21%
Source: NCAER
The 5 classes of consumer households (consumer classification) show the economic
development across the country based on consumption trends.
Socio economic classification
In addition to income classification and consumer classification, Indian households can also be
segmented according to the occupation and education levels of the chief earner of the
household (the person who contributes most to the household expenses). This is called as
Socio‐economic Classification (SEC), which is mainly used by market planners to target market
before launching their new products. SEC is made to understand the purchase behavior and the
consumption pattern of the households.
The urban area is segregated into: A1, A2, B1, B2, C, D, E1, E2
34.
Socio‐Economic Classification
Occupation Education
Less
5‐9 yrs
than 4 School Some Post‐
Illiterate of Graduate
yrs in certificate college graduate
school
school
Skilled E2 E1 D C C B2 B2
Unskilled E2 E2 E1 D D D D
Shop owner D D C B2 B2 A2 A2
Petty trader E2 D D C C B2 B2
Employer of‐
Above 10
B1 B1 A2 A2 A1 A1 A1
persons
Below 10
C B2 B2 B1 A2 A1 A1
persons
None D C B2 B1 A2 A1 A1
Clerk D D D C B2 B1 B1
Supervisor D D C C B2 B1 A2
Professional D D D B2 B1 A2 A1
Senior
B1 B1 B1 B1 A2 A1 A1
executive
Junior
C C C B2 B1 A2 A2
executive
Source: Indian readership survey (IRS)
Sections A & B refer to High‐class‐ constitutes over a quarter of urban population
Sec C refers to Middle‐class‐‐ constitutes 21% of the urban population
36. wage earner
Pucca Semi‐pucca Kuchcha
Professional
R1 R2 R3
degree
Graduation/ PG R1 R2 R3
College R1 R2 R3
SSC/HSC R2 R3 R3
Class 4‐Class 9 R3 R3 R4
Up to class 4 R3 R3 R4
Self‐learning R3 R4 R4
Illiterate R4 R4 R4
Age demographics
India is a very young nation, if compared with some advanced and developed
countries. Nearly two‐ thirds of its population is below the age of 35, and nearly 50 % is below
25.
Marketers explain that the boom in the consumption level and leisure related expenditure is
because of this young population. It will have a significant impact over the consumer goods
market. In addition to that, it is expected that this will generate trade opportunities and
continuous investment in the economy. There is huge potential for further consumption of
goods and services due to the increased level of disposable income. The expenditure on
essential goods and services has a higher share in developing countries as compared with that
of developed countries.
Age distribution if Indian population (In Millions)
37. Year/ Age 2006 2001 1996
Below 4 yrs
113.5 108.5 119.5
5‐14 yrs
221.2 239.1 233.2
15‐19 yrs
122.4 109.0 90.7
20‐34 yrs
279.1 246.8 224
35‐54 yrs
239.2 207.3 178.1
55 & above
118.7 101.7 88.7
Total
1094.1 1012.4 934.2
Consumption Trends
Food Essentials
45.68%
Essential Services (water, power, rent,
and fuels) 10.1%
Clothing
4.9%
Footwear
0.63%
Medicare
4.25%
Transport & Communication
14.51%
Recreation, Education, and Culture
Less than 4%
Home Goods
3.25%