Rural marketing in india


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Rural marketing in india

  1. 1. RURAL MARKETING IN INDIA Suchiradipta Bhattacharjee School of Social Sciences College of Post Graduate Studies Central Agricultural University
  2. 2. RURAL MARKETING IN INDIA Definition of rural marketing According to NCAER, a rural market is any market that exists in the rural area with a population less than 10,000, where the real density of population at any population nucleation is low without any significant infrastructure. Rural marketing is planning and implementation of marketing function for the rural areas. It is a two way marketing process which encompasses the discharge of business activities that direct the flow of goods and services from urban to rural areas and vice-versa. According to Mr. Adi Godrej, Chairman, Godrej group, “the rural consumer is discerning and the rural market is vibrant. At the current rate of growth it will soon outstrip the urban market. The rural market is no longer sleeping but we are”. Kashyap has defined rural marketing as a function which manages all those activates involved in assessing, stimulating and converting the purchasing power into an effective demand for specific products and services, and moving them to the people in rural area to create satisfaction and a standard of living to them and thereby achieves the goals of the organization. Concept of rural marketing The meaning and concept of rural marketing has changed with changing times, especially gaining impetus after the globalization and liberalization of economy since 1990s. The changing pattern and face of rural marketing is discussed here. Phase I (before 1960): Rural marketing referred to selling of rural products in rural and urban areas and agricultural inputs in rural markets. It was treated as synonymous to ‘agricultural marketing’. Agricultural produces like food grains and industrial inputs like cotton, oil seeds, sugarcane etc. occupied the central place of discussion during this period. The supply-chain activities of firms supplying agricultural inputs and of artisans in rural areas received secondary attention. This was totally an unorganized market where all banias and mahajans (local business people) dominated this market. Phase II (1960-1990): In this era, green revolution resulted from scientific farming and transferred many of the poor villages into prosperous business centres. As a result, the demand for agricultural inputs went up especially in terms of wheat and paddy. Better irrigation facilities, soil testing, use of high yield variety seeds, fertilizers, pesticides and deployment of machinery like powder tillers, harvesters, threshers etc. changed the rural scenario. In this context, marketing of agricultural inputs took the importance. Two separate areas of activities emerged during this period - ‘marketing of agricultural inputs’ and the
  3. 3. conventional “Agricultural Marketing”. Village industries flourished and products like handicrafts, handloom textiles, soaps, safety matches, crackers etc. hit the urban market on a large scale from rural areas. Phase III (Post 1990s): Marketing of household consumables and durables gained momentum in the rural areas with increase in economic stability of the rural households and liberalization of Indian economy. But as the industrial sector gained momentum during this period and increased its contribution to GNP, a new service sector had emerged signifying the metamorphosis of agricultural society into industrial society. The economic reforms further accelerated the process by introducing competition in the markets. Steadily, the rural market has grown for household consumables and durables. Table 1 Changing concept of rural marketing in India Phase Origin Function Major Products Source Market Destination Market I Before 1960 Agricultural marketing Agricultural produce Rural Urban II 1960s-1990s Marketing of agricultural inputs Agricultural inputs Urban Rural III Since 1990s Rural marketing Consumables and durables for consumption and production Urban/ Rural Rural Scope of rural marketing Rural Urban Rural Market Urban Production Figure 1 Rural marketing matrix Farm and non-farm and services (Unorganized sector) Brand consumables and durables (Organized sector) Handicrafts, handloom, textiles, leather products (Semi-organized sector)
  4. 4. As the line between the consumption pattern of rural and urban population is thinning, the scope of rural marketing is widening gradually in India. Depending on the production and consumption market, the rural marketing sector can be identified into organized, semi- organized and unorganized sector. Organized sector: This sector has the production centre in the urban areas and the consumer market in rural areas. The goods mainly consist of brand consumables and durables. The Fast Moving Consumer Goods (FMCG) are the main products of this market and are gaining much popularity in recent times. Semi-organized sector: With production in rural areas and consumers in urban areas, these markets mostly deal with handlooms, handicrafts and other products of the village industries. Proper organization and facilities in this sector does not only have the potential to increased opportunities for the village industries but exporting the products in overseas markets can bring in high profits. Unorganized sector: This market has both producers and consumers in the rural markets and the main products are farm and non-farm products and services. Since agriculture and allied activities is the principle occupation of the rural people, farm products and services are the principle products in this sector. Classification of rural markets 1. Consumer market: The major constituents of consumer market are individuals and households. Consumables like food products, toiletries, textiles, footwear, etc. and durables like watches, two wheelers, TV, refrigerator, washing machines, etc. day to day things are the major products of this market. It forms one of the major chunks of rural market in India. 2. Industrial market: The markets concentric to different industries like agriculture and allied activities, cottage industry, health industry/pharmaceutical industry, educational institutions, etc. form the industrial markets. Consumables like seeds, fertilizers, pesticides, animal feeds and medicines, etc. and durables like tractors, pump sets, harvesters, generators, etc. are the major products of industrial market. With gradual urbanization and shifting focus to the rural markets, the industrial market is slowly getting popularity in the rural areas. 3. Service market: With changing consumer behaviour and increasing purchasing power of the rural masses, their lifestyle is getting diversified increasing the need of the service sector. The service market serves individuals, households, offices, production firms, etc. The services offered are repairs, transport, banking, credit, insurance, repairs, healthcare, education, communication, etc.
  5. 5. Nature of rural markets 1. Elastic: Rural marketing has changed in nature from being transactional to developmental and from going alone to partnerships. It has benefitted from information technology developments to find out the solutions of rural problems. 2. Developmental: Rural marketing is more developmental than transactional. It is a process of delivering a better standard of living and quality of life to the rural consumers. 3. Social process: The vital element of rural marketing is communication. It should serve to resolve social conflicts and strengthen competitive spirit during interactions between rural and urban areas as well as within rural areas. 4. Innovation: Innovation is the essence of marketing. Innovative methods of social change are vital for the successful transformation of traditional society. 5. Discipline: Rural marketing has emerged as a separate discipline and now it is offered as a subject of study in many colleges and universities. Several textbooks are also available in the market on the subject. The subject has also caught the attention of researchers. 6. Social status: The job opportunities in rural areas are increasing. It is reported that Shakti Ammas of HUL’s Project Shakti have gained new respect in their areas. A survey revealed that rural retailers influence 35% of purchases. 7. Association: Every profession has an association which creates a forum for exchange of ideas and improvement of practices. Such associations lay out a code of conduct for its members to follow and also design standards for excellence. The formation of Rural Marketing Agencies Association of India (RMAAI) is such an association. Characteristics of rural marketing 1. Large, diverse and scattered market: Rural marketing in India is large, and scattered into a number of regions. There may be less number of shops available to market products. 2. Major income of rural consumers is from agriculture: Rural prosperity is tied with agriculture prosperity. In the event of crop failure, the income of masses is directly affected. 3. Traditional outlook: Villages develop slowly and have a traditional outlook. Change is a continuous process but rural people accept change gradually. This is gradually changing due to literacy especially in the youth who have begun to change the outlook in the villages. 4. Standard of living and rising disposable income of the rural customers: It is known that majority of the rural population lives below poverty line and has low literacy rate, low savings etc. Today the rural customers spend money to get value and are aware of the happening around him. 5. Rising literary levels: It is documented that approximately 45% of rural Indians are literate. Hence awareness has increase and the formats are well informed about the world
  6. 6. around them. They are also educating themselves on the new technology for a better lifestyle. 6. Diverse socio economic background: Due to differences in geographical areas and uneven land fertility, rural people have different socio economic background, which ultimately affects the rural markets. 7. Infrastructure facilities: The infrastructure facilities like warehouses, communication systems and financial facilities are inadequate in rural areas and physical distribution is a challenge to marketers. Potential of rural markets 1. Large population: A staggering 12 per cent of world’s population and according to 2011 census, 69 per cent of the country’s population lives in rural India and it is scattered over a large geographical area. 2. Rising rural prosperity: Average income level of the rural people have improved due to modern farming practices, contract farming, industrial growth, migration to urban areas, etc. Since 2000, the Compounded Annual Growth Rate (CAGR) has been 6.2 % for rural India and 4.7 % in urban India. 3. Growth in consumption: 56 % of India’s consumption comes from rural areas. Between 2009-2010 and 2011-2012, rural consumption grew annually at 19 % whereas urban growth has been 17 %. Between 2009 and 2012, the spending in rural India was $ 69 billion and for urban India it was $ 55 billion. 4. Change in life style: Life style of rural people has changed considerably and rural consumption has increased shift to discretionary items like electric fan, bi-cycle, TV, two and four wheeler, mobile phones, etc. 5. Higher market growth rate: The growth rate of Fast Moving Consumer Goods (FMCG) market and durable market is high in rural areas. The rural market share is more than 50 % for products like cooking oil, hair oil, etc. The growth of rural market has been 5 time more than the urban market in recent times. 6. Life cycle advantage: The products which have attained maturity stage in the urban market are still in growth stage in rural market giving the manufacturer and marketer a good scope for profit making. 7. Rural marketing is not expensive: Cheap labour in the rural areas make promotion and movement goods within the rural markets much less expensive compared to urban markets. According to Labour Bureau of India, in 2012 the daily wages of men and women in rural areas was ` 194 and `132 respectively which is much cheaper than the urban areas.
  7. 7. 8. Remoteness is no longer a problem: 1433577 km of rural roads as per Census 2011 has made rural connectivity much easier and reaching the rural markets in many parts of the country is no longer a problem. This has also contributed to the influx of FMCG and durables in rural markets. Rural marketing environment Rural marketing environment is a complex and ever changing one and the marketing organizations need to continuously keep pace with it, adopt strategies accordingly and employ creative marketing strategies to strive in the rural marketing environment. The major components of rural marketing environment are a) Social environment b) Economic environment c) Ethical environment d) Political environment e) Physical environment f) Technological environment SOCIAL ECONOMIC Psychological factors Sociological factors Anthropological factors Price Competition Consumer ETHICAL POLITICAL PHYSICAL TECHNOLOGICAL Marketing organizations
  8. 8. Figure 2 Rural marketing environment A. Social environment: The main components of social environment are discussed below: 1. Psychological factors: Consumer behaviour, attitudes, personality and mental make-ups are unique. These factors greatly influence the buying and spending behaviour of the rural consumers. The study of these behaviour is also vital to plan strategic marketing mix. 2. Sociological factors: Consumer society or the community is important. The consumer life style is influenced by the social set-up. The social constitution and changes influence customer habits, taste, and lifestyles. 3. Anthropological factors: The reasonable cultures and subcultures and living patterns influence advertising sales promotion, selling strategies and packing. The consumers in East India have different taste than consumers in South India and these factors are important considerations in marketing. 4. Demographic factors: 1971 1981 1991 2001 2011 Total population (million) 548.2 683.3 848.3 1026.9 1210.2 Rural population (million) 524.0 628.8 741.6 833.1 Proportion of rural population to total population (million) 80.1 76.6 74.3 72.2 68.9 Decadal variation (%) 19.8 16.7 15.2 9 Source: Census, 1991, 2001, 2011 5. Education: Rural literacy 1981 1991 2001 2011 % of literates 36 45 59 67.77 Source: Census, 1991, 2001, 2011
  9. 9. 6. Household number Particulars 1991 2001 2011 Rural Urban Total Rural Urban Total Rural Urban Total Household number (million) 112 40 152 138 54 192 220 110 330 Family size 5.55 5.32 5.36 5.31 5.08 4.81 Source: Census, 1991, 2001, 2011 7. Rural housing pattern House type 1981 1991 2001 2011 Pucca (%) 22 31 41 55.4 Semi-pucca (%) 37 36 36 27.6 Kuccha (%) 41 33 23 17 Total 100 100 100 100 Source: Census, 2001, 2011; NSS 2009 8. Occupational pattern Occupation Population in million Total Rural Urban Ain worker 362 245 116 Marginal worker 119 102 17 Cultivators 118 114 4 Agricultural labourers 144 136 8 Household industry worker 18 11 7 Other workers 200 85 115 Source: Census of India, 2011
  10. 10. B. Economic environment: The components of economic environment are as follows: 1. Price: Pricing is a delicate issue in rural markets where it should be market-friendly and consumer-friendly as the rural consumers are more price sensitive compared to their urban counterparts. The marketers have to keep in mind to get descent returns on investment and effects of producers and marketers. 2. Competition: Compared to the urban market, rural market has much less competition mostly because of the late attention it received from the marketing agencies and the organized sector. But currently with saturation of the urban markets, the competition is rising in rural markets mostly among the FMCG. 3. Consumer: The awareness level of the rural consumers are increasing everyday thanks to increasing literacy levels, increased exposure to mass media channels, Information and Communication Technology and shifting attention of the marketing agencies. 4. Consumer’s expenditure pattern Composition of rural per capita expenditure Food Non-food 1983 66 34 1991 63 37 2001 59 41 2013 49 61 Source: NSSO, 2001, 2013 5. Size of rural market: Total size of the rural market in 2012 was worth US$ 425 billion Annual size of rural market in 2012-’13 FMCG US$ 14.8 billion Durables US$ 604 billion Seed US$ 2 billion
  11. 11. 6. Rural development Population below the poverty line (Rural) Period No. of Persons (Million) % of Persons Poverty line (Rs.) 1983 252 46 89.5 1993-94 244 37 206 1999-2000 193 27 328 2013 270 22 368 Source: Human Development Report, 2001; Economic Times, 2013 7. Five Year Plan allocations Sectoral allocations during the five-year plans (Rs. crore) Head of Development 7th FYP 8th FYP 9th FYP 10th FYP 11th FYP 12th FYP Agriculture 105 225 372 589 1,165 2,840 Rural Development 89 344 890 1,219 3975 6730 Source: Planning Commission 2002; National Development Council, 2013 C. Ethical environment: Business minus ethical values brings degeneration. In the long run it brings problems. Lack of standardization, exploitation, falsification, etc. disenchants the rural consumers towards a product or a brand or company itself. D. Political environment: The government policies towards trade and commerce, internal taxation and preferential treatments have a influence on the marketing strategies. The marketing environment has to meet the political frame work in which a government is made to work.
  12. 12. E. Technological environment: The fast changing science and technology gives a cutting edge to the marketing of products. These changes warrant changes in marketing inputs and strategies. Faster and efficient communication and transport systems have speeded up the marketers. The capital is made to work faster and harder .So the marketer has to use these new marketing tools and facilities in designing and implementing his marketing strategies which are adaptive to the change in environment and ensure success. F. Physical environment: The infrastructure availability for movement and storage of goods play an important role in the physical distribution of goods and reaching the consumers. Efficient and cheaper logistics helps the market in a big way to keep prices in limits. 1. Distinguishing features of rural and urban life Population Density (Urban + Rural) (Per Sq. Km.) 1971 1981 1991 2001 2011 Population Density (Total) 177 216 267 312 382 Rural 171 214 253 Distribution of Towns and Villages 1991 2001 2011 No. of Towns 3,697 5,161 7,935 No. of inhabited Villages 580,779 593,154 597,608 Total no. of Villages 634,321* 638,588* 6,40,867* * The total number of Villages also includes non-inhabited Villages. Source: Census of India 2001, 2011 2. Road connectivity Road Connectivity at the Village level PMGSY roads Non-PMGSY roads 2011 3,20,000 1,10,000 Source: Census, 2011
  13. 13. 3. Telephone connectivity Telecom Density (Phone per 100) 2000 2005 2013 Urban 8.2 26.2 144 Rural 0.7 1.74 41.70 All 2.9 9.08 73.32 Source : Telecom Regulatory Authority of India Report, 2005, 2013  Rural vs. Urban market Sl. No. Factors Urban Rural 1 Philosophy Marketing and societal concepts, Green marketing and relationship marketing Marketing and societal concepts, development marketing, and relationship marketing. 2 Market demand High demand for luxury items, FMCG, etc. Low demand for luxury items and FMCG but the demand is increasing Competition Since urban markets are mostly dominated by the organized sector, so high competition among the organized sector Rural market is mostly dominated by the unorganized sector and so the competition is high in it Consumer a) Location Mostly concentrated location of urban areas due to highly defined and organized infrastructure Wide spread location of rural market due to wide spread rural areas and large number of village and village markets b) Literacy 85 % of urban population are literate 68.9 % of rural population are literate c) Income Per Capita Income in rural areas in 2004-’05 was Rs. 44,223. Per Capita Income in rural areas in 2004-’05 was Rs. 16,327 d) Expenditure MPCE is Rs 1,984.46 in urban India according to NSSO 2009- 2010 MPCE is Rs 1,053.64 in rural India according to NSSO 2009- 2010
  14. 14. The expenditure in urban areas is mostly planned and even throughout the year Expenditure in rural areas has seasonal variations due to the seasonal income related to farm outputs e) Needs For urban consumers the needs are generally high because of high income, easy awareness and availability and planned marketing strategies For rural consumers the needs are generally low due to lower income, Limited awareness and availability and neglected marketing strategies f) Innovation adoption Due to higher exposure and awareness, the urban consumers are mostly innovative in nature Due to high tradition orientation, lack of exposure and awareness, the rural consumers are sceptical and laggard in nature 4 Products a) Awareness Product awareness is high due to better marketing, higher exposure to mass media channels like TV, internet, etc. Product awareness is low due to low exposure to mass media channels and lesser marketing b) Positioning The positioning of the urban markets are easier due to their concentrated nature Because of their diluted or wide spread nature, the positioning of the rural markets are difficult both for producers and consumers c) Quality preference It is high in urban markets due to high degree of awareness It is low in rural markets due to low degree of awareness d) Features Features of products are very important in urban market as quality preference is high Features are less important in rural markets as quantity preference is high 5 Price sensitivity Because of higher income, the urban consumers are moderately price sensitive Because of lower income, the rural consumers are highly price sensitive 6 Price level desired Generally medium to high price level is desired in urban markets due to higher per capita income and expenditure Generally low to medium price level is desired due to low to medium income and expenditure of majority of customers 7 Distribution channels Large arrays of distribution channel are in urban markets due to high demand of products. Distribution channels generally found are wholesalers, stockists, retailers, supermarkets, specialty stores and authorized show rooms Distribution channels are generally limited to Village shops, Shandies, Haats and Jatras
  15. 15. 8 Transport facility In urban markets transport facilities are good In rural markets the transport facilities are generally moderate 9 Product availability Due to high demand, a large range of products are available in urban markets Due to less demand, generally moderate range of products are available in rural markets 10 Advertising Print, audio-visual media, outdoor hoardings and posters, exhibitions etc. wide range of advertising strategies are available in urban markets Few dialects are used in urban markets due to highly diverse population and high concentration TV, Radio, print media to some extent are used for advertising the products in rural markets More languages are used in rural markets due to mostly homogenous population 11 Personal selling Door-to-door selling is frequent in urban market due to high concentration of population Because of their wide spread nature, door-to-door selling is very rare in rural markets 12 Sales promotion Contests, gifts, price discounts are the most frequently used means of sales promotion Gifts and price discounts are mostly used but contests are rarely used in rural markets 13 Publicity Because of a large number of media present in urban market and their access to the consumer, scope of publicity is high in urban markets Scope of publicity is less in rural markets due to less exposure to mass media channels of the rural customers Consumer behaviour Consumer buyer behaviour refers to the buying behaviour of the final consumers – individuals and households who buy goods and services for final consumption and all these consumers make up the consumer market. Rural India id much larger than the urban India and this huge segment of the rural population displays vast difference in their purchase decisions and product use. Villagers react differently to different products, colours, sizes, etc. in different parts of India. Thus utmost care is needed in terms of understanding consumer psychology for marketing products in rural India. Factors influencing the buying behaviour of the rural people are discussed below: a) Environment of the consumer: The environment or the surroundings, within which the consumer lives, has a very strong influence on the buyer behaviour. For example, electricity increases the demand for TV, mobile phones, etc.
  16. 16. b) Geographic influence: The geographic location in which the rural consumer is located influences the thought process of the consumer. c) Family: Family size and role played by family members exercise considerable influence in the purchase decisions. It has been observed that, purchase of durables has less to do with income and more with size of the family. d) Economic factors: The quantum of income and earnings stream are one of the major deciding factors which determine to a great extent what the consumer will be able to buy. Many people in the rural market are below poverty line and for large number of people agriculture is the primary occupation. More than 70 per cent of the people are in small scale agricultural operation and these factors influence their buying process. e) Place of purchase: A consumer is buying the product from the village haat, retailer or wholesaler also influence his thought process and ultimately buying behaviour. f) Multiple use of product: In rural markets, products with multiple use are more popular and likely to gain market faster. Characteristics of rural consumer: The rural customer shows distinctive characteristics, which makes him different from the urban buyers. a) Education Profile: Nearly 45% of the rural Indians are literate (men 59%, women 31%). The rural customer has much lesser education than his/her urban counterpart. Generally, the maximum education that one sees among rural areas is still primary school or high school level. Though rural literacy programmes have made significant headway, we are still confronted with a customer who is illiterate. This comes in the way of the marketer using print media and handbills to promote the product. Visual displays and phonetics become important in promoting the product in the rural areas. Demonstration on product usage and even on how to use it becomes integral to the marketer’s promotion strategy. b) Low income levels: Though rural incomes have grown manifold in the last one decade, still an average rural consumer has a much lower income than his or her urban counterpart. Still a large part of his income goes to provide the basic necessities, leaving smaller income to be spent on other consumer goods. This makes the rural consumer more price sensitive than the urban consumer. Marketers have evolved various strategies to lower the final prices. One such strategy is designing special products as reflected by Hindustan Lever’s strategy of developing Sunlight Detergent Powder and the other in even reducing the size of the product. Another aspect of this low income is that an average rural customer buys a single unit of the product and not in bulk.
  17. 17. c) Occupations: Typically, in the rural area one finds that the principal occupation is farming, trading, crafts, and other odd jobs like plumbing, electric works, etc. One also finds primary health workers and teachers in the rural areas. Since farming, animal husbandry and poultry farming are the principal occupations we find that even here we have different types of farmers. The basis for differentiation is obviously their size and ownership of land. We have their consumption patterns differ mainly because of their income levels. For example, a large or a big farmer will have almost everything that an urban consumer will have. He is an affluent farmer and represents the highest end of the rural income continuum. d) Reference Groups: Typically in rural area, the reference groups are the primary health workers, doctors, teachers and the Panchayat members. One may even observe that the village trader or the grocery shop owner, commonly called the “baniya” or the “mahajan”, may also be an important influence in the rural customers decision-making. This is because the trader extends credit to the farmers. Today, another person is also considered as a change agent and that is the rural bank’s officer or manager. A marketer needs to be aware of these influences that can effect a change in the rural customers’ consumption patterns. e) Media Habits: A rural customer is fond of music and folklore. In a state like Maharashtra the rural theatre called “Tamasha” has held sway with the people. Likewise, “Nautanki” in which the artists are a part of the audience entertains the rural Uttar Pradesh. Today, television and radio are important forms of media, which hold the attention of rural folks, so is the video. Radio programs reach almost 95% of the Indian population, while television programs is now as high as 85%. As we mentioned earlier because of a low education level print media does not have that much of an impact as the audio and the audiovisual media does. f) Importance of customs: Basic cultural values have not yet faded in rural India. Buying decisions are still made by the eldest male member in the rural family whereas even children influence buying decisions in urban areas. Further, buying decisions are highly influenced by social customs, traditions and beliefs in the rural markets. Many rural purchases require collective social sanction, unheard of in urban areas. The rural attitude towards consumption has been traditionally based on the values of restrain and self-denial. But the high exposure to T.V advertising in recent years where brands are working relentlessly to loosen this restraint by communicating escape/release and self- confidence messages is having its effect, particularly on the youth. But Caste and family are still paramount in rural life.
  18. 18. Buyer decision making process: The decision making in consumers is generally a five step process discussed below: a) Problem recognition: This is the first stage where a person recognizes that there is a problem or a need to fulfil. This may either be an actual state where a problem has arisen and needs to be sorted out; the product is failing, or the consumer is running short of it, and thus needs a replacement. A problem could also be a desired state where there is an imbalance between the actual state and the desired state; another product seems better and superior to the one that is being currently used, and so the consumer wants to buy it. A need could be triggered off by an internal stimulus or an external stimulus. Marketers need to identify what could trigger a particular need. b) Information search: After a need is recognized, the consumer goes for an information search, so as to be able to make the right purchase decision. He gathers information about the product category and the variations, various alternatives and the various brands. Such a search could be ongoing, specific or incidental. The consumer could recalls information that is stored in his memory (comprising information gathered and stored, as well as his experiences, direct and indirect). He could also seek information from the external environment. The sources of information search could be personal (family, friends, peers and colleagues), commercial (marketers’ communication in the form of advertising, salespersons, publicity etc), public (mass media, consumer forums, government rating agencies) and experiential (self and others’ experiences). Personal contacts are highly influential sources, public sources are highly credible. c) Evaluation of alternatives: Once the consumer has gathered information and identified the alternatives, he compares the different alternatives available on certain features. These are those features that a consumer considers in choosing among alternatives; these could be functional/utilitarian in nature (benefits, attributes, features), or subjective/emotional/hedonic (emotions, prestige etc.).The consumer also uses decision rules that help a consumer simplify the decision process. At the end of the evaluation, purchase intentions are formed. d) Purchase decision: After the consumer has evaluated the various alternatives, he selects a particular brand. Consumer purchases may be trials/first purchases or repeat purchases. The consumer may further have to make decisions on where to buy from, how much to buy, whom to buy from, when to buy and how to pay. It is noteworthy that a purchase intention (desire to buy the most preferred brand) may not always result in a purchase decision in favour of the brand; it could get moderated by attitudes of others and unexpected situational factors.
  19. 19. e) Post purchase behaviour: After the purchase, the consumer uses the product and re- evaluates the chosen alternative in light of its performance viz. a viz. the expectations. He could be experience feelings of neutrality (Performance meets expectations), satisfaction (Performance exceeds expectations) or dissatisfaction (Performance falls short of expectations). This phase is significant as it (i) acts as an experience and gets stored in the memory; (ii) affects future purchase decisions; (iii) acts as a feedback. Consumer behaviour pattern: Consumer behaviour pattern can be classified under two types: A. Degree of involvement B. Amount of time spent A. Degree of involvement: Different pattern of behaviour on purchasing different types of products and services. They buy from nearby shops and don’t deliberate much on the characteristics of products. Individual decisions are made. In case of durables they visit different shops and opinions of others and evaluate product characteristics and benefits, their financial, payment schedule is decided and then decide. Depending on high and low degree of involvement and difference among brands, buying behaviour can be classified into following four types: High involvement Low involvement Significant differences among brands Complex buying behaviour Variety seeking behaviour Few differences among brands Dissonance reducing behaviour Habitual buying behaviour i) Complex buying behaviour: Consumers engage in complex buying behavior when they are highly involved in a purchase and aware of significant differences among brands. This is usually the case when the product is expensive, bought infrequently, risky and highly self-expressive. The marketer needs to differentiate the brand’s features, use print media to describe the brand’s benefits and motivate store sales personnel and the buyer’s acquaintances to influence the final brand choice. This kind of buying behavior is seen in case of purchasing computers, refrigerators,
  20. 20. automobiles, etc. Marketers should help consumers learn about the product, attributes, uses and benefits; make comparative analysis of features and benefits of products in print media and train and motivate personnel. ii) Dissonance reducing behaviour: Sometimes the consumer is highly involved in a purchase but sees little difference in the brands. The high involvement is based on the fact that the purchase is expensive, infrequent and risky. For example, carpet buying. After the purchase, the consumer might experience dissonance that stems from noticing certain disquieting features of the carpet or hearing favorable things about other carpets. Thus marketing communication should aim at supplying beliefs and evaluations that help the consumer feel good about his or her brand choice. The marketers should be intelligent in knowing probable arguments in favour and of against the product. On what grounds product may be appreciated or discounted, the marketers must know. iii) Habitual buying behaviour: Many products are bought under conditions of low consumer involvement and the absence of significant brand differences. Consider salt. Consumers have little involvement in the product category. They go to the store and reach for the brand. If they keep reaching for the same brand, it is out of habit, not strong brand loyalty. It happens with most low-cost, frequently purchased products. Marketers find it effective to use ad repetition, price and sales promotion to stimulate product trial. Habitual buying behavior is rational and emotional. The marketers make rational appeal and raise consciousness levels for rational buying behavior and emotional buying behavior is associated with individual emotions like love, fear, jealousy and wisdom. iv) Variety seeking behaviour: Some buying situations are characterized by low consumer involvement but significant brand differences. Here consumers often do a lot of brand switching. For example in cookies, consumer may reach for another brand out of boredom or a wish for a different taste. The marketer will try to encourage habitual buying behavior by dominating the shelf space, avoiding out of stock conditions, sponsoring frequent reminder advertising, offering lower prices, deals, coupons and free samples. B. Amount of time spent: Purchase behaviour is classified into three types depending upon nature of purchase action: i) Planned buying: Purchase is budgeted and scheduled in advance, well thought out and predetermined. For example, camera, computers, etc. ii) Emergency buying: Purchase made in hurry to avoid stock outs. For example, buying provisions that are out of stock, buying electrical bulb at night when it fuses, etc.
  21. 21. iii) Impulse buying: Purchase made spontaneously, amused or bewitched by the product item. For example, handicrafts, ice creams, fairness creams, textiles and garment.  Rural marketing strategy Rural marketing strategies can be sub-divided into: a) Segmentation: Heterogeneity in rural, prerequisites for effective segmentation, degrees of segmentation, basis of segmentation and approaches to rural segmentation – geographic segment, demographic segmentation, psychographic segmentation, behavior segmentation, multi attribute segmentation b) Targeting: Evaluation and selection of segments, coverage of segments c) Positioning: Identifying the positioning concept, selecting the positioning concept, developing the concept and communicating the concept. Prerequisites for effective segmentation: a) Measurable – Variables should be distinct, clear and measurable. Only then can segments be described in exact terms and the differences between them understood properly. Factors measurable in urban (eg. Monthly income)cannot be measured directly in rural due to non-uniform income patterns and multiple sources of income. b) Accessible – Marketers should ensure that the segmented market is conveniently reachable for the quick and efficient delivery of products. With significant improvement in connectivity of villages and increased interest in using traditional haats and other new channels for distribution, rural markets are becoming more and more accessible. c) Differentiable – Rural consumers are identified as a separate segment as their responses are likely to be different from those of urban customers, at least for some products. For instance, while buying a motorcycle, rural consumers give more importance to the sturdiness, mileage and carrying capacity of the vehicle, whereas urban consumers look for style, power and looks. d) Substantial – A segment is attractive to the marketer only when it is profitable. Type of segmentation: a) Geographic segmentation: i. Regions : East, West, North and South ii. Village size : <500, 501-1000, 1001-2000, 2001-5000, >5000 . Rural lifestyle changes with village size due to variation in the level of infrastructural and economic development.
  22. 22. iii. Density: Low, moderate, high (Villages with high population density have better infrastructural facilities and higher purchasing power. iv. Climate: Summer, Rainy, Winter (Talcum Powder is used more in hot and humid regions) v. Culture: culture affects language, dress, food habit and location a. Demographic segmentation: i. Age and life cycle: Children, teenagers, young adults, elders, seniors (Confectionary and toys are more desirable in childhood, whereas young adults seek motorcycles, soft drinks, trendy clothes and music systems) ii. Family structure: Nuclear, joint (Family pack or economy refill packs work very well with joint families, Joint family translates to greater consumption of products) iii. Gender: Male, female iv. Income: Due to irregular income patterns and multiple sources of income, assessment of rural income is difficult. v. Landownership: Land owners, rich farmers, small or marginal farmers, agricultural laborers. Segmentation on the basis of size of landholding, area of land under cultivation, irrigation method, crop mix and rate of money realisation. vi. Education & House type vii. Occupation: Cultivators, shopkeepers, poultry, artisans viii. Religion & Caste: Settlement of villages on the basis of religion and caste. Eg. Rajput village. b. Psychographic segmentation: i. Social class: Social class is determined by a combination of factors like education, occupation, income, wealth and others. Classified rural consumers into five classes- Affluent, The Well off, The Climbers, The Aspirants and the Destitutes on the basis of three variables : Education of the chief wage earner, Ownership of durables, and Type of house. ii. Lifestyle: Overall manner in which a person lives and spends time and money. iii. Personality c. Behavioural segmentation: i. Occasions: Festival, mela, jatra, weekly haat. In rural areas, most durables are purchased during or after the harvest season because this is when farmers have cash in hand after selling their agricultural produce. Melas offer products at attractive prices and weekly haat days are the time to purchase daily-use products, vegetables and spices.
  23. 23. ii. Benefits sought: Quality, convenience, value for money, service. Rural consumers are more concerned with the utility of the product than its appearance and sophistication. iii. User status: Rural consumers fall into the category of first-time users for most product categories. Therefore, the focus on product trials and demonstrations is very crucial in rural market. iv. Usage rate: Usage for most FMCG products is relatively low among rural consumers due to poor affordability. Marketers have launched sachet packs for rural consumers and family packs for joint families. v. Loyalty status: Rural buyers take a long time to decide on a particular brand, but once they are convinced, they are more brand loyal than their urban counterparts. vi. Place of purchase: Village shops (Tea, kerosene), Haats (Food grain, pulses, vegetables), Nearest town (Fertilisers, seeds), Melas (Clothes, cheap jewelry) Degrees of segmentation: a) Mass marketing – All consumers are being treated the same. Allows a company to target the maximum number of consumers. Eg. HUL offered only one detergent powder, Surf, to all consumers. But when Nirma entered the market and grabbed a sizeable market share of low-income households, HUL woke up and introduced Wheel. b) Segment Marketing – Marketers have come to realize the potential of different consumer segments, that are substantial enough to target and have responded by offering low-priced sachets and appropriately designed products. Type of marketing strategy a) Niche Marketing – A very small group in a segment that has some specific need and the marketer has specific skills to satisfy it. Eg. a tractor that doubles up as a thresher. b) Micro Marketing – Tailoring of the product to satisfy a particular taste or need. Eg. Dabur launched Anmol, a mustard and amla-based hair oil, to target rural consumers in northern markets who used loose mustard oil. c) Local Marketing – Involves designing brands and promotions to suit the needs and wants of local customer groups on a geographical basis. d) Individual Marketing – Tailoring and carpentry are examples of individual marketing. An individual can get the product made exactly according to his specific need. Product strategy: It refers to the long range competitive plan involving decisions on products, product line and product mix to make proper utilization of resources and achieve marketing goals. It is important because:
  24. 24. i) It achieves product market fit ii) It encourages innovativeness iii) It provides competitive edge iv) It makes better use of resources Product concept and classification: a) Based on tangibility of goods i) Tangible goods also called products which can be felt and touched and have quantitative measures ii) Intangible goods, also called services which have qualitative measures b) Based on purpose of use i) Consumption purpose, generally bought by the consumers for direct consumption in households, offices, etc. ii) Production purpose, generally raw material for industrial or agricultural purposes c) Based on shopping habit i) Convenience goods ii) Shopping goods iii) Speciality goods d) Based on price of products i) Mass product which are used by the masses and price is low to medium ii) Premium products are high quality and high price products used for special purposes e) Based on product development i) Innovation: Development of novel products ii) Imitation: Imitating an already accepted product and developing on it or selling it as it is with slight modifications f) Based on brand hierarchy level i) Global brands that are used worldwide and has same price and quality everywhere. For example, Pepsi, Coke, LG, etc. ii) National brands are generally confined within the boundary of a nation. For example, Godrej, Tata, etc. iii) Regional brands are confined within a region and are generally targeted towards a specific group of people. iv) Local brands are generally confined in a very small localities or areas. v) Unbranded products like oil, food grains, etc. vi) Commodities like tamarind, fish, meat, eggs
  25. 25. Product mix: It is a set of all product lines and items offered by the company. Product mix decisions depend on the following factors – i) Length of product line: The total number of products sold in all lines is referred to as length of product mix. ii) Line stretching: A company stretches its product line beyond the current range of products. It can stretch its product line either down market, up market or both ways. iii) Line pruning: Removing the unnecessary products in the product line which yield lower or no profit. iv) Line modernization: Modernizing the product line with innovation or imitation Pricing strategy: Price is a major element of the marketing mix. It is an important strategic issue because it is related to product positioning. Pricing is a determinant of the market demand for the product. But before any pricing decisions are undertaken, it is important that the factors influencing price are understood. These factors can be categorized as internal and external: a) Internal factors: The internal factors affecting price include cost and the company’s pricing objectives. b) External factors: These factors include customers, suppliers, competitors and legal environment.. The different pricing strategies are: a) Optional product pricing: It is the pricing of optional or accessory products along with the main product like a company selling tractors for a low sticker price but charging high prices for serving and spare parts. b) Captive product pricing: It is setting a price for products that must be used along with the main product, such as blade for a razor and film for a camera. c) Product bundle pricing: It is combining several products and offering the bundle at a reduced price. Companies very commonly use this pricing strategy during periods of inflation it helps to generate sales and attract customers in a highly competitive market; it is mostly used in festival. d) Penetration pricing: It involves setting prices of products relatively low compared to those of similar products. This pricing policy is appropriate when demand is elastic. For example, Anchor white and Ajanta tooth pastes used this pricing to enter the crowded dental cream market. e) Economy pricing: It is no-frills low price, the cost of marketing and manufacturing are kept to a minimum. Regional and local manufacturers usually follow this economy
  26. 26. pricing strategy as they have limited investments to make on building brands and developing channels. f) Value pricing: When economic recession or increased competition forces a company to provide value products and services to retain sales. For example, Godrej No.1 soap placed their offering containing rose, sandalwood, neem and other ingredients at a very economical price. g) Coinage pricing: Prices are set of a coin value. Coinage price is directly proportionate to the package size. These packs are small in size and are normally meant for one time consumption (shampoo sachet) or day’s consumption (tea bag) or a week’s consumption (bathing or washing soap). h) Psychological pricing: The price quality relationship refers to the idea that consumers tend to equate product quality with the price charged. In the color TV segment LG at a higher price is considered a better buy than Texla and Jolly brands particularly in rural households. i) Discriminatory pricing: Price discrimination exists when sales of identical goods or services are transacted at different prices from the same supplier; different prices are charged on the basis of different consumer groups, location, product form etc. discriminatory pricing may take the following norms - consumer segment pricing, product form pricing and location pricing. j) Product form pricing: Different versions of the same product are priced differently but not proportionately to the increase in costs. For example, Microsoft sold different versions of its operating software WindowsXP at different price level. Windows vista home basic version is sold at $200 and with some variations the same operating software windows vista ultimate version is sold at $320.  Product promotion strategy The promotion measure should be cost effective. Word of mouth is an important message carrier in the rural areas and ‘opinion leader’ play a significant role in influencing the prospective rural consumers about accepting or rejecting a product or a brand. Other attributes are explained as under: a) Mass media: Mass media is a powerful mode of communication. The media mostly used are television, radio, print media like handbills, leaflets, folders, etc. b) Personal selling and opinion leaders: In personal selling it is required that the potential users are identified and awareness is created among them. A highly motivated sales person can achieve this. Word of Mouth holds a lot of validity in the rural areas. This is the reason why opinion leaders are thriving among rural consumers.
  27. 27. c) Special campaigns: These should be undertaken during harvest & marketing seasons in rural areas. E.g. Tractors owners meet (tonee) conducted by MRF. d) Haats or weekly markets: here people from surrounding villages conduct trade on fixed days covering the need of 10 to 50 villages at a time. e) Melas: These are gathering of people for entertainment as well as purchase and sale of goods and services. f) Wall paintings: One of the most widespread form of advertising and a favourite among the rural Indians. g) Van campaigns: It is one of the most popular forms of communication with rural consumer regarding new products. They are basically done for better brand building, creating awareness, product sampling, and retail merchandising.