Successful marketing strategy begins with an understanding of the market consisting of the

customers with different life styles, background and income levels for the goods and services.
With the advent of new technology, improving maturity in thinking and living conditions of
people, the expanding horizons of marketing, the intensifying competition is satisfying
consumers with myriad of products and services and the raising levels of standard of living
altogether constitute a new era of marketing. As a result marketers have to adopt a new
philosophy, new organization practices, and new strategic approaches to achieve their goals
(Krishnamacharyulu and Ramakrishnan, 2006).
The aim of marketing is to meet and satisfy target customers needs and provide them better
services. In order to succeed in a dynamic and increasingly complex marketing environment
where individuals and businesses are faced with more and more choices, marketers have an
urgent need to learn and anticipate whatever they can do better for their consumers. Because
consumer is the foundation of every business and what consumers sees, thinks, prefers and buys
are of great importance of marketers to fine tune their marketing offers and achieve high level of
consumer acceptance and satisfaction. Consumer is the pivotal around which the entire business
revolves and consumers differ in how they make purchase decision owing to variables such as
type of family, income and occupation, status, etc., and the role of individual plays in the
decision process (Hundal, 2008).
According to Boone and Kurtz (200), Consumer behavior is the outcome of both individual and
environmental influences Therefore, understanding of consumer behaviour, which leads to
purchase, is very important. The term consumer behaviour is a subset of human behaviour.
However, it does not mean that all human behaviour is oriented towards consumption. Therefore
understanding the consumers behaviour and their buying process are the essential task of
marketing managers.
Consumer behaviour research is an effective tool in marketing for all sorts of organization. It
provides clue as how to reach and serve the consumers more efficiently. Consumer behaviour is
the study of how individuals and groups and organizations select, buy use and dispose of goods
and services, ideas or experiences to satisfy their needs and wants. Studying consumers provide
clue for improving or introducing products or services, setting prices, devising channels,
constructing messages and developing other marketing activities. Successful marketing requires

that companies fully connect with their customers. Understanding consumers gaining a 360
Degree view of both their daily lives and the changes that occur during their lifetimes. Gaining a
through, in-depth consumer understanding helps to ensure that the right products are marketed to
the right consumers in the right way (Kotler and Keller ).
Consumers usually follow the typical buying process that consists of a sequence of events such
as problem recognition, information search and evaluation of alternatives, purchase decision, and
post purchase behaviour. Marketers want to develop products and services to help consumers in
order to solve problems rather than the nature of information search that consumers undertake in
a particular target market. In addition to this, marketers can also understand different types of
evaluation criteria used by the consumers such as various dimensions on products, its features
characteristics, and benefits to solve a specific problem. Consequently marketers have to go
beyond the mixture of influences on buyers and develop an understanding of how consumers
actually make their buying decisions. Consumer decision making is one of the central themes of
psychological economics (Sharp and Mott, 1986).
The duration and the effort that the consumers devote to a particular decision depend on the
importance of the desired good or services to them. Routine purchases that pose little risk to the
consumer are called low - involvement decisions. Non-durable goods such as grocery,
vegetables, clothes etc., are the products used for daily consumption can be called lowinvolvement product. On the other hand, purchases with high level of potential, social or
economic consequences are said to be high involvement purchase decisions. Consumers
generally spend more time and effort in buying decision for high - involvement products than
that of low - involvement products. The number of family members involve in low - involvement
products is very modest. On the other hand high - involvement purchase are considered very
important by consumers where two or more family members are directly or indirectly involved in
the decision - making process. Family is an important consumption and spending unit. In
addition, families constitute an important economic and social unit that affects consumption
decisions of individual family members. The family group is perhaps the most important
determinant of consumer behaviour, because of the intricate, continuing interaction among
family members. The large number of purchase decisions is influenced by consumers interaction
with the reference groups such as family, friends and relatives. However of all reference groups,

the family is one of the strongest, immediate and most pervasive effects on consumers
personality, motivation and attitude (Kumar and Singh, 2004).
Marketing success or failure depends on target consumers reactions expressed in terms of buying
patterns. The consumer, the most critical component in marketing strategy of an enterprise, needs
to be studied in detail. In order to understand marketing we must understand how the consumer
decides in favour of one brand or product, what motivates the consumer to select an alternative,
and who influences the consumer to buy the brand or product (Saxena, 2008).
The individuals specific behaviour in the market place is affected by internal factors such as
needs, motives, perceptions and attitudes, as well as by external factors - family, social groups,
culture and economic influences. The family defines purchase needs and inputs financial strains
within which the buying is to be done making consumer non-durable purchases in families
encompass participation of various family members. Different members play different roles, viz,
the person who senses the need for purchases is called initiator and one who in the family seek
information before purchases about the brand, features, prices etc., is called information seeker.
Influencer is who induces for purchases and the member who contributes finance for the
purchases is called financial contributors. Finally, the member who decides the purchases is
called decider (Suri and Mamoria, 2005).
Generally, the marketers are interested to know in the families, whether one member in the
family is making effort to initiate to buy the product in his/her family or not? Are all having the
ability to collect and process information relating to the products? Among the family members
who influences the buying decision? Actually who is financing for the purchases in most of
families, in addition, who makes the buying decision? It may be stated that in the process of
buying, different individuals may be involved or only one member may do all the tasks. Buying
decisions are also strongly influenced by variables such as cultural, social and personal factors,
age, occupation, education and economic situation (Schiffman and Kanuk, 2008).
The dressing style, food habits and celebration of festivals by the consumer greatly depends on
the religious practices followed by him/her. Thus the consumption pattern of the Indian
consumer is based on the values, beliefs and customs inculcated in each person right from the
time of birth. Hence an understanding of the profile of an Indian consumer will enable marketers

to design suitable marketing mix strategies for selling goods and services to the target market
(Nair, 1999).
The field of consumer behaviour studies how individuals, groups, and organizations select, buy,
use, and dispose of goods, services, ideas, or experiences to satisfy their needs and desires.
Studying consumers provides clues for improving or introducing products or services, setting
prices, devising channels, crafting messages, and developing other marketing activities (Kotler
and Keller, 2008). The consumer buyer behaviour is the buying behaviour of final consumer
individuals and households who buys goods and services for personal consumption. There is no
question about it consumers are paramount to the economy. All marketing decisions are based
on assumptions about consumer behaviour [Hawkins et al., 2001, Mulkern, 2001; and Labbe,
2000]. In order to create value for consumers and profits for organisations, marketers need to
understand why consumers behave in certain ways to a variety of product and services offered.
The study of consumer behavior focuses on how individuals make decisions to spend their
available resources (time, money, effort) on consumption-related items (Schiffman and Kanuk,
2008).

Consumer Behaviour Definition

The field of consumer behavior covers a lot of ground. According to Solomon (1996), consumer
behavior is a study of the processes involved when individuals or groups select, purchase, use, or
dispose of products, services, ideas, or experiences to satisfy needs and desires.
The official definition of consumer behavior given by Belch (1998) is the process and activities
people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of
products and services so as to satisfy their needs and desires. Behavior occurs either for the
individual, or in the context of a group, or an organization. Consumer behavior involves the use
and disposal of products as well as the study of how they are purchased. Product use is often of
great interest to the marketer, because this may influence how a product is best positioned or how
we can encourage increased consumption.
The American marketing Association defines consumer behaviour as the dynamic interaction of
affect and cognition, behaviour and environmental events by which human beings conduct the

exchange aspects of their lives According to Du Plessis (1991) consumer behaviour comprises
the behaviour patterns of decision units (individuals as well as families) which precede,
determine and follow on the decision process for acquisition of need- satisfying products, ideas
and services.
According to Hawkins, Best and Coney (1992) the key to successful marketing strategies is a
thorough understanding of consumer behaviour. An understanding of consumer behaviour
includes observable behaviour such as amount purchases, when, with whom, by whom and how
purchases are consumed. It also includes non-observable variables such as the consumers value,
personal needs, perceptions, what information they have in memory, how they obtain and process
information, how they evaluate alternatives and how they feel about the ownership and use of
various products (Hawkins, Best and Coney 1992).
The theories of consumer decision-making process assume that the consumers purchase decision
process consists of steps through which the buyer passes in purchasing a product or service.
However, this might not be the case. Not every consumer passed through all these stages when
making a decision to purchase and in fact, some of the stages can be skipped depending on the
type of purchases.
The reasons for the study of consumers helps firms and organizations improve their marketing
strategies by understanding issues such as: The psychology of how consumers think, feel, reason,
and select between different alternatives (e.g., brands, products); The psychology of how the
consumer is influenced by his or her environment (e.g., culture, family, signs, media); The
behavior of consumers while shopping or making other marketing decisions; Limitations in
consumer knowledge or information processing abilities influence decisions and marketing
outcome; How consumers motivation and decision strategies differ between products, that
differ in their level of importance or interest that they entail for the consumer; and How
marketers can adapt and improve their marketing campaigns and marketing strategies to more
effectively reach the consumer.
Models of consumer behaviour
Understanding consumer behaviour and knowing customers, have and never will be simple.
Consumers may say one thing but do another. They may not be in touch with their deeper

motivations. They may respond to influences that change their mind at the last minute. These
issues have lead to theories like that of the black box approach taken on by Futrell [2000:67]. It
refers to how marketers are not able to tap into consumer minds, thus keeping them in the
dark. In other words, marketers can apply various stimuli and observe the conduct of
consumers, but they cannot observe the consumers actual thought processes. This hidden
information is considered to be the black box. In an attempt to obtain some understanding,
marketers study consumer behaviour. Many researchers [Hawkins et al. 2001; Bearden et al.
1997; and Engel et al., 1995] describe consumer behaviour as the study of individuals or groups
and the mental, emotional and physical processes they use to select, obtain, consume and dispose
of products or services, to satisfy needs and wants, and the impact that these processes have on
the consumer and society.
At one time, marketers could understand consumers through the daily experience of selling to
them. But the growth of FMCG companies and markets has removed many marketing managers
from direct contact with customers. Increasingly, managers have had to rely on the 7 Os
framework for consumer research to answer the following key questions about any market:
Who constitutes the market?

Occupants

What does the market buy?

Objects

Why does the market buy?

Objectives

Who participates in the buying?

Organizations

How does the market buy?

Operations

When does the market buy?

Occasions

Where does the market buy?

Outlets

Andreason (1965) proposed one of the earliest models of consumer behavior. This model is
shown in Figure 1.1.The model recognizes the importance of information in the consumer
decision-making process. It also emphasizes the importance of consumer attitudes although it
fails to consider attitudes in relation to repeat purchase behavior.

Constraints

Advocate impersonal
sources
Perceived
beliefs,towards
Attitudes
product,
complement
Attitudes
towards sources
Income,
budgetsubstitutes,
piorities, physical
capacity, hous
Norms,
Values of significant others.
Intrinsic attributes
Independent impersonal sources
Extrinsic attributes

Personality

Hold
Yes
No

Price availability
Advocate personal sources
Filtration

Select
Beliefs

Other purchase decisions

Owne

Feelings

Search
Independent personal sources
Disposition
No action

Information storage

Direct experienceWants
Want strength

Other customer
Decision-makers

Figure 1.1

Andreason, A.R (1965 Attitudes and Consumer Behavior: A Decision Model in New Research in

Marketing (ed. l. Preston). Institute of Business and Economic Research, University of California, Berkeley, pp.1-61

There are numerous models trying to explain consumer behaviour. These models generally deal
with various stimuli, influential factors, the decision-making process and outcomes. Some
models are very basic and categories all variables such as the one proposed by Kotlers
[2000:161], which is illustrated in figure 1.2.
The starting point for understanding buyer behavior is stimulus-response model shown below.
Marketing and environmental stimuli enter the buyers consciousness. The buyers
characteristics and decision process lead to certain purchase decisions. The Marketers task is to
understand what happens in the buyers consciousness between the arrival of outside stimuli and
the buyers purchase decisions.
They must answer two questions:
How do the buyers characteristics-cultural, social, personal, and psychological-influence buying
behavior?
How does the buyer make purchasing decisions?
Marketing

Other stimuli

stimuli

Buyers

Buyers

characteristics

process

decision Buyers decision

Product

Economic

Cultural

Problem Recognition Product choice

Price

Technological

Social

Information search

Brand choice

Place

Political

Personal

Evaluation

Dealer choice

Promotion

Cultural

Psychological

Decision

Purchase Timing

Post

Purchase Purchase amount

Behaviour
Figure 1.2: Source: Kotler, P., 2000, Marketing management, Millennium edition, U.S.A.: Prentice-Hall, p. 161.
Figure 1.2 shows how the marketing mix and other stimuli enter a consumers thoughts. The
consumer then has to make certain decisions, which are directly influenced by their personal
characteristics. For a marketer, the ideal end result would see the consumer making a purchase.

Other models contain more detail and would focus on specific issues as demonstrated by Engel
et al. [1995:154] and Hawkins et al. [2001:26] in figure 1.3 and figure 1.4 respectively.

Figure 1.3: Source: Engel J.F., Blackwell, R.D., Miniard, P.W., 1995, Consumer behavior, 8th edition, U.S.A.:
Dryden Press, p. 155.

Figure 1.3 indicates the impact of environmental influences and individual differences on the
consumer. They play an important role when it comes to the decision-making process. This
process spurs on a consumers memory recall, which can then be used in carrying out a purchase
and deciding whether it was a satisfactory action or not.

Figure 1.4: Source: Hawkins, D.I., Best, R.J., Coney, K.A., 2001, Consumer behavior, 8th edition, New York,
U.S.A.: McGraw-Hill, p. 26.

In figure 1.4 a persons self-concept and lifestyle is the central role of consumer behaviour.
External and internal influences can produce and affect needs and desires, ultimately affecting
the decision-making process. As this cycle of need satisfying takes place, the consumer gains
experience.
Gilbert (1991) suggested a model for consumer decision-making in which is shown in Figure 1.5
This model suggests that there are two levels of factors that have an effect on the consumer. The
first level of influences is close to the person and includes psychological influence such as
perception and learning. The second level of influences includes those, which have been
developed during the socialization process and include reference groups and family influences.
All these models that have been adapted for tourism offer some into the consumer behavior

Socioeconomic influences

process involved during the purchase post-purchase decision stages.

Motivation or energizers

Cultural influences

Perception

Consumer or
Decision-maker

Personality/ attitude

Reference group influences

Learning

Family influences

Figure 2.10 Consumer Decision-Making Framework

Figure 1.5: Source: Gilbert, (1991) In Cooper (Ed.). Pp.78-105
THE BUYER DECISION PROCESS
The buyer decision process consist of Five Stages-: Need recognition, information search,
evaluation of alternatives, purchase decision, and post purchase behaviour. Clearly the buying
process starts long before actual purchase and continues long after. Marketer need to focus on the
entire buying process rather than on just the purchase decision.
NEED RECOGNITION- The first stage of the buyer decision process in which the consumer
recognizes a problem or need of FMCG.
INFORMATION SEARCH- The stage of the buyer decision process in which the consumer is
aroused to search for more information; the consumer may simply have heightened attention or
may go into active information search to the product.
Perceiving a need

EVALUATION OF ALTERNATIVES - The stage

of the
buyer decision process in which the
NEED
RECOGNITION
consumer uses information to evaluate alternative brands in the choice set.
PURCHASE DECISION- The stage of the buyer decision process in which the consumer
actually Seeking
buys the
theproduct.
value for his need
PRE PURCHASE SEARCH

POST PURCHASE BEHAVIOUR-The stage of the buyer decision process in which the
consumer take further action after purchase based their satisfaction or dissatisfaction.

Assessing the available alternatives

EVALUATION OF ALTERNATIVES
Figure: 1 SIMPLE MODEL OF RURAL CONSUMER
BEHAVIOUR

Buying value

PURCHASE DECISION

Value in consumption or use

POST PURCHASE BEHAVIOUR

The buying process begins with need recognition. At this stage, the buyer recognises a problem
or need or responds to a marketing stimulus. Next, the consumer needs to decide how much
information (if any) is required to make the decision. If the need is strong and a product or
service that meets the need is easily available, a purchasing decision is likely to be made
immediately. If this is not the case, the information search process begins. A customer can obtain
information from several sources: personal sources (family, friends), commercial sources
(advertising, retailers, packaging), and public sources (newspapers, magazines, radio, television,
Internet). The usefulness and degree of influence of each of these sources of information will
vary by product and by consumer. It is worth noting that marketers today have a greater degree
of control over the information that is provided (or is not provided) to consumers and the manner
in which this information is presented (Kivetz & Simonson, 2000).
In the evaluation stage, the customer must choose between alternative brands, products and
services. An important determinant of the extent of the evaluation is whether the customer feels
involved in the product. A buyers level of involvement determines why s/he is motivated to
seek information about a particular product or brand while virtually ignoring others. The
involvement level, as well as other factors, affects an individuals choice of one of three types of
consumer buying behaviour: routine response behaviour, limited decision making, and extended
decision making (Pride & Ferrell, 2007, pp. 177-179). Table 3 presents a comparison of the
behaviour types.
A consumer uses routine response behaviour when buying frequently purchased, low-cost items
that demand very little search-and-decision effort (e.g., milk, eggs, bread or socks). Customers
spend very little time deciding whether to purchase these items and do not typically need to read

reviews or consult with friends for their opinions before making routine purchases. However,
when confronted with ethical products, consumers often become more involved, and this results
in a more extensive information search (Carrigan & Attalla, 2001 Zander & Hamm, 201). These
are usually small purchases, on the lower end of the pricing spectrum. When buying such items,
consumers may prefer a particular brand but are familiar with several brands in the product class
and view more than one as being acceptable. Typically, low-involvement products are bought
almost automatically. Limited decision making is a combination of an extensive purchase
decision and a routine one. Consumers who participate in this type of buyer behaviour typically
know what type of product they want but are attempting to select a brand. Purchasing clothing is
a good example of how limited decision making works. A customer who needs a new pair of
jeans goes into a store looking for jeans but investigates a variety of brands to determine which
pair is the best fit. When customers engage in purchases that require limited decision making,
they may seek advice or a suggestion from a friend. This type of decision making requires a
moderate amount of time for information gathering and deliberation. The search is not as
thorough or as time consuming as it is with higher priced items.
The most complex type of buying behaviour, extended decision making, occurs when purchasing
unfamiliar, expensive, or infrequently purchased products (e.g., a computer, television, car or
house). Consumers spend substantial amounts of time researching a large number of potential
options before they buy. They speak with trusted friends, family, colleagues and sales
professionals and read reviews and ratings online and in consumer magazines. Consumers
participating in an extended decision-making process typically take more time to make a final
purchase decision and spend more time researching their options. Many of these consumers
experience cognitive dissonance. Extended decision making is frequently used for purchasing
high-involvement products.
Purchasing a particular product does not always elicit the same type of problem solving process.
Most consumers occasionally make purchases solely on impulse, rather than on the basis of any
of these three buying behaviours. Impulse buying is an unplanned decision to buy a product or
service, made just prior to a purchase. Such purchases range from small (chocolate, candy, gum)
to substantially large (clothes, jewellery, art) and sometimes lead to problems such as financial
difficulties, family disapproval, or feelings of guilt or disappointment Wood (2005).
FACTORS AFFECTING CONSUMER BEHAVIOR
Consumer purchases are influenced strongly by cultural, social, personal, and psychological
characteristics. For most marketer cannot control such factors, but they must take them into
account.
Cultural Factors
Culture factors exert the broadest and deepest influence on the consumer behavior the marketer
needs to understand the role played by the buyers culture, subculture, and social class.

Culture- the set of basic values, perception, wants and behavior learned by the member of the
society from family and other important institutions.
Subculture- a group of people with shared values system based on common life experiences and
situations. Each culture contains smaller sub-cultures. Sub-culture includes nationalities, religions,
racial groups and geographic regions.
Social class- relatively permanent and division in a society house members share a similar values,
interests, and behaviors. Social class can be determined by a combination of occupation, income,
education, wealth and other variables.

Social Factors
A consumers behavior is influenced by social factors, such as the

consumer small group,

family and social roles and status.

Group- Two or more people who interact to accomplish individual or mutual goals. A person's
behaviour is influenced by many small groups or reference groups. These groups involve family,
religious groups, friends circle, neighbours etc.

Family- The family members (husband, wife, and children) can strongly influence buyer
behavior.
Marketers are interested in the roles and influences of the husband, wife and children on the
purchase of different products and services.

Role and Status- Role consist of the activities people are expected. To perform according to the
persons around them Status reflect the general esteem given to it by the society. People choose the
products that show their status in the society. The person's position in each group can be defined
in terms of both role & status. Each role carries a status that is conferred by society.

Personal Factor
A buyer decision of FMCG also are influenced by personal characteristics such as the buyers
age life style, and life cycle stage, occupation ,economic situation , lifestyle , and personality and
self concept depend upon the personal factor.
Age and Life cycle stage- People change the goods and services they buy over their lifetime.
Tastes of the people undergo change with their age. Marketers define their target markets in terms

of family life-cycle stage and develop appropriate plans and products for each stage.

Family life cycle- the stages through which families might pass as they mature over time.
Occupation- A persons occupation also affects the goods and services they bought.
Life Style- A persons pattern of living as expressed in his/her activities, interest, and opinion.
Personality-A persons distinguishing psychological characteristics that lead to relatively
consistent and lasting responses to his or her own environment.
Psychological Factors
A persons buying FMCG are influenced by four major psychological factors: motivation,
perception, learning, and beliefs and attitudes.
Motivation- A need that is sufficiently pressing to direct the person to seek satisfaction of the
need.
Perception- The process by which people select, organizes, and interpret information to form a
meaningful picture of the world.
Learning- Changes in the individuals behavior arising from experience.
Beliefs and Attitude- Belief is a descriptive thought a person hold about something Attitude is a
persons consistently favorable or unfavorable evaluation, feelings, and tendencies towards an
object or idea. Own elaboration based on (Hasslinger, Hodzic, Obazo, 2007; Kotler and
Armstrong, 2007; Stvkov, Stejkal, Toufarov, 2008).
INDIAN RURAL MARKET
Today Indian consumers are becoming very unpredictable. The consumer today, is richer,
younger, eager to accept changes and more aspirational in his/her needs than ever before. This
Statement is not confined to urban India but also applicable to rural India. Now, when the urban
market is near saturation in the face of stiff competition from global players, the marketers are
targeting the rural markets as this seems to be the only way to maintain their market share. Now
the focus is at bottom of the pyramid, what Prof. C.K. Prahalad has called tier III of Indian

societythe bottomdown, 600 million people living in 6 million odd villages comprising 12%
of worlds population, which is now attracting not only Indian corporate houses but also global
retail leaders. Overall, there is a huge market which is waiting to be served, ready to splurge,
willing to explore new products, brands and services (Dey; Rafat and Agarwal, 2012).
Unlike urban markets, rural markets are difficult to predict and possess special characteristics.
The featured population is predominantly illiterate, have low income, characterized by irregular
income, lack of monthly income and flow of income fluctuating with the monsoon winds. Rural
markets face the critical issues of Distribution, Understanding the rural consumer,
Communication and Poor infrastructure. The marketer has to strengthen the distribution and
pricing strategies. The rural consumer expects value for money and owing to has unsteady and
meager status of weekly income; increasing the household income and improving distribution are
the viable strategies that have to be adapted to tap the immense potential of the market. Rural
markets face the critical issues of Distribution, Understanding the rural consumer,
Communication and Poor infrastructure. The marketer has to strengthen the distribution and
pricing strategies. It is uneconomical to access a large number of small villages with a very low
population density spread over a large geographic area. Social norms, traditions, castes, and
social customs have greater influence on the consumer behavior in rural areas than in urban
areas. Factors such as limited physical access, low density of shops, limited storage facilities,
need for a large number of intermediaries in the distribution channel to reach the end customers,
and low capacity of intermediaries to invest in business make the tasks of reaching rural
consumers very complex (Sabura; Kumar and Hameed, 2012).
The rural market is zooming ahead at around 25 per cent annually. "The rural market is growing
faster than urban India now," says Venugopal Dhoot, chairman of the Rs 1900 -crore Videocon
Appliances. "The urban market is a replacement and up gradation market today," adds Samsung's
director, marketing, Ravinder Zutshi. In India where about 70% population resides in the rural
areas and nearly half of the national income is generated by the rural population, hence it become
necessary to understand the psyche of the rural population, their needs, aspirations and also their
behavior to be success in the marketing in rural areas. The villagers have accepted the modern
way of agriculture as a business but also have accepted modern living. Apart from the food
items, they are interested in buying durable products. This change in the attitude of rural
consumers is sweeping across the countryside. The expanding rural market is important to
growth of economic development of India. Rural markets have proved to be very attractive for
corporate and the size of market is increasing year by year. The increased income/purchasing
power of the rural consumer and the improved income distribution have enhanced rural demand
for several products. With a population already in excess of one billion people, India has caught
the eye of multinational corporations across the globe as a place of opportunity for exploring
new markets. The Indian rural market has a huge demand base and offers great opportunities to
marketers. Two-thirds of Indian consumers live in rural areas and almost half of the national
income is generated from here. The reasons for heading into the rural areas are fairly clear (Siras,
2012).

India is one of the largest emerging markets, with a population of over one billion. Out of which
68.84 % are living in rural areas (Census 2011). Level of urbanization increased from 27.81% in
2001 Census to 31.16% in 2011 Census. Rural India is on the threshold of momentous change.
Rural India will be a market worth USD 500-600 billion by 2020, according to McKinsey report.
Rural consumption levels are also anticipated to equal current urban levels by 2017. The
economy is vibrant, incomes are rising; and the habits, preferences and attitudes are changing
rapidly. To be successful in the rural market, companies will have to be innovative and sensitive
while devising marketing strategies. Traditional urban marketing strategies will have to be
localized as per the demands of the rural market (Prajapati and Thakor, 2012).
Thrust on rural development since 1950 eventually made India into an attractive rural market.
Increased awareness along with rise in income levels influenced the rural marketing environment
in the country (Velayudhan, 2002). Other factors that contributed to the growth of rural markets
are penetration of media, rising aspiration of rural people and packaging revolution (Bijapurkar,
Rama, 2000; Kotler et al., 2009). Fast moving consumer goods (henceforth referred to as FMCG)
market has emerged as one of the most attractive rural markets in India (Kashyap, Pradeep &
Raut, Siddharth, 2007). An effective FMCG marketing strategy in a rural setup essentially
includes product variants, product categories, price points, sizes and widespread distribution
network (Kumar & Madhavi, 2006). The rural FMCG market in India has grown 15% in 2011
(Nielsen Report, 2012). The Indian rural consumer market grew 25% in 2008 and would reach
US$ 425 billion in 2010-11 with 720-790 million customers (Quarterly Report, CII-Technopak,
2009). According to FICCI Technopak Report 2009, FMCG industry is projected to grow by
12% and reach a size of US $ 43 billion by 2013 and US $ 74 billion by 2018.
Demographic profile of rural Indian market
No. of Villages 638,691
Rural Population 741 Million
There are total 3,697,527 retail outlets in rural India
Rural literacy rate( 7 year and above) is 45%
The no of middle income and higher income household expected to grow up to 111
million
Rural market is growing up to 5 times than urban market
Investment in formal saving instruments: 6.6 million household in rural 6.7 million in
urban
145,98 villages with population less than 200 and 13,113 Villages with population over
5000
7271 Villages with railway station
1,38,000 villages with post offices
15039 Villages with hospital
12 million rediff signup out of total 20 million are from rural area
FMCG segment with an estimated annual size of 50,000 cr.

32000 rural bank branches

Sources census of India 2011 Global Retail development index 2010

Rural Market and Rural Marketing

Different experts and organizations have divergent views on what constitutes the term, rural.
Collins Cobuild Dictionary (2001) describes the word rural as place far away from towns and
cities. A rural market broadly comprises of consumer markets, institutional markets and services
(Dogra & Ghuman, 2008). According to Velayudhan (2002), rural marketing includes all those
activities of assessing, stimulating and converting the rural purchasing power into an effective
demand for specific products and with the aim of raising the standard of living. It is a two way
marketing process of flow of goods and services from rural to urban areas and vice-versa
(George & Mueller, 1955). Rural marketing is any marketing activity in which one dominant
participant is from rural area (Kotler, et al., 2009).
Marketing scenario in India changed with market liberalization policies after 1990s
(Gopalaswamy, 2011). Most of the Indian rural markets are Virgin in nature and they are now
opening for most of the packaged goods and for a number of product categories (Bijapurkar,
Rama 2000). Rural marketers have to differentiate themselves on quality and value for money
(Anand & Krishna, 2008). For this purpose, they need to understand the factors that influence the
rural purchase of FMCG (Krishnamoorthy, 2008).
The rural Indian market is no doubt having huge potentials yet to be tapped, but at the same time
this market has plenty of obstacles to be handled properly for making a dent in to the rural
market. The better understanding of rural market characteristics and rural people psych will help
the marketer to integrate in the life of rural people more efficiently and effectively. The real
India lives in the village. Rural marketing is the new buzzword as the new marketing mantra for
the survival and the growth of and the success forcing companies to go rural. These statements
tell the importance of rural marketing for the survival and the growth of any marketers and are
supported by the facts given belowThe total FMCG market is in excess of US$16.4 billion and is set to treble from US$11.6 billion
in 2003 to US$33.4 billion in 2015. It is currently growing at 14%. With 12.2% of the world
population living in the villages of India, the Indian rural FMCG market is something no one can
overlook (Singh and sheikh, 2012).
Rural Marketing Mix
Marketing mix refers to the set of tools used by a company to promote and sell its brands or
product in market. The most important decisions, and indeed the essence of the marketing
managers task within a company, are decision about the controllable marketing variables:
decision about what E. Jerome McCarthy termed the 4Ps: product, price, place and promotion.
On contrary to the traditional 4Ps model, some of the marketers are adopting the 4Asmodel,
which is considered to be more customers oriented. As per figure 2, The 4As of rural marketing
mix i.e. Affordability, Availability, Acceptability and the Awareness have been now universally

accepted both by practitioners and the academicians, as touch stone for the success of any
product/ business strategy in the rural market. What 4Ps are to mainstream marketing, the 4As
are for the rural marketing.
Figure 2 : 4AsModel
4Ps(Interaction means with the customers)
4
As
Challenges
Product capability of satisfying the needs and Acceptability
wants.
Price the amount the customer has to pay for Affordability
acquiring the product.
Place refersto the point where sale is made.
Availability
Promotion activities undertaken to make product Awareness
known and preferred among the target customers.
4Ps(Interaction means with the customers) 4As Challenges
Product capability of satisfying the needs and wants. Acceptability Price the amount the
customer has to pay for Affordability acquiring the product. Place refers to the point where sale
is made. Availability Promotion activities under taken to make product known Awareness and
preferred among the target customers.
Acceptability as a Challenge:
Catering to the 70 crore rural customers residing in the 6 lakh villages, where the habits, customs
and the culture changes every100 km, the customization of products to suit the requirements of
such diverse demographics hence becomes logical for the acceptability of any product.
Affordability as a Challenge:
As being the major and sole element of marketing mix which earns revenue and the exchange
value, the needed amount and the determinant of the market demand for the product.
Availability as a Challenge:
Making the product available has always been a critical task in the rural market.
Awareness as a Challenge:
Creating consumer awareness about the product and making it affordable for the rural customers
will pay dividends only if the advertised products are available in the rural market (Shah.c, Desai
R; 2013).
The better understanding of rural market characteristics and rural people psyche will help the
marketer to integrate the life of rural people more efficiently and effectively. As like an umbrella
it will cover more and more rural customer and once it happens, may lead a faster growth of any
marketer in rural market as we all know that the FMCG market will be driven by the rural
market().
The rural market is an area of darkness to Indian entrepreneurs. The Indian rural market, with its
vast size and demand base, offers great opportunities to marketers. More than 70 percent of the
countrys consumers are in the rural market and more than half of the national income is

generated here. The rural market is very much larger than the urban in the aggregate. Yet, the
rural market represents the largest potential market in the country. Its primary activities are
agriculture, animal husbandry, fisheries, forestry etc. It contributes to over half of Indias GDP. It
does not lag behind the urban in growth rate of GDP either. If consider growth rates in per capita
income, rural market has been more or less matching the urban (Kashyap, 2012).
The rise of rural markets has been the most important marketing phenomenon of the 1990s,
providing volume growth to all leading companies. Many corporates have been trying to get a
grip on rural market. The reasons why companies are going rural are manifold. Higher rural
income driven by agricultural growth, increasing enrolment in primary schools, high penetration
of television and other mass media have increased the propensity to consume branded and value
added products in rural area (Badi, 2007).
As a result of the Green Revolution, there is a socio-economic revolution taking place in
Indian villages since last three decades. Increasing knowledge of fertilizers, water resources,
pesticides, better quality seeds, modern farm equipments and methods of farming have changed
the villages far better. The per capita income of the farmers is on the increase and the manner in
which they spend their disposable income has also changed. The rural market is not passive. It is
vibrant and growing at a faster pace. It will soon outstrip the urban market if this pace of
development continues (Rama, 2013).
Socio-economic changes in villages have led villagers to think of material well being. This
change in the attitude of the Indian rural people is sweeping across the countryside. The
expanding rural market is important to the growth of economic development of India. With the
change in scenario, the marketing focus is also changing towards villages: Go rural is the
slogan of marketing gurus (Sarangapani and Mamta, 2008).
The Indian rural market is much larger than the urban market in terms of population and number
of households. The rural market consists of more than 100 million households with a total
population of about 740 million. In spite of being larger in size, rural areas are characterized by
low per capita income, low literacy, average agricultural productivity and low level of
industrialization. To successfully exploit the potential offered by rural market, there is need to
understand the market not just in term of number of households & population, but in terms of
their occupation pattern, income generation, market arrangements for agricultural produce, the
process of rural & cottage industrialization, communication facilities, infrastructure
development, rural buyer behavior, attitude and belief of rural people and their changing values
& aspirations. The Rural population is nearly three times the urban, so that rural consumers have
become the prime target market for consumer durable and non-durable products, food,
construction, electrical, electronics, automobiles, banks, insurance companies and other sectors
besides hundred per cent of agri-input products such as seeds, fertilizers, pesticides and farm
machinery (Kumar, 2013). The Indian rural market today accounts for only about Rs 8 billion of
the total ad pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly there
seems to be a long way ahead. Although a lot is spoken about the immense potential of the

unexplored rural market, advertisers and companies find it easier to vie for a share of the already
divided urban pie. A radical change in attitudes of marketers towards the vibrant and burgeoning
rural markets is called for, so they can successfully impress on the 230 million rural consumers
spread over approximately six hundred thousand villages in rural India (Pareek and Pincha,
2013).
What rural market buys?
Rural India buys small packs, as they are perceived as value for money. There is brand stickiness,
where a consumer buys a brand out of habit and not really by choice. Brands rarely fight for
market share; they just have to be visible in the right place. Even expensive brands, such as
Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep distribution, many
brands are doing well without much advertising support Ghadi, a big detergent brand in North
India, is an example (Pareek and Pincha, 2013).
Rural Consumer
Rural Consumers are fundamentally different from their urban counterparts socially,
psychologically, physiologically and literally. Rural consumers buy only inexpensive products.
There is mass consumption among them regarding a particular product or brand since they are
homogeneous of village or regional level. The behavior of the rural consumer depends upon the
product he wants to purchase. The behavior is highly dynamic even in the consumption of one
single product (Challapalli, 2004).
Special features of rural market
Unlike urban markets, rural markets are difficult to predict and possess special characteristics.
The featured population is predominantly illiterate, have low income, characterized by irregular
income, lack of monthly income and flow of income fluctuating with the monsoon winds
(Jaideep).
Rural markets face the critical issues of Distribution, Understanding the rural consumer,
Communication and Poor infrastructure. The marketer has to strengthen the distribution and
pricing strategies. The rural consumer expects value for money and owing to has unsteady and
meager status of weekly income; increasing the household income and improving distribution are

the viable strategies that have to be adapted to tap the immense potential of the market (Sabura;
Kumar and Hameed, 2012).
Opinion leaders play a key role in popularizing products and influence in rural market.
Nowadays educated youth of rural also influences the rural consumers. Rural consumers are
influenced by the life style they watch on television sets. Their less exposure to outside world
makes them innocent and fascinated to novelties. The reach of mass television media, especially
television has influenced the buying behavior greatly (Jaideep).
1.20 DEFINITION OF MARKETING:
The word market is derived from the Latin word Marcatus meaning goods or trade or a place
where business is conducted. The term marketing is defined as a business activity planned at
satisfying to a reasonable extent, consumer or customer needs and wants, generally through an
exchange process.
The human needs are less and are important for his survival. The wants of people are many and
varied and change with time, place and society. The wants keep changing with life styles, earning
capacity of consumers, social values, education etc. Human intentions and decision to acquire
may not be the same due to existing conditions. A man may like or intend to stay in a five star
hotel. He may decide (or acquire) a room in a three star hotel due to his tight financial position.
Kotler defines marketing as a social and managerial process by which individuals and groups
obtain what they need and want through creating, offering and exchanging products of value with
others.
As per the definition by the American Marketing Association (AMA), marketing is the process
of planning and executing the conception, pricing, promotion and distribution of ideas, goods
and services to create exchanges that satisfy individual and organizational goals. Market
traditionally is a place where buyers and sellers gather to exchange their goods.
With this concept of markets, it is seen that Marketing means working with markets to actualize
potential exchanges for the purpose of satisfying human needs and wants. Definition of
Marketing Management, according to Kotler, is the process of planning and executing the

conception, the pricing; promotion and distribution ideas, goods and services to create exchanges
that satisfy individual and organizational goals. He has thus approved the definition of the AMA.
1.21 DEFINITION OF RURAL SOCIETY IN INDIA:
There is a lack of universal definition of rural and consequently urban society in India. The
differences exist between urban and rural societies but both are parts of one human society. Thus
differences are more of theoretical concept than divisions based upon the community life.
Definitions:
Definitions of Rural

Census

Limitation

Village: Basic unit of rural areas is the

Term rural is not defined.

revenue village, might comprise several

The

hamlets demarcated by physical

specify

boundaries.

strata.

Town: Towns are actually rural areas

Term rural is not defined.

but satisfy the following criteria:

The

definition does not

the

population

definition does not

Minimum population >=5000

rule out 5000+ population

Population

villages.

density>=400/sq.km.
75% of the male population
engaged in non-agri activity.

RBI

Locations with population up to 10,000

It does not include 10,000+

will be considerate as rural & 10,000 to

population villages in rural

1,00,000 as semi-urban.

definition.
In country, the

definition

includes 5,000 10,000

population towns in rural.

NABARD

All locations irrespective of villages or Village & town characteristics are

town,

up

to

population

of

10,000 will

not defined.

be considered as rural.

Planning

Towns with population up to 15,000

Town characteristics

Commission are considered as rural.

defined.

Sahara

Population

Locations having shops/commercial

criteria

are

not

&

other

establishments up to 10,000 are treated characteristics are not taken in to

as rural.

LG

The rural & semi urban area is defined

Electronics

as well other cities other than the seven

metros.

considerations.