RURAL CONSUMER BEHAVIOR

The ultimate objective of all production is consumption for the satisfaction of varied needs of man. A free market economy provides freedom to the consumers to buy and consume goods of their choice. Buying preferences of the consumers send signals to the producers to produce various commodities in required quantities. Producers, therefore, produces only those commodities which are desired by the consumers. Consumer behavior is related to likes and dislikes and expectations of the consumers. Consumer behavior has changed in recent years owing to enhanced awareness, information technology and more importantly governmental intervention through legislations. Thus, the manufacturers are more cautious in dealing with consumers of their respective products. The understanding of consumers has to invariably come from the consumer. The information relating to consumer behavior has to be necessarily based on an enquiry into their purchase process. The purchase act by a consumer is governed by various factors such as economic, social and psychological. Consumer behavior refers to the acts of individuals directly involved in obtaining and using goods and services and includes the decision process that provide a purchase. Consumer Behavior is not only the study of what people consume but also where, how often and under what conditions the product is consumed. The rural consumers in India account for about 73 percent of the total consumers. In recent years, the lifestyle of a large number of rural consumers in India has changed dramatically and the process of change is on. The buying behavior of the rural consumers is influenced by several factors such as socio-economic conditions, cultural environment, literacy level, occupation, geographical location, efforts on the part of sellers, exposure to media etc. The consumer movement in India till now has been confined to the middle class citizens in urban areas. It has yet to spread among the masses in rural areas.

UNDERSTANDING RURAL CONSUMER NEED OF THE HOUR If there is any one part of consumer India that epitomizes the line every truism about India can be contradicted by another truism, it is the rural consumer India. Often marketers do not invest a great deal of effort in understanding rural consumers and hence fail to develop suitable marketing strategies. Most of the time efforts are in the form of blinkered inside out approaches. At worst, it comes in the form of tinkering to strip features and creating no frills models of a feature rich expensive product without a concern for what the rural consumers would consider to be frills and essentials. At best, it has been seen in the form of letting R&D loose in their spare time to invent things that the poor can use based on the stereotypical image of the poor as illiterate, uninformed and primitive. The result has been specially created new products which are low priced but are light years behind in sophistication. In either case they usually fail to connect with the market. Thus unless marketers are able to understand rural consumers it is almost impossible to develop effective marketing strategies to cater to this huge untapped market.

Types of Rural Consumers

The Affluent/ very rich: Households owning personal car/ jeep and other products. The Well off: Households owning any/ all of these air conditioners, motor cycle, scooter, washing machine, refrigerator, colour television with other durables but not car or jeep. The Climbers: Households owning any/ all of these VCR or VCP, mixer grinder, sewing machine, audio equipment (two in ones etc.), black and white television, geyser with other durable products but not those mentioned in the first two categories. The Aspirants: Households owning any/ all of these electric fan, electric iron, bicycle with other durables but not the ones mentioned in the first three categories The Destitute: Households other than those classified under Categories one to four above (owning any/all/none of these wristwatches, mono cassette recorder, pressure cooker and transistor/radio).

SIMPLE MODEL OF RURAL CONSUMER BEHAVIOR Need recognition It is the difference between the desired state and the actual state. A rural consumer first recognizes his needs and accordingly thinks of purchasing the product. This is the first step in the simple decision making model. For instance a farmer in a rural area wants to purchase a colour television Pre purchase search After the need has been identified, the next step is to do a pre purchase search. Pre purchase search is of two types namely internal search using ones memory and external search which involves getting more information from friends or relatives (word of mouth). Marketer dominated sources, comparison shopping, public malls etc. A successful information search leaves a buyer with possible alternatives, the evoked set. Here the farmer may go to a nearby city and visit a showroom that has multiple products. Evaluation of alternatives This third step is to basically pick the best alternative from the available. In this step the buyer needs to establish criteria for evaluation. He makes a decision about what features he wants or does not want in the product. Accordingly ranks are given to the alternatives. The farmer may look for products of Videocon, Onida, and LG that are available with the dealers and finally select one of them. If he is not satisfied with the choice made the buyer can return to the search phase. Also marketers try to influence the buyer by framing alternatives. Purchase decision This is action that results in the purchase of the product from among available alternatives. The customer may plan to purchase a specific product that suits his needs and is within his budget, etc. This includes product, package, store, method of purchase among other things. For example the farmer may plan to go for LGs Sampoorna Colour Television as it has a vernacular on screen display, better sound and superior picture quality. Besides it is priced at only Rs 8,500.

Purchase This involves the actual purchase of the product. However it may differ from the decision due to time lapse between the purchase decision and the actual purchase or may also depend upon the availability of the product. Post purchase behavior This is the final step in the simple model of consumer behavior. The buyers relationship with the seller does not come to an end with the purchase especially in the case of consumer durables. This is not an important factor for FMCG. The farmer may see whether LG has a service centre nearby in case the product needs servicing. It is found that the main elements studied for analyzing rural consumer decision making process are media exposure, purchase aspects, behavior of the consumer towards price, quality relations, credit and influence of the retailer.

RURAL CONSUMER BUYING BEHAVIOR Rural buyer behavior refers to the buying behavior of final consumers individuals and households who buy goods and services for personal consumption. All these final consumers make up the consumer market. The rural consumer is likely to exhibit different purchase behavior as compared to his urban counterpart. This is basically due to the unique characteristics of rural markets. The composition of Indian rural market is probably the much more complex than the whole market in Europe in terms of cultural, linguistic and other diversities. The social and religious customs, climatic considerations, dual ownership due to prevalence of joint family system, mould the buying habits of rural consumers. The Chairman of Hindustan Unilever Ltd also corroborates our survey shows that rural consumers tend to be more subject to local religious, cultural and social pressures and there are regional variations in tastes and habits.

Thus it is important to study the thought process of the rural consumer purchase decision so that marketers can successfully reach this huge untapped segment.

Factors influencing buying behavior To understand rural buying behavior a marketer must first understand a) The factors that influence the buying behavior and, b) The variations in that behavior

These help to generate information upon which a marketer can create bases for segment the rural market taking the following factors into consideration:  Environment of the consumer The surroundings within which consumer lives has a very strong influence on the buying behavior. A villagers needs are different from those of his urban cousin. The environment has a critical influence in shaping the needs of the rural consumer. Products made to urban specifications may be impractical in rural settings. An excellent example would be of electrical and electronic goods. Virtually all radios, cassette players and television sets are made to urban supply specifications. In many villages, especially in power strapped villages, voltages fluctuate wildly making electrical goods susceptible to frequent breakdowns. In fact villagers dont mind paying more for these goods if they can sustain the frequent power cuts. Also water supply affects demand for durables in many villages.  Geographic variations in market behavior The geographic location in which the consumer is located also speaks about the thought process of the consumer. Rural markets are not homogeneous. Variations in economic development and degree of acceptance of innovation are evident in such markets. Geographic variation to urban centres and variations in development have resulted in tremendous heterogeneity even within a state for example western and eastern UP where there are major differences. For instance in western UP bullock carts are

smaller vehicles with one buffalo while in eastern UP bullocks carts are larger pulled by two buffaloes. Also locals speak Hindustani in western UP while they speak Bhojpuri in eastern UP. For instance villages in south accept technology quicker than in other parts of India. Thus HMT sells more winding watches in the north while they sell more quartz watches down south.

These have implications to product design and marketing strategies.

 Influence of occupation and consumption patterns The perception that the rural consumer is either a farmer or an agricultural labourer restricts marketing effectiveness. In fact there are other groups of consumers with different needs and behavior having significant purchase volumes. The Indian Readership Survey of 1998 has chosen the occupation of chief wage earner as a basis to define the rural consumer. It tells us that the occupation profiles of owners of consumer durables of three popular consumer durables indicate that non agricultural occupation group is one that constitutes the high consumption segment. Here the non agricultural occupation group includes shopkeepers, traders or those in employment service like government administration jobs, banks, teachers and other professionals. Television owners in the service clan constitute 43 percent which means one in two persons own a television set. In the case of other non agricultural group, the shopkeepers and traders, one in three persons owns a television.

Influence of consumer behavior and its implications

 Place of purchase Not all the rural consumers buy from the same location. Also the same consumer buys from different location depending upon the product and need. A study on haats showed that about 58% of villagers visiting these haats preferred them over village shops due to better quality, prices and variety.

Companies need to assess the influence on consumers of both village shops and haats. Rural consumer do not depend on the haats and village shops alone as some purchases are made from the urban areas also. For example, there are few product categories in which the rural distribution is still low and therefore consumer buys from towns. It was observed that for certain categories of products of FMCG, the rural consumers made as high as 50% of their purchases from urban markets. In case where rural dealer penetration is low, the purchase from urban centres is high. For example, shaving creams have low dealer penetration and hence 37% of purchases are made from urban area while there is a high dealer penetration for tea and hence 60% purchases are from rural markets and 25% from urban centres.

% of products bought from the nearby town rather than within the village itself  Creative use of product Marketers will find it useful to keep an eye on the different ways in which the rural consumers can use the given product. This is because product use can differ and not be envisaged by the marketer. Even for the experienced marketers there could be surprises. Market development is achieved by being alert to the new and creative uses of products. Godrej hair dye being used to colour the horns of oxen,washing machine being used for churning lassi. The study of product end provides indicators on the need for education and also new product ideas. STIMULI Stimuli are inputs to any of the senses. Stimuli (i.e sensory inputs) include products, packages, brand names, commercials etc. Marketing stimuli include an enormous number of variables that affect consume perceptions such as the nature of the products, their physical and commercial attributes (including the positioning of the print ad or the timimg of a commercial and editorial environment) According to the Howard and Sheth model of buying behavior, the most significant stimuli affecting buyer behavior are the information cues about the characteristics of the product. The cue may be significative if it comes from the product itself when the consumer is involved in a shopping activity. SOCIAL CLASS Social class is the classification involving stratifying people into groups with various amounts of power, prestige and privilege. We cannot associate social class with income because someone in a traditionally low status job like plumber may

today earn as much as an individual in a more prestigious job like a school teacher. In certain other cultures the stratification is more clear- cut. Although the caste system in India is no longer as powerful as it was a few years ago, it still has a tremendous influence on rural society CULTURE Cultural factors exert the broadest and deepest influence on consumer behavior. The marketer needs to understand the role played by the buyers culture. Culture is the most basic element that shapes a persons wants and behavior. In India, there are so many different cultures which only go to make the marketers job even tougher. Some of the few cultural factors that influence the buyers behavior are as below: Product: colour, size, shape, design For example, the Tata Sumo which was launched in rural India in white colour was not accepted. But however, when the same sumo was re launched as spacio in a different name and in a bright yellow colour, with a larger seating capacity and ability to transport goods, the acceptance was higher. Another good example would be Philips Audio systems. Urban India looks at technology with the viewpoint the smaller the better. However in rural India the viewpoint is totally opposite. This is the reason for the large acceptance of big audio systems in rural India. Thus Philips makes audio systems that get easily accepted by the sheer size. Social practices There are so many different cultures in India and each culture exhibits different social practices. For example, there are common bath areas in a few villages. The villagers used to buy one lifebuoy cake and cut it into smaller bars. This helped lifebuoy to introduce smaller 75 gm bars which could be used individually. Decision making by male head The male in Indian culture has always been given the designation of the key decision maker. For instance, the Mukhiyas opinion who is the head of the village

is usually shared with the rest of the village. Even in a house the male is the final decision maker. It is the men who do the purchasing women are not allowed to step out of the house. In rural areas this trend is very prominent while in urban households the wife is the key decision maker. The trend is also changing in rural households due to more media exposure. Changes in savings and investment patterns The savings and investment patterns of the rural rich is shifting from gold, land to tractors, VCRs, LCRs etc. Thus cultural factors have a strong influence on the rural consumer behavior. Times are changing and increased reach of information through media and influence of the urban areas is surely reducing the influence of traditions. But until that happens, marketers need to  Develop products that suit the cultural practices of the rural consumer.  Identify a suitable target audience and design media and message that reflect the social behavior.  Design the distribution to reach the places or outlets from where the consumer has been traditionally making his purchase. PERCEPTION Perception can be defined as the process of selecting, organizing and interpreting or attaching meaning to events happening in the environment. It is an integral part of consumer behavior, whereby an individual selects data or information from his environment, organizes it and then draws conclusions or meaning from it. The marketer who seeks to modify the behavior of the rural consumer needs to influence the consumers perception and attitude. It is here that the marketer has to carefully design the products and developing message for the rural markets. The decision variables of product and message are critical to marketing effectiveness in rural markets as the colour, shape and actions that hold meaning for rural consumers are different from those of urban consumers.

The factors that affect perception are exposure and interpretation. Exposure involves the extent to which we encounter a stimulus. In rural areas where marketers fall short of exposing the products, alternative uses for the same product crop up. Interpretation involves making sense of the stimulus. Perception is a different process and different people may interpret an event differently. Consumers perception of the product and promotion contribute to creating the position for the product. The interpretations of the rural consumer are different from those of urban consumers. Colours are interpreted differently, so are sizes and shapes. The lower literacy levels in the rural markets increase the importance of perpetual influences. In interior markets, brand identification is through visual patterns a red soap cake identifies Lifebuoy soap. The strong influence of perceptions on rural consumers provides a good reason for the marketer to develop separate marketing strategies for the rural market. ATTITUDE Attitudes are generally the inner expressions or feelings that reflect whether a person is favourably or unfavourably predisposed towards the subject. Consumer attitudes are a composite of a consumers beliefs, feelings and behavioral intentions towards some object. The beliefs that a consumer may hold towards a product may be positive (that sturdy and tough fans last long) or negative (that sleek and designer fans perish fast). It could also be neutral. For example fans should be preferably black or white. Also beliefs need not be accurate e.g chemicals like fluoride in toothpaste corrode teeth. The feelings that consumers have for some brands or objects are sometimes based on beliefs. For example in a village in Rajasthan the village elders banned television sets as they felt everyone was getting addicted and were neglecting their farming duties.

The behavioral intentions of rural consumers are typical of their overt habits. A typical rural Indian applies toothpowder on his index finger and rubs it on his teeth. This is because toothpowder is more in line with mouth washing habits. So when an urban consumer uses toothpaste his rural counterpart uses neem sticks, charcoal products etc. Changing attitudes of rural consumers Changing the attitudes of rural consumers is very difficult particularly if they feel marketers have a vested interest in either increasing sales or making them switch to other brands. But there are a few ways in which changes can be brought about Attitude to quality and price Conventional wisdom on rural marketing believes that villagers craves, but cant afford the products the products his city cousin consumes. As a result companies usually try to reduce the prices of their products either by creating smaller pack sizes or by compromising on quality. This works sometimes and with some products only. Small size packs get acceptance in markets that can only pay a smaller price because of the nature of income receipts. A land less labourer may get a small sum of money every day, so he buys his provisions daily and does not have a big sum to spend. He will therefore buy something that has a small unit price. The rural consumer is a very careful buyer. He is very conscious for getting value for money and does not like to pay extra for the frills he cannot use. However it is not true that only cheap brands sell in the market. An example to support this would be that of the Usha Company. Usha found that the sales of its economy brands was falling in rural areas in contrast to its premier Century brand even though it was priced 20 percent higher.

TYPES OF RURAL CONSUMER BUYING BEHAVIOR Types of consumer buying behavior are determined by:
y

Level of Involvement in purchase decision. Importance and intensity of interest in a product in a particular situation.

y Buyers level of involvement determines why he/she is motivated to seek information about a certain products and brands but virtually ignores others. High involvement purchases--Honda Motorbike, high priced goods, products visible to others, and the higher the risk the higher the involvement.

Types of risk: y Personal risk y Social risk y Economic risk

The four type of consumer buying behavior are:

y

Routine Response/Programmed Behavior--buying low involvement frequently purchased low cost items; need very little search and decision effort; purchased almost automatically. Examples include soft drinks, snack foods, milk etc. Limited Decision Making--buying product occasionally. When you need to obtain information about unfamiliar brand in a familiar product category, perhaps. It requires a moderate amount of time for information gathering. Examples include Clothes--know product class but not the brand. Extensive Decision Making/Complex high involvement - unfamiliar, expensive and/or infrequently bought products. High degree of economic/performance/psychological risk.

Examples include cars, homes, computers, education. Spend a lot of time seeking information and deciding. Information from the companies MM; friends and relatives, store personnel etc. Go through all six stages of the buying process. y Impulse buying, no conscious planning. The purchase of the same product does not always elicit the same buying behavior. Product can shift from one category to the next. For example Going out for dinner for one person may be extensive decision making (for someone that does not go out often at all), but limited decision making for someone else. The reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of friends will also determine the extent of the decision making.

Some facts with respect to rural customer and its behviour: Purchase location preference in rural areas: y 46% from the nearest retail shop y 39% from the nearest city y 15% others Payment habits of rural consumers: y 27.5% y 24% y 48.5% Cash Credit Mixed

Brand loyalty status in rural areas: y y y y 38.5% 23% 29.5% 9% Always purchase same brand usually purchase same brand sometimes purchase same brand never purchase same brand

SOME FINDINGS ABOUT RURAL CONSUMER BEHAVIOR  A majority of rural consumers draw information from friends and neighbours.  More rural consumers gather information from retailers, compared to those in urban areas.  About 70% of the rural consumers are advised by the retailer to buy a specific brand.  Friends and relatives are the most reliable sources of information, compared to other sources in both rural and urban areas, and retailers play a pivotal role in rural markets, particularly for convenience products.  Very few consumers feel that advertisements through mass media have made any impact

 In a little more than 50% of the cases, family members would select the brand in both rural and urban areas.  Higher income consumers in rural areas are fairly conscious of brand use and social prestige.  About 70% of the rural consumers use the same brand that is used by neighbours and friends. Among these, a majority are from the lower income group.  Price is relatively important in case of durable products and less important in case of non durables for both rural and urban consumers.  Consumers in both rural and urban areas generally perceive a product to be of inferior quality when it is priced low and vice versa.  Higher income consumers are less- price sensitive and fairly brand loyal for all the products.  A majority of the consumers buy the convenience products from the same shop, indicating high shop loyalty; rural higher income consumers buy from outside the village.  Rural consumers buy durables mostly during the post harvest season, outside the village (nearly towns).

Changes in consumer behavior in rural markets

The Indian rural market is expected to grow more than tenfold to become a USD$100 billion opportunity for retail spending in the next 15 years, The Nielsen Company has found. Details of the findings were unveiled today at Nielsens flagship Consumer 360 conference in New Delhi, India. The study showed that in more than half the largest FMCG categories, rural India is now contributing more to their growth than urban. One of the key drivers of this trend appears to be the unprecedented growth of smaller packaging options in rural India.

While the ability of lower priced packs to improve accessibility is known, their pace and presence has been unrelenting. In addition, premium skin care brands typically associated with urban areas are growing nearly twice as fast in rural. The rural market is currently worth approximately USD$9 billion in consumer spending in the FMCG space annually. The study findings show that food categories are currently driving the bulk of the additional USD$91 billion into the marketplace by 2025. One of the most telling points is the unprecedented pull of consumer demand fueled by an overdrive of awareness and acceptability. This will allow, and propel manufacturers to swing into full gear, said Prasun Basu, Executive Director and Vice President, The Nielsen Company. It was also found a surprising set of priorities. In rural areas, education of children ranked second after having a good crop. On the consumption front, a third of rural consumers are eating biscuits for breakfast and one in six rural buyers of hair dye now uses colors other than black to indulge in the trend of externalized beauty that is picking up fast in rural areas. These emerging cues that seem to be on the fringes of the larger market, or EmerFringe trends are the signs of a future that has arrived. The rural consumer is no longer merely experimenting with urban products because of a phase of prosperity rather, she is reveling in it and indulging unabashedly, providing gratification to her senses and her self-esteem. Increased literacy and greater awareness in rural markets create new demands and discriminating buyers. This is observed more in the younger generation. In villages today, this segment of buyers consumes a large variety of products, both durable and non-durable. There is a visible increase in the consumption and use of a variety of products. The younger generation appears to seek variety and is more discriminating. The young adult in a village likes to sport a fashionable watch and the preferred brand of toilet soap for the youth is not necessarily Lifebuoy, the brand preferred by the elders.

The studies also revealed that:

y y

Rural purchasing power has grown faster than urban in the last six quarters. Faster growth in rural is not limited to penetration; today the rural consumers frequency of consumption is growing faster as well, demonstrating their entrenchment in these categories. Instant noodle sales are growing nearly twice as fast in rural India compared to urban in both penetration and frequency. Seemingly urbane brands in categories like deodorant and fabric softener are growing much faster in rural India than urban