Unit 2

Rural consumer behaviour

Consumer Behaviour :
Consumer behaviour is the process through which the
ultimate buyer makes the purchasing decisions. The
study of consumer behaviour is the study of how
individuals make decisions to spend their available
resources on consumption related items. It includes the
study of what they buy, why they buy it, when they buy
it, from where they buy it, how often they buy it and how
often they use it.
Consumer behaviour may be defined as, "The decision
process and physical activity individuals engage in when
evaluating, acquiring and using or disposing of goods and
services."
According to Jacobs, "Consumer behaviour reflects the
totality of consumer's decisions with respect to the
acquisition, usage and disposition of goods, services,
time and ideas by human decision-making units."
Buying Decision Process :
Consumer passes through different stages while
purchasing the product which are as follows,

1.Need Recognition
The process of buying starts when a person realises that
he has a problem or an unsatisfied need. A need can be
arised internally or by an external stimulus. Internal
stimuli are customer's desire attitude or perception and
external stimuli are advertising etc.
2.Information Search
A consumer, who realises the need for a product will try
to gather information regarding the product. Information
search helps the customer understand the feature of a
product and competing brands better.
3.Evaluation of Alternatives
In this stage, a customer analyses the information
available with him to select the right brand or product.
The criteria to evaluate a product may differ depending
either on the buying situation or on the level of
involvement required. Sales personnel can help customer
evaluate the product or brand features vis-a-vis other
products.
4. Purchase Decision and Purchase
Selection or purchase of a particular brand is dependent
on the evaluation criteria and ratings. The purchase
decision also depends on the availability of the brand as
consumer buy the most preferred brand, Affordability
also play an important role at this stage.
5. Post Purchase Evaluation of Decision
A customer evaluates the performance of a product after
buying it. The consumer I will either be satisfied or
dissatisfied after this evaluation. Buyer's post purchase
feelings are important to marketers. The purchase and
the buyer talking favourably about the product post
purchase evaluation might either lead to repeat to others
or the buyer may talk negative about firm's product.

Rural Consumer Behaviour :

 Study about the behaviour shown by rural consumer
about acquisition, consumption and disposition of
various products.
 Consumers of rural markets are spread throughout
the country side with low income levels, lack of
education where income comes in seasonal basis
during harvesting time.
 They are also scared to try out new or innovative
products.
 Villagers react differently to different
products,colours, sizes, etc. in different parts of
India.
 Thus utmost care in terms of understanding
consumer psyche needs to be taken while marketing
products to rural India.
  Thus, it is important to study the thought process
that goes into making a purchase decision, so that
marketers can reach this huge untapped segment.

Factors affecting Rural consumer behaviour:

1.Social factors :
Social class is one of the main concepts in socio-cultural
environment. A society consists of different social classes
and all social classes are determined by income,
occupation, literacy level etc. of its members. Each class
has its own class values according to lifestyle, behavior
etc.
I.Influence of culture: Culture and tradition influence
perception and buying behaviour. For example, the
preference in respect of color, size and shape are often
the result of cultural factors. Rural consumers’
perception of products is strongly influenced by cultural
factors.
II.Geographic locations: Rural consumer behavior is also
influenced by the geographic location of the consumers.
For example, nearness to feeder towns and industrial
projects influences the buying behavior of consumers in
the respective clusters of villages.
2.Income level:
Normally, the higher the income level, the higher is the
level of spending and vice versa. But this may not be the
case in developing countries, especially in the rural areas.
I.Involvement of others in the purchase: Involvement of
others in the purchase in the purchase decision is yet
another relevant factor in this regard. There has been a
change here in recent years. In the past, the head of the
family used to make the purchase decision all by himself.
II.Exposure to urban lifestyles: Extent of exposure of rural
consumers to urban lifestyles also influences their buying
behavior. An increased exposure and interaction with
urban communities has been the trend in recent years.
III.Places of purchase: Buying behavior of rural consumer
also varies depending on the place of purchase. Different
segments of rural buyers buy their requirements from
different places/outlets. Some buy from the village
shopkeepers; some from village markets/fairs; others
buy from the town that serves as the feeder to the rural
area.
IV.The way the consumer uses the products: The
situation in which the consumers utilize the product also
influences their buying. The example of lack of electricity
affecting buying behavior illustrates this point as well.
Lack of electricity automatically increases the purchase of
batteries by rural consumers.
3. Personal Factors:
The personal factors such as age, occupation, lifestyle,
social and economic status and the gender of a consumer
may affect the buying decisions of the consumers
individually or collectively.
I.Age factor:
The age factor greatly influences the buying behaviour.
For example, teenagers prefer trendy clothes, whereas
office executives prefer sober and formal clothing.
II.Gender:
The consumer behaviour varies across gender. For
example, girls prefer certain feminine colours such as
pink, purple and peach, whereas boys go for blue, black
and brown.
III Education:
Highly educated persons may spend on books, personal
care products, and so on. But a person with low or no
education may spend less on books and more on
personal grooming products.
4. Psychological Factors:
A person’s buying behaviour is influenced by the
psychological factors such as the following:
I.Learning:
It refers to changes in individual behaviour that are
caused by information and experience. For example,
when a customer buys a new brand of apparels, and is
satisfied by its use, then they are more likely to buy the
same brand the next time. Through learning, people
acquire beliefs and attitudes, which in turn influence the
buying behaviour.
II.Attitude:
It is human tendency to respond in a given manner to a
particular situation or object or idea. Consumers may
develop a positive, or a negative, or a neutral attitude
towards certain products or brands, which in turn affects
their buying behaviour.
III.Motives:
A motive is the inner drive that motivates a person to act
or behave in a certain manner. A marketer must identify
the buying motives of the target customers and influence
them to act positively towards the marketed products.
Rural consumers vs urban consumers :
Comparison between rural and urban consumers
1. Generally educational levels are very high among
urban consumers whereas it is low among rural
consumers. High levels of education among consumers
leads to qualitative purchase behavior.
2. Family structures differ between urban areas and rural
areas. Generally large families in rural areas have single
decision maker in purchasing goods and services whereas
in urban areas family size being small and women mostly
employed, decision making is almost equally divided
among male and females.
3. Urban consumers show purchase behavior uniformly
throughout the year on account of uniform availability of
monetary resources which results on account of high
employability, therefore demand is uniform. The rural
economy of India is primarily agrarian which means that
monetary resources are available to most rural
consumers only seasonally that is during harvest time
and therefore purchase behavior and demand pattern of
rural consumers cannot be uniform throughout the year.
4. Product awareness levels are very high in urban areas
as advertisements like hoardings, distribution of
brochures, product exhibitions etc are very high in urban
areas. Rural consumers posses low product
awareness,levels on account of minimal advertisements
like T.V. Advertisements, Newspapers etc. However
marketers have become more aware of importance of
potential rural consumers, in order to tap rural markets
they have started marketing, campaigns etc.
5. Timely availability of products to urban consumers is
not a wonder on account of established distribution
channels whereas rural areas are not having timely
availability of products on account of slow movement of
products through rural distribution channels.
6. After sales service is adequately available in urban
areas due to the presence of huge consumer population,
whereas rural areas do not have huge number of
consumers therefore after sales service are not provided.
7. Urban consumers are fast and have ultra modem
approach, on account of this urban consumers are
known for brand switching, whereas rural consumers are
conservative and are known to retain the same brand
due to psychologically bounded traditions.
8. Urban consumers generally prefer to purchase bigger
volume packs to get cost benefit whereas rural
consumers prefer to purchase smaller volume packs.
9. Availability of cash credit facility from retailers of
urban areas is almost non-existent, whereas cash credit
is available from rural retailers.
10.A wide variety of brands are available in urban areas
because of huge population in urban areas whereas
variety in brand availability is less in rural areas as rural
consumers prefer only few known brands.

Relevance of marketing mix for rural market/consumer:

 Marketing mix (programme) comprises of various
controllable forces (often referred as elements) like
product, price, promotion and place. Success of any
business enterprise depends on marketing mix. These
four elements are like powerful weapons in the hand of
manager to defend his market and/or attack on rivals. A
manager needs to understand his rural market carefully,
considering all important characteristics of rural
customers.
Following part deals with marketing mix elements for
rural segments:

1. Product Mix:
Product is a powerful determinant of firm’s success. The
products must be suitable to rural customers in all
significant aspects. The company must produce product
according to the present and the expected state of rural
buyers. Product features (size, shape, colour, weight,
etc.), qualities, brand name, packaging, labeling, services,
and other relevant aspect must be fit with needs, wants
and capacity of buyers. Product must undergo necessary
changes and improvements to sustain its suitability over
time. Note that effectiveness of other decisions like
pricing, promotion and place also depends on the
product.
2. Price Mix:
Price is the unique element of marketing mix,
particularly, for rural markets. Rural customers are most
price sensitive and, hence, price plays more decisive role
in buying decisions. Pricing policies and strategies must
be formulated with care and caution. Price level,
discounts and rebates, credit and installment faculties,
and so on are important considerations while setting and
altering prices. Normally, the low-priced products attract
rural buyers. However, some rural customers are quality
and status conscious.

3. Promotion Mix:
Rural markets are delicately powerful. Certain
adaptations are required to cater to the rural masses.
The promotion strategies and distribution strategies are
of paramount importance. Ad makers have learned to
leverage the benefits of improved infrastructure and
media reach. The television airs advertisements to lure
rural masses, and they are sure it reaches the target
audience, because majority of rural India possesses and
is glued to TV sets!
Marketing manager has to decide on promotional tools
such as advertisement (objectives, message, media,
budget, scheduling, etc.), sales promotion (sales
promotion tools, levels, costs, timing, etc.), personal
selling (including objectives, sales force size, recruitment
and selection, training and development, remuneration,
training, controlling, etc.), and publicity and public
relations.
Similarly, puppet-shows, dance, dramas and mythological
songs, specially developed for product-promotion
purpose, are now being used in rural markets. These
traditional art forms readily render for communication
with the rural society.

4. Place Mix:
Rural markets face the critical issues of distribution. The
marketer has to strengthen the distribution strategies.
Distributing small and medium sized packets through
poor roads, over long distances, into deep pockets is a
difficult task.
Normally, indirect channels (particularly one or two level)
are more suitable to serve scattered rural customers. In
two level channels wholesalers are located at urban and
semi urban to serve urban and rural retailers. However,
not only in backward states, but also in progressive
states, local producers (farmers and others) distribute
directly to customers.
For service marketing, employees of rural branches and
agents can do better jobs. Banking, insurance,
investment, satellite and cable connection, cell phone,
auto sales and services, etc., the market is booming in
villages of some states. Service industries are trying to
penetrate the rural segments by deploying the specially
trained employees and local agents.

Problems in rural marketing:

Some of genuine problems associated with rural market
include:
1. Wide and Scattered Market:
Wide and scattered market is difficult to reach in both
the aspects – promotion and distribution. Rural India is
spread in the entire county in around 6 lakhs villages of
different sizes while urban population is concentrated in
around 3200 cities. Most of villages are extremely small
with population less than 500 people. Only one percent
(6300) villages have a population of more than 5000. It is
challenging tasks to choose target markets and to serve
them effectively.
2. Problem of Designing Products:
Products sold successfully in urban markets, may not
necessarily be successful in the rural markets due to
difference in utility value of the products. Mind-set of
rural segments seems quite astonishing and different.
Existence of considerable heterogeneity among rural
folks poses challenges for marketers to incorporate their
uneven expectations in the products.
3. Transportation Bottleneck:
Transportation is the nerve centre for any type of
business. Most of villages are not properly connected
with main roads. Every year during monsoon thousands
of villages are disconnected for a longer time. Lack of
proper transportation hinders marketing activities. Agro-
based products cannot be sent to marketing centers, and
industrial products cannot be supplied to rural
population safely in time. In certain areas, even
construction of road or railway is difficult to construct
and maintain.
4. Seasonal and Irregular Demand:
Rural demand is characterized as seasonal and irregular.
So, companies cannot concentrate on rural segments as
it is difficult to plan. In the same way, demand depends
on income of rural customers, and income is quite
uncertain because they depend on agriculture, and
agriculture depends on monsoon.
5. Uncertain and Unpredictable Market:
Market response is difficult to scale. They don’t have
stable and predicted behaviour. In such a situation, the
effective marketing strategies do not make a sense.
Rapid changes are difficult to incorporate and, hence,
there are more chances to suffer. Overwhelming
response of rural population to some products
experiences sudden fall. Market planning remains ever
challenging in rural segments.
6. Low Living Standards:
Rural customers have low income, low purchasing
power, low literacy rate, and, therefore, low standard of
living. But, picture is now changing and marketers can
have better opportunities than ever. Low standard of
living restricts their buying ability and pace of adopting
products.
7. Lethargic Life Style:
Lack of desire for a new life style is most critical issue for
a marketer. They cannot be easily convinced to try, use
and adopt certain products with better qualities and
innovative features Product modification does not create
desirable and positive effects on rural folks. Customs,
established beliefs, superstitions, etc., restrict their
behaviour. Unfortunately, their opinion leaders lack
scientific approach. Innovative and superior products are
difficult to be introduced successfully in rural areas.
8. Language Problem:
Language is a main constrains in communication
strategies. Multiplicity of languages spoken in rural areas
makes marketing activities difficult. Languages differ
from state to state, and area to area in the same state.
While designing advertising, personal selling, and
publicity strategies, marketers cannot fulfill linguistic
expectation of all rural people. Promotion programme
always lacks versatility.
9. Urban Marketers v/s Rural Customers:
The executives in companies cannot understand the
consumer psychology of rural markets. Lack of
awareness and understanding about consumer
behaviour in rural markets create problems in
formulating marketing strategies. Rural and urban
customers significantly differ in terms of habits, tastes,
uses, preferences, and other such aspects. So, any
attempt to satisfy rural customers with urban mind
(marketing executives born and brought-up in urban
climate) results into vain endeavor.
10. Backwardness:
Rural customers are economically backward. More than
30 per cent of the rural masses live below the poverty
line. Poverty confines them to spend even for basic
necessities. Backwardness also affects their mentality to
change. Their poor purchasing power and rigidity are
main constraints for marketers to serve them.
11. High Inventory Costs:
Since rural demand is limited and uncertain, an effective
inventory management is difficult. Besides, the retailers
serving in rural areas don’t have adequate knowledge
and aptitude to decide optimum inventory. Unnecessary
stocks cut their profit margin, and they lose customers in
case of inadequate stocks.
12. Inadequate Marketing Support:
Normally, producers and wholesalers do not extend full
support to rural retailers in terms of liberal credit,
financial assistance, and other facilities that they offer to
traders of urban areas. In same way, rural customers and
retailers are not given adequate space in designing
overall marketing programme.