CHAPTER II

REVIEW OF LITERATURE

2.1. Introduction

A literature review is a body of text that aims to review the critical points of

current knowledge and or methodological approaches on a particular topic. Literature

reviews are secondary sources, and as such, do not report any new or original

experimental work. Its ultimate goal is to bring the reader up to date with current

literature on a topic and forms the basis for another goal, such as future research that may

be needed in the area. A well-structured literature review is characterized by a logical

flow of ideas; current and relevant references with consistent, appropriate referencing

style; proper use of terminology; and an unbiased and comprehensive view of the

previous research on the topic.

For clear and easy understanding, the review of literature is presented in the

following sub-headings.

2.2. Opportunities in Rural Marketing

2.3. Promotional and Marketing Strategies

2.4. Consumer Behaviour

2.5. Brand Awareness and Preference

2.6. Challenges in Rural Marketing

2.2. Opportunities in Rural Marketing

Gopalaswamy (1999) found that like any market that has seen a demand and

awareness boom, rural India has been witnessing considerable rise in purchasing power

and brand 'recognition' (not to be confused with 'awareness'). A change in consumption

patterns and access to communication media have made the rural market a vital cog in the

sales-growth wheel, especially with demand for many categories plateauing in the urban

markets.

According to the National Council of Applied Economic Research (NCAER,

2000), with about 74 per cent of its population living in its villages, India has perhaps the

largest potential rural market in the world. It has as many as 47000 haats (congregation

markets), compared to 35000 supermarkets in the US. Plus, of the total FMCGs demand

in India, nearly 53 per cent came from the rural market.

The oral care industry, especially toothpastes, remained under penetrated in rural

India with penetration rates below 45 per cent. With rise in per capita incomes and

awareness of oral hygiene, the growth potential was huge. Lower price and smaller packs

were also likely to drive potential up trading. In the personal care segment, according to

forecasts made by the Centre for Industrial and Economic Research (CIER, 2002),

detergent demand was likely to rise to 4180 000 metric tonnes by 2011-12. The demand

for toilet soap was expected to grow to 870000 metric tonnes by 2011-12. Rapid expose

to beauty conscious was expected to propel the demand for cosmetics to 100000 metric

tonnes by 2011-12, with an annual growth rate of 10 per cent.

Badi and Badi(2004) found that the strength of rural marketing laid in the 4A

approach- affordability, acceptability, availability and awareness of consumers, though

weakness like low per capita income and illiteracy can be overcome as more and more

companies were taking interest into rural marketing in India to capture the untapped

market. Opportunities for rural marketing were the vast size of rural market in India,

around 128 million households, huge market potential for FMCG and durable, rise in the

literacy level of rural consumers and easy reach to mass media would pave the greater

way for tapping the rural areas.

According to the Ministry of Food Processing (2005), 200 million people

expected to shift to processed and packaged food by 2010, India needed around US$ 28

billion of investment to raise food processing levels by 8-10 per cent especially in rural

areas. While the expenditure on mass-based, high volume, low margin basic foods such

as wheat, wheat flour and homogenised milk was expected to increase substantially with

the rise in population, there was also a market for branded staples was also expected to

emerge.

According to NCAER (2007) rural marketing has become the latest marketing

mantra of most FMCG majors. True, rural India was vast with unlimited opportunities,

waiting to be tapped by FMCGs. So it was not surprising that the Indian FMCG sector

was busy putting in place a parallel rural marketing strategy. Among the FMCG majors,

Hindustan Lever, Marico Industries, Colgate-Palmolive and Britannia Industries were a

few of the FMCG majors who have been gung-ho about rural marketing. Seventy per

cent of the nation’s population, i.e., rural India, can bring in the much-needed volumes

and help FMCG companies to log in volume-driven growth.

Mahesh Kumar (2008) found that penetration levels as well as per capita

consumption of most product categories like jams, toothpaste, skin care and hair wash in
rural India were low, indicating the untapped market potential. The growing Indian

population, particularly the middle class and the rural segments, presented an opportunity

to makers of branded products to convert consumers to branded products. The Indian

rural market with its vast size and demand base offered a huge opportunity for

investment. Rural India has a large consuming class with 41 per cent of India’s middle-

class and 58 per cent of the total disposable income.

Bhatia(2008) found that rural India has a large consuming class with 41 per cent

of India’s middle class and 58 per cent of the total disposable income. The rural market

accounted for 70 per cent of toilet soap users, and almost 50 per cent of TV sets, fans,

pressure cookers, bicycles, washing soaps, detergents, tea, salt and tooth powder. The

rural market for FMCG products was growing much faster than the urban counterpart.

Lokhande(2009) observed that rural India has progressed from the popular

perceptions, and owing to public as well as private options, there was considerable

progress in the communities, both economically and socially. Government schemes like

the mid-day meal scheme and National Rural Employment Guarantee Scheme (NREGS)

have increased the availability of disposable income among the rural consumers.

Moreover, younger generations were looking at alternative sources of income to

supplement the income generated through agriculture.

Sharma (2010) found that there were hardly any shops in the 2.30 lakh villages.

As a medium of promotion, ‘haats’ were very relevant for almost all brands since they

provided a medium to engage an average of 4600 people. Moreover, 17 per cent of Indian

villages accounted for 50 per cent of rural population in India and 60 per cent of rural

wealth.
 Hagargi(2011) found that rural markets offered immense growth opportunities

like untapped market, large population, first mover advantage, huge scope for penetration

etc, at the same time these markets poses some challenges also. Rural markets were an

important and growing market. And it had become an important one especially for

telecom operators in India. Though characteristics features such as thin population

situated at distance from one another, heterogeneity, low literacy rate limited purchasing

power, cyclical cash flows of rural consumers made them less attractive, but suitable

marketing strategy such as bottom of pyramid. 4A’s mode availability, acceptability,

affordability, and awareness and adopting some innovative marketing strategies there by

creating a win-win situation, can help companies in tapping the vast rural market.

2.3. Promotional and Marketing Strategies

Glueck and Jauch (1984) suggested concentration, integration, diversification,

cooperation, and internationalization as different routes to expansion. But these strategies

did not necessarily lead to expansion of market for a particular product category.

Brooks (1995) conceptualized “market” as a set of customers served by a set of

suppliers, where both sets were defined in terms of products and services and in terms of

geographic locations. This meant for each of its products in a chosen geographical area, a

company can have different estimates of market potential depending on the definition of

respective product’s market boundaries in terms of competition.

Laird and Harman (1997) had presented a model that identified the factors that

drove customer perceptions of value and describes linkages with marketing strategy. The
paper argued that a thorough understanding of customer value drivers can increase the

effectiveness of marketing strategy. Improved customer intimacy was the major pay off.

The value driver analysis can provide critical insights for product and service

development and operational efficiency. The paper proposed a model for linking

marketing strategy to the customer's perceptions of value. It suggested that a deep

knowledge of customer value can improve the processes that create and deliver that

value. Anticipating changes in customer value was critical to the success. Additional

attention should be placed an understanding the impact of the buying situation several.

The market expansion strategy was a strategy of increasing primary demand for a

product category by converting non customers into customers of an industry and/ or by

increasing the usage rate of industry’s existing customers. Focus on increasing the usage

rate was especially relevant in case of products with high penetration levels but low per

capita consumption. For example, expansion of market of consumer non durables (i.e.,

toilet soaps and detergent cakes/ powders) in India, can take place through increase in its

usage rate (Rao, 2001).

Size of the market was measured in terms of demand. Demand for a product

category as a whole was termed as primary demand while demand for a particular brand

of a product was called selective demand. The upper limit of market demand was called

market potential (Kotler 2001). In the marketing and strategy literature, primary demand

creation and selective demand creation have been identified as distinct strategic options

(Etzel et. al., 2001; Kotler 2001; Zikmund and d’Amico 2001).

Bansh Hari (2002) found that electronic product was looked upon by most people

almost as a natural phenomenon beyond people's control many people have accepted
marketing of electronic products as their career and electronic products have greater

effect an society. Attitude of people towards marketing was positive and marketing of

electronic products powerful enough to promote consumers cultures and value. It was an

investment of the future which manufactures expect would pay off many times more. The

study was restricted only up to marketing of electronic products which exclusively were

T.V. and computer.

Kim and Mauborgne (2005) conceptualized a “blue ocean” strategy framework

for creation of demand in an untapped market. They visualized it as an alternative

strategy to market share growth. However, not every one agrees that market expansion

and market share growth were mutually exclusive strategies.

Prahalad (2005) with other scholars like Hammond (2002) and Lieberthal (2005)

has developed a “bottom of the pyramid (BOP) marketing framework” as a means of

expanding low income markets. In the context of rural marketing, a BOP framework was

more relevant than a “blue ocean strategy” framework. Although a “BOP” framework

was useful for development of a general framework for market expansion, conceptually

expansions of markets do not necessarily mean expansion of “bottom of the pyramid”

markets. A “BOP” framework put strong emphasis on the creation of consumption

capacity among the poor. However, like a “blue ocean strategy” framework, it did not

adequately address a very important consumer behavior related issue of how to bring an

unwilling customer into the market. “BOP” framework also ignored the competitive

dimension in the formulation of strategy.

Companies selling in mature markets often took primary demand as given. They

concentrated their marketing resources on building selective demand. However in

countries which were characterized by huge but largely untapped market potential, some

companies attempt to build primary demand as well as preference for their brands (Kotler

and Armstrong 2006). In the strategy literature, the term “market expansion” has

generally been used in the context of primary demand creation and not selective demand

creation.

Walker Jr. et. al., (2006) defined market expansion strategy as stimulating

primary demand to help speed up overall market growth. Hence we concluded that

market expansion means increase in primary demand or increase in market potential for a

product category and not the increase in sales of a specific brand.

Indu and Gupta ( 2007) found that the marketing strategies of the US based

motorcycle manufacturer Harley Davidson Motor Company (H-D) used the marketing

mix element including product, price, distribution and promotion strategies of the

company. Not with standing the success of H-D'S marketing strategies, some critics were

of the opinion that the H-D was not focusing and its core competency i.e. motorcycle and

is diluting its brand. The company has a long way to go in maintaining good relationships

with the company's customers.

Purkayastha and Fernando (2007) found that the absence of a regular marketing

department might prove counter productive for the company. With the competition in the

ethical cosmetics market expected to increase some experts also felt that lush, which had

thus for remained an independent, The company did not have a traditional marketing

department and retied more an unconventional products, wacky product naves in store

advertising, word of month advocacy and public relation.

 In the case published in case folio entitled "Market Expansion Strategies of

Maruti Udyog", it was found that market expansion strategies was based on the

introduction of new models, and upgrading of existing models in response to market

demand. Promotional offers were undertaken by NUL in its quest for market dominance

the company was able to would itself according to the market requirements by entering

new domains and reaching out to potential customers through its 'True Value' and other

promotional offers.

Delsapratim Purkayastha (2009) found that HUL’S strategy for growing two

mature brands with mass appeal Life buoy and Sun silk by targeting new segments in

innovative ways. With India being waived as a test market for emerging markets

strategies analysts felt that the learning from these initiatives would help Uni Lever

develop a strong presence in other emerging markets strategies as well. The study tries to

dispel the myth that emerging markets were only about devising strategies to target the

huge BOP segment Analysts are of the opinion that HUL'S success in India was due to its

ability to cater to all segments by adapting products, prices and promotion to each of

them.

Mohankumar and Shivaraj(2010) found that Hindustan Unilever soaps and

detergents brand were available in all levels of the market i.e. upper end, mid segment

and lower end of the market, where as Proctor and Gamble brands were mainly focusing

on higher end of the market. Quality was the major purchase determinant of soaps and

detergent among the higher income group respondents, where as price was the most

important factor in the lower end of the market. The factors influence in purchasing

detergent included price, size of the soap, quality, lather, fragrance, skin care, durability,
promotional scheme whereas the factors influencing in purchasing bathing soap were

price, size of the soap, quality, lather, fragrance, skin care, durability and promotional

scheme.

Adebisi Sunday and Babatunde Bayode (2011) found that that strategic

promotional mix influenced the sale turnover with little 25 per cent while other variable

not included in the variable tested takes the larger 75 per cent that would rapidly lead to

organisation growth. Since promotional mix constitute few per cent of variable that can

push an organisation to the highest level, therefore other factors of marketing mix such as

product development, effective pricing, distribution of right quality and quantity to the

consumers should be appropriately considered.

2.4. Consumer Behaviour

Proctor et. al., (1982) noted that the principal aim of consumer behaviour analysis

is to explain why consumers act in particular ways under certain circumstances. It tries to

determine then factors that influence consumer behaviour, especially the economic, social

and psychological aspects which can indicate the most favoured marketing mix that

management should select.

One peculiar characteristic of consumer behavior was the fact it was usually

simultaneously “reinforced” and “punished.” It can be reinforced by the benefits obtained

from products and services or by social approval, but it was simultaneously punished

because the consumer has to surrender generalized conditioned reinforcers, such as

money and rights, and to spend time and effort in the purchasing process (Alhadeff,

1982).
 From the work of Schwartz and Lacey (1988) it has been proposed that purchase

and consumption activities occurred in a continuum which ranged between relatively

open to relatively closed consumer behaviour settings. The consumer was acting

according to the rules or instructions devised and presented by others in order to avoid or

escape the aversive consequences she might face otherwise.

Ahmed (1992) opined that the durable goods were generally purchased in

recognition of a need that has to be fulfilled of the durable goods. Those that fell in

category of what it termed as 'gadgets' or appliances were generally purchased for they

offer come convenience by way of reducing labor or time or effort involved in a process

such as a food processor, microwave cooking oven or refrigerator, washing machine etc.

She of the new that the consumers were more reluctant to admit the intangible appeals of

the durable goods especially those pertained to their status or social standing but more

admitted that the practice aspects of the products attracted them to purchase it.

Kumar (1993) found that business competitions resulting in intense sales

promotion and marketing efforts tend to shake the confidence of consumers. There was a

decline in the quality standards of products because of lowering of prices either to meet

competition or the poor purchasing power of the consumer increased in the market

imperfection which lead to an information gap between the manufacturers/ traders and

the consumers because of impersonalized selling. There was an increase in the number of

goods and services in the economy of which the consumer has no previous experience

resulting in error in his decision making.

Foxall (1994) suggested informational reinforcers may derive their power

ultimately from their association with the utilitarian consequences of behavior, which
may account for the successful synergistic effect of incentives and feedback in

combination. Moreover, the symbolic, verbal reinforcers in informational feedback were

related to the tendency for human behaviour to be rule governed as well as shaped by

direct consequences. This would account for the ability of specific prompts, acting as

instructions for pro-social behavior, to increase the motivational effect of

utilitarian/incentives and informational/feedback consequences.

Richins and Rudimin (1994) have reviewed how materialistic tendencies were

associated with individual’s identities, use of money, motivation for work, and social

behaviour. Substantial research further suggested that people highly oriented toward the

acquisition of wealth and possessions report relatively low levels of well-being. (Kasser

and Ryan, 1996; Mick,1996; Carver and Baird,1998; Sirgy,1998).

Conversely, the relatively open setting did not constrain the consumer, who, thus,

has greater choices. Therefore, in this case, the consumer was acting on self instructions,

under the control of positive reinforcement (feeling of freedom, a sense of being in

personal control of his behavior) and in which his approach behaviour was difficult to

predict. Also difficult in this environment was to isolate the positive reinforcers that

might be the exact causes of the consumer’s current behavior (Foxall and Greenley,

1998).

The dominance (dominance-submissiveness) dimension ranged from extreme

feelings of lack of control or influence upon one’s surroundings to feelings of being

influential and powerful, or in control. Empirical studies have shown the significantly
high power of the dominance dimension in discriminating between open/closed consumer

behavior settings (Foxall and Greenley, 1999, 2000; Soriano, Foxall and Pearson, 2002).

In their study of control and empowerment, Wathieu et. al., (2002) challenged the

traditional economic view which assumed that “a larger choice set would constitute an

improvement of a consumer’s situation” and their findings showed that certain kinds of

choice set expansions may cause aversive behavior in consumers, which was explained

by self-control, regret and overload mechanisms. Finally, in a relatively open consumer

behavior setting the consumer felt more autonomous and his subjective perception of

control has a positive impact on his long-term well-being.

Consequential stimuli have consisted of feedback, such as specific/personal

information on the actual effects of individuals’ actions (levels of reduction of his/her

electricity consumption or private car mileage), and incentives, such as financial bonuses,

praise and encouragement (reward with additional consumption goods or the capacity to

acquire them for pro-social behaviours).

Generally strong links have been found between conservation behavior and its

consequences, and incentives have commonly the strongest immediate influence on the

behaviour, at least in the short term. Incentives used alone have more effect than

feedback used alone. Feedback in the form of education and information was expected to

be more successful as a strategy when it is tailored to fit a specific situation (Lehman and

Geller, 2004).

Informational consequences, however, were socially-derived and symbolic,

depending above all on the actions and reactions of other people. They may consist of

feedback on the performance of the individual as a consumer. They were verbal (or
social) in the sense of being mediated by other persons and involved communication in

the sense that behavior of one organism generated a stimulus that affected the behavior of

another organism (Baum, 2005). Thus, while utilitarian consequences were related to the

technical functions of products or services, informational consequences were related to

social functions of acquiring and using products or services, such as social status and

prestige associated to certain consumer behavior patterns.

Changes have enhanced the complexity of consumption (Mick, Broniarczyk and

Haidt, 2006) and created an atmosphere that has turned out to be more favorable for the

risk of compulsive behaviour than before. The belief that consumer goods were an

important route towards success, identity and happiness (Huang, 2007) were core values

of consumer society.

Chevalier and Goolsbec (2008) mentioned that the consumers thought about the

future when they made durable goods purchase and looked very much like the forward

looking rational expectation consumer of the neoclassical model. This was apparent in

the purchase behavior of the students and in the pricing behavior of sellers. People were

willing to pay less or qwre less willing to buy products for which the projected future life

was short.

Lautnan and Pouwels (2009) suggested that there was a need for the development

of data fusion models that capitalizes on the advantages and disadvantages of various

important assessment methodologies, multistage models reflecting hierarchical consumer

decision making and competitive set formation would seen to have potential value.

Sarvana (2010) found that education played a key role in shopping behavior and

higher income group respondents shopped as and when they liked. In majority women
played a major role in purchase decision and they preferred to prepare an item list before

purchasing. Family influenced the consumer’s behavior to a greater extent while

purchasing. Majority of the respondents preferred to purchase products from

departmental store rather than any other shop. Most of the people recommended the

product purchased by them to others. People gave preference to product quality. Most of

the consumer satisfied with the factors such as price, quality and availability of service

and design of goods.

Malu(2011) found that consumer behaviour differed from consumers to

consumers; several factors were responsible for this like their knowledge, income,

lifestyle, social class, background, customs and traditions. Many things were very deep

rooted in affecting consumer behaviour like degree of utility of the product, quality ,price

features such as size, shape, color, design, performance, conformance, reparability,

profitability, range etc. All of these affected consumer behaviour largely this can be

understood through several examples Like while purchasing readymade garments people

assessed it by touching, further boosting their decision, they took trials to check its fitting

and degree of comfort, but while purchasing food item they checked it by other taste as

well as through their senses sampling as also one of the important part of their judgments

posed which enhanced their decision making in the form of acceptance or rejection of the

product or services.

2. 5. Brand Awareness and Preference

The core of brand equity lied in the construct of brand awareness. Brand equity

occurred when the consumer has a high level of awareness and familiarity with the brand
and holds some strong favourable and unique associations in memory. The two important

measures of brand awareness were brand recognition and recall. Brand recognition was

the ability of consumers to confirm that they have previously been exposed to a brand

and brand recall reflected that the ability of consumers to name brand when given the

product category, category needed or some other similar cue. Top of mind awareness was

critical as it captured the “consideration set” in a given purchase situation. Each type of

awareness has a different purpose and specific implications (Kapferer, 1988).

In low involvement decision settings, brand awareness was just adequate leading

to purchase. Repeat purchase then was a function of the functional utility and image

utility of the brand. Thus, when perceived quality differences exit among competing

brands, consumers may “pay a price” for employing simple choice heuristics such as

brand awareness in the interest of economizing the time and effort (Hoyer and Brown,

1990).

Nedungadi (1990) confirmed the importance of top-of-mind awareness in a study

which found that the higher the position of the brand in the consumer's mind measured by

unaided recall, the higher the purchase intention and the higher the relative purchase of

the brand. Further, increases in brand awareness were shown to increase the probability

of choice even without any accompanying change in attitude or perceptions.

In many cases consumers tried to minimise the costs of decision making in terms

of time spent, and cognitive effort, by employing simple rules of thumb, such as 'buy the

brand I've heard of'. This was particularly likely to occur in low involvement situations

where a minimum level of brand awareness may be sufficient for choice (Mackay 1990).
In such situations, the consumer may lack the motivation or the ability to judge between

brands.

A further way brand awareness may affect choice within the consideration set is

by influencing perceived quality. In a consumer choice study by Hoyer and Brown (1990)

over 70 per cent of consumers selected a known brand of peanut butter from among a

choice of three, even though another brand was 'objectively' better quality (as determined

by blind taste tests), and even though they had neither bought or used the brand before.

This result was even more surprising considering the subjects were given the

opportunity to taste all of the brands. Just being a known brand dramatically affected

their evaluation of the brand. Intuitively, this makes sense: a consumer may rationalise

that if they have heard of a brand, the company must be spending a fair sum on

advertising. If it was spending a lot on advertising, then the company must be reasonably

profitable which means that other consumers must be buying the product and they must

be satisfied enough with its performance therefore the product must be of reasonable

quality.

Morden (1991) was of the opinion that advertising was used to establish a basic

awareness of the product or service in the mind of the potential customer and to build up

knowledge about it. Brands were used to differentiate products from their competitors.

They facilitated recognition and where customers have built up favorable attitude towards

the product, may speed the individual buyers through the purchase decision process.

Individual purchasers would filter out unfavourable or un-known brands and the

continued purchase of the branded product would reinforce the brand loyal behaviour.
Without brands, consumer couldn’t tell one product from another and advertising then

would be nearly impossible.

In memory theory, brand awareness was positioned as a vital first step in building

the “bundle” of associations which were attached to the brand in memory. The brand was

conceptualised as a node in memory which allows other information about the brand to

be “anchored” to it (Aaker 1991b). The conceptualisation of a network of brand

associations in memory with the brand as a central core has been put forward by many

others (Holden and Lutz 1992; Keller 1993; Holden 1993;).

Brand awareness can also affect decisions about brands within the consideration

set (Keller 1993). Consumers may employ a heuristic (decision rule) to buy only familiar,

well-established brands. Consumers did not always spend a great deal of time making

purchase decisions.

Unaided awareness measured the brand’s impact, i.e., to what extent, it was

spontaneously associated with a given product category. The purpose of aided awareness

was to reassure the brand has already been heard of. Unaided awareness was very

important for low value, fast moving products. The pursuit of a particular type of

awareness depended on the way in which buyers of a product made their decisions and

the level of involvement. When three brands on the market were strongly rated in unaided

awareness, scarcely any other brand has a chance of even getting quoted (Laurent, et.al.,

1995).

The different brand elements have varying roles in reinforcing the value of brand

and its relevance to the consumer groups. Visual messages appealed the most of rural

audience. Study on recall of pictorial advertisements as compared to non- pictorial

advertisements indicated how much more effective they were with rural

consumers(Velayudhan, 2002).

Batra and Homer (2004) have put forward in their research that brand image

beliefs have a great impact on brand preferences when the consumer product schema fit

the product category. They used in their research two celebrities as endorsers to test their

impact on image beliefs (fun and sophisticated) and found that the effect of image beliefs

on brand preferences were reflected in the purchase intentions, but only when the image

beliefs were relevant and schematically fitted with the product category. This implied that

categorization of information facilitates an understanding of stimuli aroused by the

sponsorship.

According to Smith (2004) consumers used this schema to judge if the image

beliefs transferred from an event in a sponsorship matches with the product and their

expectations of the product category. Goodstein (2005) supported that these product

schemas can influence consumers’ attitudes and behavioural intentions toward advertised

brands and their marketing communications.

The benefits that a retailer stood to gain on selling spurious brands; a pattern was

similar to what was observed while surveying retailers in the rural market (Selvaraj,

2007). Generally, the relationship between the consumer and the retailer in rural market

was seen to be cordial and trustworthy which was based on various reasons like living in

the same geographic area, mutual respect and relatively higher value.

The key variables that influenced brand preferences amongst rural consumers for

durable products were the greater longevity and higher price points (than FMCG or other
non-durable consumer goods). Quality or performance did not determine brand

preference in the durable products in rural markets, and was impeded further by low

brand awareness and lack of trial among other things (Anand et. al., 2008)

A logical framework of brand awareness amongst rural consumers (Krishna et.

al., 2008) lent credibility and pertinence on mis-branding products (in unrelated

category). It specifically denoted “shopkeepers’ recommendation” as vital component

influencing the buying behaviour in rural market.

The rural retail market structure helped to ascertain their place of buying and

selling which subsequently connected to the buying behaviour of rural consumers

(Narang, 2008). Local shops were frequented for day-to-day purchase while ‘haats’ or

‘mandis’ (further categorized as a common geographic marketplace) were visited less

frequently on specific day of each week for specific purchases.

Prialatha and Malar Mathi (2011) found that rural consumers were more

concerned about the quality, brand name and brand benefits of the personal care products

purchased by them. Further it was also found that once the rural consumers found that

certain brands were suitable to them, they did not change it easily due to influence of

friends/social group and lack of availability of their usual brands. Incase of non

availability of their personal care brand at the store where they purchased regularly, they

often went to another retail store to get their preferred brand and do not compromise

easily. These store keepers introduced and inform them about the brand, its benefits and

also about the promotional offers. Hence the marketer has to develop a good rapport with

the local retailers to reach the illiterate rural consumers. Support and cooperation from

local retailers also helped in getting a competitive edge over local brands sold in rural
areas. Friends/Social group were found to have considerable influence on respondents

who were single, as they involved in brand discussions to decide their purchase. Package

factor has considerable influence on younger respondents as they preferred attractive

package colors and design, while illiterates often identified their brand with the color of

the package rather than the brand name.

2.6. Challenges in Rural Marketing

Panda (1998) found that the unit disposable consumption level was very low and

the assortment has to be made in a different size compared to the urban market to make it

suitable for the rural customer’s pocket. Multiplicity of assortment added up to the cost

level of the product and works against adding experience effect to the production. Further

more the distributed settlement and high transportation cost made it potentially less

feasible for many companies to launch products for rural consumption. Besides, the

conventional wisdom of urban glossy advertising and fantasy mix through television was

not going to work in the rural markets.

Xavier (1999) found that low per capita disposable income, acute dependence on

vagaries of monsoon, seasonal consumption linked to harvests and festivals, poor

connectivity, power problems, inaccessibility to conventional communication advertising

media, cultural and language barriers were important problems influencing the rural

population.

Shanti(2001)found that language and regional behaviour variations should be

considered while developing rural communications strategy. Advertising and Public

Relations agencies should entrust development of rural communications packages to

professionals hailing from small towns, as they would have a better connect with rural

mindset.

Mehra et.al., (2002) in their study conclude that in order to communicate

effectively with rural audiences, it was important to understand the aspirations, fears and

hopes of rural customers, in relation to each product category, before developing a

communication package to deliver the product message.

Ranganathan (2003) found that in the area of communication, companies have

perhaps failed to recognize that a rural consumer may be buying a particular brand or

even the product category itself (particularly durables) for the first time. With hardly any

key influencer within the village and few sources of information (since print and

electronic media have limited reach), the rural consumer felt inhibited and ill equipped to

buy confidently.

Mona (2004) found that one way could be using company delivery vans which

can serve two purposes- it can take the products to the customers in every nook and

corner of the market, and it also enabled the firm to establish direct contact with them

thereby facilitating sales promotion. However, only the bigwigs can adopt this channel.

The companies with relatively fewer resources can go in for syndicated distribution

where a tie-up between non-competitive marketers can be established to facilitate

distribution.

Babu (2005) found that the problems of physical distribution and channel

management adversely affected the service as well as the cost aspect. The existent market

structure consisted of primary rural market and retail sales outlet. The structure involved

stock points in feeder towns to service these retail outlets at the village levels. But it
became difficult maintaining the required service level in the delivery of the product at

retail level.

Shrivastava (2006) found that there were several challenges confronting sales and

marketing executives in the rural domain. There was a strong need for regionalization.

The entire sales delivery should preferably be in the local language. This called for not

just the translation of sales and marketing content but also customization of the same to

suit the regional cultural sensitivities.

Rajan (2007) noted that along with customising the communication for them, it

was also important for brands to customise their product offerings. Hence, it was

important for a brand as well as the agency to test the communication plan exhaustively

before embarking on a national scale. It was important for any brand to test the campaign

before as well as after it was executed to understand and measure the audience

consumption patterns.

Samir Gupte (2008) pointed out that various parts of the country could be

classified into regions that were media-dark, media-grey and media-live. In addition to

this, many parts of India did not have electricity for major parts of the day. Moreover, on-

ground rural media was used mainly as a supplement or a complement to other media.

Dhumal et. al., (2008) found that the buying behaviour of rural consumers was

more bounded by the tradition, customs and values which brought a gigantic change in

the life style and personality of the consumers in rural areas. Rural markets were under

developed and the consumers were also less aware of new brands. Language

diversification was also a problem as India never had a common language; it was a

barrier in effective communication in rural areas.

 Sharma (2009) found that the in rural India, consumers were not brand-loyal, but

their purchase patterns can be termed as ‘brand stickiness’. So continuous efforts were

taken for creating brand awareness for rural consumers would be a critical problem faced

by the companies in rural marketing.

Lokhande(2010) pointed out that women, children, Sarpanch, village elders,

teachers, religious leaders, self-help groups and youth clubs were important influencers

for the rural consumers. In this vast country which was the cornucopia of several cultures,

disparities exist even among consumers within the same state, but settled in different

regions. Hence, it required a much more detailed understanding of the target audience

and customisation of the communication for a rural market as compared to an urban

audience, which can be classified according to a limited number of factors.

Singh, et.al.,(2011) found that the major challenges to rural marketing included

poor transportation, poor communication, non availability of appropriate media, problem

of warehousing, problem of branding and packaging. They also found that rural people

have become more value conscious than price and the rural market had a grip of strong

country shops, which affected the sale of various products in rural market.

2.7. Research Gap

From the above literature review, it has felt some of the gaps which could be

certainly carried out in the present research. The previous research studies on rural

marketing were carried out in marketing mix, brand awareness, brand preference, factors

affecting consumer’s purchasing pattern, consumer’s perception, customer satisfaction,

marketing strategies, promotional strategies and problems in marketing of various

products and services in automobile industrial products, electronic goods, soaps and

pastes and few other FMCG products in various parts of the country.

The research gaps has been identified and included in the present research are:

opportunities and challenges for FMCG produced by MNCs, impact of promotional and

marketing strategies adopted by MNCs for marketing of FMCG, consumer behavior of

FMCG and brand awareness and preferences of consumers for FMCG especially for

personal care products, home care products and food and beverage products of Hindustan

Unilever Limited, Procter and Gamble and Nestle in Southern Tamil Nadu. With the help

of critical reviews of earlier research studies, the appropriate objectives and hypotheses

have been formulated for the present research.

2.8. Conclusion

With this background, the present study has been designed suitably to study the

integrated rural marketing strategies and challenges for MNC’s with special reference to

Southern Tamil Nadu. Through the extensive literature survey, it has also found the

research gaps and those gaps have also been included in the present research. The

research framework, questionnaire construction, research design, sampling procedure and

data analysis from the various previous research studies have been understood and the

suitable methodology has also been applied for the present research.