Rural Consumer Behaviour1 Wwwmanagementsourceblogspotcom

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By ex-TYBMS students.
Rural Consumer Behaviour
Consumer Buyer Behaviour refers to the buying behaviour of final

consumers - individuals and households who buy goods and services
for personal consumption. All of these final consumers combined make
up the consumer market.
The consumer market in this case is Rural India. About 70% of India's
population lives in rural areas. There are more than 600,000 villages in
the country as against about 300 cities and 4600 towns. Consumers in
this huge segment have displayed vast differences in their purchase
decisions and the product use. 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 influencing buying behaviour
The various factors that effect buying behaviour of in rural India are:
1. Environmental of the consumer - The environment or the

surroundings, within which the consumer lives, has a very strong
influence on the buyer behaviour, egs. Electrification, water
supply affects demand for durables.
2. Geographic influences - The geographic location in which the

rural consumer is located also speaks about the thought process
of the consumer. For instance, villages in South India 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.
3. Influence of occupation – The land owners and service clan buy

more of Category II and Category III durables than agricultural
laborers/farmers.
4. Place of purchase (60% prefer HAATS due to better quality,

variety & price) Companies need to assess the influence of
retailers on both consumers at village shops and at haats.
5. Creative use of product ex Godrej hair dye being used as a paint

to colour horns of oxen, Washing machine being used for
churning lassi. The study of product end provides indicators to
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the company on the need for education and also for new product
ideas.
6. Brand preference and loyalty (80% of sale is branded items in 16

product categories)
Cultural factors influencing consumer behaviour
Cultural factors exert the broadest and deepest influence on consumer

behaviour. The marketer needs to understand the role played by the
buyer's culture. Culture is the most basic element that shapes a
person’s wants and behaviour.
In India, there are so many different cultures, which only goes on to
make the marketer's job tougher. Some of the few cultural factors that
influence buyer behaviour are:
1. Product (colour, size, design, shape): There are many examples

that support this point.
For example, the Tata Sumo, which was launched in rural India in
a white colour, was not well accepted. But however, when the
same Sumo was re-launched as Spacio (a different name) and in
a bright yellow colour, with a larger seating capacity and ability
to transport good, the acceptance was higher.
Another good example would be Philips audio systems. Urban

India looks at technology with the viewpoint of ‘the smaller the
better’. However, in rural India, the viewpoint is totally opposite.
That is the main reason for the large acceptance of big audio
systems. Thus Philips makes audio systems, which are big in size
and get accepted in rural India by their sheer size.
2. Social practices: There are so many different cultures, and each

culture exhibits different social practices.
For example, in a few villages they have common bath areas.

Villagers used to buy one Lifebuoy cake and cut it into smaller
bars. This helped lifebuoy to introduce smaller 75-gram soap
bars, which could be used individually.
3. Decision-making by male head: The male in Indian culture has

always been given the designation of key decision maker.
For example, the Mukhiya’s opinion (Head of the village), in most

cases, is shared with the rest of the village. Even in a house the
male head is the final decision maker. In rural areas, this trend is
very prominent.
4. Changes in saving and investment patterns From gold, land, to

tractors, VCR’s, LCV’s
The Differences in Buyer behaviour
Rural Urban
Conservative Innovative
• Values, aspirations, needs - • Follow trends
traditional and based on (including International)
culture, social customs, beliefs
Eldest Male Member KDM Varies
Collective Sanction Unheard of
Brand Protection in India

This is the latest initiative by the consumer goods industry in India in
association with Federation of Indian Chambers of Commerce and
Industry to fight a long standing menace - that of counterfeits and
pass-off products.
Be it Soap, shampoo, toothpaste or hair oil, biscuit, soft-drink or
confectionery, batteries or balm - go to any market in India and you will
find a plethora of products that are available in look alike packages
under slightly twisted names – Fair & Lovely could be Pure & Lovely or
a Parachute could be Parashudh. The packaging, color and design of
the pass-off product is so similar to the original, that it is impossible to
distinguish between the two if you are not the sort who reads product
names before picking them up. Leave alone the vast uneducated
masses that live in this country, hardly any of the educated informed
consumer would also be in a habit of verifying the accuracy of the
product name or manufacturer before buying goods at the local kirana
shop. A recent study conducted by AC Neilson reveals that 80% of
consumers realize they have brought a counterfeit or fake product only
after they have consumed it. And there may be a large number of
those who never realize the same even after consumption!
While the problem of fakes is witnessed all across the country, it is
more severe in the North. Counterfeiting is rampant in the states of
Delhi, Punjab, Haryana and UP. Procter & Gamble, which has embarked
on a major drive against counterfeits of its popular Vicks Action 500
brand, found through a study that 54 strips in every 100 strips of
Action 500 being sold in the market were counterfeits. The company’s
sales growth in this sector has been stated to have been affected by
10% due to this menace of counterfeits. Counterfeits and pass-off
products are reportedly affecting sales of several brands to the extent
of 20-30%. It is estimated that the counterfeit products contribute to
about Rs17bn worth of sales of the Rs60bn FMCG market. Government
would be losing almost Rs6bn in revenues that would have been
generated on excise, octroi, sales and income taxes that would have
been paid on these sales. For companies, besides loss of revenues, an
even greater loss would be through damage to brand reputation or loss
of customer loyalty caused by the poor quality of these look alike
brands. And the customer unwittingly is using products that may
sometimes cause bodily harm or even danger to life.
The problem of counterfeits is not confined to India alone. It is
estimated that counterfeits account for Rs200bn i.e. about 5-7% of
total world trade.
The consumer goods industry in India has therefore come together to

launch on offensive against these unscrupulous players. A Brand
Protection Committee has been formed under the aegis of the
Federation of Indian Chambers of Commerce and Industry
(FICCI). The Mission of the Committee is to stem the sale of
counterfeits and fakes in India. Directors of leading consumer non-
durable companies such as P&G, HLL, Marico, Smithkline Consumer,
Britannia, Indian Shaving and research agencies such as A C Neilson
and CERC are members of the Brand Protection Committee. The
committee aims to work in close conjunction with industry, consumer
associations, trade associations and regulatory authorities to eliminate
counterfeit and pass-off sales in the country. The Committee proposes
to focus on enforcement of applicable laws, measure and publicize
negative economic impact of counterfeits and create consumer
awareness, and take action against errant manufacturers, wholesalers,
distributors and retailers with the help of regulatory authorities. This is
a concerted effort on part of the FMCG industry to stem the loss that
accrues to the companies, the Government and the consumers.
The problem of fakes is more rampant in rural areas due to low literacy
levels and consumers reliance on product identification through
pneumonics. Companies are trying to educate customers to look for
certain packaging identification marks before purchase.
A brief summary of a study conducted by ORG-MARG is given
below.
Aug 2000 – Jul 2001
No. of No. of
BRANDS look alike Volume Dealers Major States
Brands (Lacs)
Dabur Vatika 2 148 K.L 1 Pun/Har, Assam
Del, Assam, Bihar,

Clinic All Clear 38 1099 K.L 1
M.P.
Surf Nw Exl Act Bihar, W.B., Guj, M.P.,
5 1837 11
Oxg Maha
Horlicks 2 1276 - Assam, Karnataka
Colgate Dental
9 2190 T 20 W.B., Bihar, M.P.
Cream
Colgate Tooth
6 1009 28 Assam, Bihar, Maha
Powder
Dabur Amla 34 9893 K.L 14 Raj, U.P. Pun / Har
Panteen Pro-V
7 733 K.L 4 U.P., Bihar, Guj, M.P.
New
Ariel Power
4 200 9 Assam
Compact
Iodex 26 755 9 U.P., Guj, M.P.
Product Strategy: This is a strategy which companies apply to

their product according to the market needs and the target group. It is
a strategy which best suits the company and also targets the consumer
of that particular region. Some product strategies are such that they
encapsulate the whole of rural India.
e.g.: Coca-Cola targeted the whole Indian rural market with the
positioning of “Thanda Matlab Coca-Cola” advertisements because
most of the villagers say when wanting a drink refer to it as Thanda……
so Coca-cola used that word.
Product Market Selection: While launching product variants for

different markets, a company has to consider two things:-
- Reach: the company must ensure that the rural area they are
targeting should be easily reachable by road and should also be
well connected with a major town nearby. This is important
because regular supplies have to be transported to the village
from the major town.
- Cost-effectiveness: in order to supply to the village area, a
company must assess their costs and other charges so as to
maximize returns. Only if cost-effective, must the market be
selected and product variants (if any) be launched.
Product Features: this is the most important factor in reinforcing

positioning because rural folk will purchase products only if they have
functional benefits and features that appeal.
- The consumer should experience the product benefits. They
should be able to use, touch and feel the product, and benefit
from the it, only then will they buy it again.
- Demonstration: an example of this would be Colgate showing
video films wrestler with a weak tooth; highlighting the
importance of oral hygiene; and other examples would include
free shampoo washes, etc. and companies can get very
innovative with their demonstrations.
- Product Education: companies need to educate the rural
consumers about their products and their advantages. E.g.
Colgate Palmolive shows video films on oral hygiene to the rural
masses.
Most of the companies build their strategy linking consumer
perceptions and their product features.
- Size: sizes are altered or increased in accordance with the
consumer perceptions which can be found out by surveys and by
in depth interviews with the rural consumer. E.g. torches and
audio systems, Tata Spacio was a bigger rural version of the Tata
Sumo.
- Shape: companies have changed product features like wide
bodied cookers with handles on both the sides for ‘chulha’
cooking.
- Colour: an example would be that mostly all hair oils are green in
colour. Tata launched the Spacio in a bright yellow colour.
- Consistency: Cadbury came out with harder chocolates so as to
delay the melting process.
- Taste: the villagers’ tastes and preferences should be
incorporated in food items.
- Technology: companies came out with better technology to
enable their products to perform better under the tough rural
circumstances. E.g. Philips eye-fi (to improve satellite reception),
LML scooters with stronger suspension, electronic instruments to
withstand voltage fluctuations and Philips also came out with
power free radios.
Packaging: (Sachets, bubble packs) Packaging of the product

largely depends on these factors:
- Affordability: companies should consider the fact that rural
consumers largely depend on daily wage. A product should be
packaged by keeping this in mind. E.g. Videocon came out with a
washer priced at Rs. 3000.
- Perceptions: social and cultural perceptions should be taken care
of while packaging the product. Eg. Tata Spacio came out in a
bright yellow colour and not in the traditional white colour
because the rural people in some parts of India perceive white as
a symbol of death.
- Ability to read: the product should be packaged so that the rural
consumer should identify it. since literacy levels are low symbols,
logos and visuals are important associating it with a symbol. E.g.
lightning picture of Rin.
Pricing: pricing should be kept in accordance with the financial
strength of the villagers or the people one aims to target. One
should remember that a major part of the rural consumer base earn
a daily wage, so their savings are minimal. A company should not
emphasize on price but on value. It should provide value to the rural
consumer for the least possible price.
The Consumption Basket of the villagers is allocated among
different needs among the villagers and they prioritize and spend
their meager earnings.
Examples of good pricing strategies are Philips 14” TV for Rs. 8000
which provides good value for the price and Videocon washer for Rs.
3000.
THE MARKETING PROCESS
The markets for different products vary largely in size in rural areas.
The sizes of the markets for the different sectors in rural markets are
shown below:
• FMCG – Rs. 50,000 Crore.
• Durables – Rs. 5,000 Crore.
• Agricultural Inputs – Rs. 45,000 Crore.
• Automobiles – Rs. 8,000 Crore.
The automobile sector is growing at a rate of 25 – 30 %.

The following table shows the extent of rural sales by select
companies.
HLL 50 %
COLGATE 50 %
GODREJ 30 %
MARICO 25 %
CADBURY 25 %
GSK 25 %
HEINZ 20 %
CIPLA 18 %
HERO HONDA 40 %
KINETIC 30 %
THE SEGMENTATION PROCESS

- This process includes:
- Identification of the segmentation variable,
- Segmentation of the market, and,
- Development of the profile.
The different variables are:

1. GEOGRAPHIC: Segmentation on the basis of geography is done
depending on various factors such as
Region: North, South, East and West.
Village Size: < 500 people
501 – 2000 people
2001 – 5000 people
> 5000 people
Proximity to the feeder town
Density: The no. Of people per sq. km
Climate: Moderate, rain fed or dry with scanty rainfall.
Level of Irrigation: Whether good, moderate, scanty or none at
all.
2. DEMOGRAPHIC: Segmentation based of demographics takes into
consideration factors such as Age, Income, Occupation, Literacy
(Level of Education) and Caste.
3. PSYCHOGRAPHICS/BEHAVIOURAL: Such segmentation is done
using variables such as Lifestyle of the people, (whether rigid,
traditional, changing or imitating urban), Occasion, (whether on a
regular day or a special occasion), Benefits sought from the
product (such as Quality, Price and Service), and Loyalty to brands,
(whether Low, Medium or High.)
Rural Consumers majorly look into the value that the product offers.
They associate value with the Benefits that the product offers, its
Availability, and its Cost. When talking of Benefits, they look at the
features of the product as well as the Packaging and attractiveness,
Availability, whether or not the products are available at Retail Shops
and Haats, Cost, whether or not the product is reasonably priced.
Rural Consumer – Occupation,

income, Culture, Perception, Attitude
Benefits Availability Cost

Product features Retail Shops Price
Packaging Haats
Value
Rural Branding
It is the process of creating and disseminating the brand name so that
it is instantly understood by the customer. It is different from branding
in rural areas as there people don’t understand English names of
brands. They rather associate the product with the picture on the
package. E.g. “Laal sabun or red soap for lifebuoy.”
Creating an Identity – under this process an identity is created in the
minds of the customer. E.g. ‘TATA Namak – Desh Ka Namak’ here what
TATA has done is they have given the salt a national image. They have
associated it with the country and as a result rural consumers tend to
connect with it and trust it more & they also remember it well.
Enhance Recognition – The brand should be recognizable to the

consumer and create top of the mind (TOM) consumer recall. E.g.
Fevicol ‘majboot jod’.
Building a brand Image – The brand should have a personality of its

own. E.g. Mahindra & Mahindra has built its brand image in the tractor
sector. Bhumiputra series of tractors, Sarpanch series have done very
well in the rural areas. Brand name has connected well with villagers.
Marketing Tips
- Target consumers on unmet needs vis-à-vis price, products, and

features.
- Develop the market through a unique positioning.
- Product and packaging should be creatively used for delivering
VALUE and influencing perception.
- Product features can be communicated effectively to create a
favorable attitude.
- Distinct colours, designs, symbols help illiterate consumers to
identify the brand.
- Leverage strengths e.g. distribution (e.g. Wheel) or costs (Nirma) to
deliver the value offering.
- For high-priced durables, the market can be enlarged through hire-
purchased schemes.
Researching the Rural Markets
- Marketer has limited understanding of the rural consumer.

E.g. The consumer research people in the rural areas of the south find
researching very difficult as the people do not answer in Hindi. As a
result the marketer should make note of such points in order to market
his product well.
- Consumer responses to variables in urban markets may need to be
unlearned. The rural consumer must be handled differently due to
the vast psychographic difference.
Essentials (points to remember)
Sceptism of villagers – the villagers do not trust a person from a big

company. Some people do not even answer an official well. Thus when
marketing, promoting or advertising a product, one should take care
that it is done in the regional language. This makes the customer
willing to listen or see.
Informal (Dress, Greeting) – Dressing at the first meet should be very

informal in order for them to receive u well. Informal greeting helps
generally researchers to get information out of rural consumers.
Be a good listener and always explain the objective of the research at

the outset.
Don’t write down too much as it again creates doubts in the minds of
the consumer.
Never refuse their hospitality. It feels like an insult to them when

someone does so.
Locations for Conducting Research
- Retail shops, STD booths

o Women – one can have a direct one to one conversation
with women at retail shops as they are generally there for
shopping.
o One stop shop – generally such stores provide almost all
requirements of a villager.
o Retailer is usually well informed about the village
- Tea stall
o Middle age people generally sit around such places and
chat
o At such places there are many conversations and one can
indulge into one or create one.
- Play ground
o Youth (morning/evening) – one finds young people playing
at the ground or exercising.
o Watchers
- Chaupals
o Evenings: middle aged and old people meet together at a
certain spot in the village and discuss things about the
village. This is a rather informal meeting of the villagers.
o One can easily find influencers and opinion leaders from
amongst people who are talking.

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For ManagementParadise.

Consumer Buyer Behaviour refers to the buying behaviour of final

Thus, it is important to study the thought process that goes into

Factors influencing buying behaviour

1. Environmental of the consumer - The environment or the

2. Geographic influences - The geographic location in which the

3. Influence of occupation – The land owners and service clan buy

4. Place of purchase (60% prefer HAATS due to better quality,

5. Creative use of product ex Godrej hair dye being used as a paint

6. Brand preference and loyalty (80% of sale is branded items in 16

Cultural factors influencing consumer behaviour

Cultural factors exert the broadest and deepest influence on consumer

1. Product (colour, size, design, shape): There are many examples

Another good example would be Philips audio systems. Urban

2. Social practices: There are so many different cultures, and each

For example, in a few villages they have common bath areas.

3. Decision-making by male head: The male in Indian culture has

For example, the Mukhiya’s opinion (Head of the village), in most

4. Changes in saving and investment patterns From gold, land, to

The Differences in Buyer behaviour

Brand Protection in India

The consumer goods industry in India has therefore come together to

Dabur Vatika 2 148 K.L 1 Pun/Har, Assam

Del, Assam, Bihar,

Horlicks 2 1276 - Assam, Karnataka

Dabur Amla 34 9893 K.L 14 Raj, U.P. Pun / Har

Iodex 26 755 9 U.P., Guj, M.P.

Product Strategy: This is a strategy which companies apply to

Product Market Selection: While launching product variants for

Product Features: this is the most important factor in reinforcing

Packaging: (Sachets, bubble packs) Packaging of the product

The automobile sector is growing at a rate of 25 – 30 %.

THE SEGMENTATION PROCESS

The different variables are:

Rural Consumer – Occupation,

Benefits Availability Cost

Enhance Recognition – The brand should be recognizable to the

Building a brand Image – The brand should have a personality of its

- Target consumers on unmet needs vis-à-vis price, products, and

- Marketer has limited understanding of the rural consumer.

Essentials (points to remember)

Sceptism of villagers – the villagers do not trust a person from a big

Informal (Dress, Greeting) – Dressing at the first meet should be very

Be a good listener and always explain the objective of the research at

Never refuse their hospitality. It feels like an insult to them when

Locations for Conducting Research

- Retail shops, STD booths

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