RURAL CONSUMER

BEHAVIOR

“There is an invisible market waiting at the bottom of

the world economic pyramid”- C.K Prahalad

Content

• Introduction

• HUL Lifebuoy Case

• Buying decision process

• Factors influencing Decision

making process

• Buyer characteristics

• Buying behavior pattern

• Brand loyalty

• Innovation adoption

Introduction

• What comes from Rural India

• 70% of India’s population

• 56% of income

• 64% of expenditure

• 33% of savings

• 54% FMCG sales

• 59% durables sales

• 10-50% of 2 wheeler and 4 wheeler sales

In recent years, HLL’s

focus on differentiating

products based on a

health platform-

diarrhea

Hands are the

main reason for

any disease

The hand washing habit

differs in urban areas

and rural areas

Change

consumer

behavior and

beliefs

media

Group research

and observation

interview

Teamed with O &

M to design a

behavior change

education

campaign

focused on

uniting health

attribute

BUYING DECISION

PROCESS RURAL MARKET

Need Recogni-

tion

Informa-tion

Search

Evalua-tion of

Alternat-ives

Purchase Decision

Post Purchase Behavior

1. Need Recognition – High involvement product,

productivity drives consumer’s recognition for need.

2. Information Search – From opinion leaders and

influencers. Fuelled by exhibitions and road shows.

• Sources

- Personal

- Commercial

- Public

- Experiential

3. Evaluation of Alternatives – Depends upon the type of

product- convenience or shopping. More importance to price

and quality and operational advantages respectively.

• Evaluation Models

- Expectancy Value Model

o Identifies necessary attributes.

o Evaluates relative importance of each.

o Arrives at overall brand impression for further comparison.

- Lexicographic Model

o Attributes arranged in order of priority.

o Selection made if first attribute is satisfactory.

o If not, second attribute forms the basis for evaluation.

- Conjunctive Model

oConsumer selects product that satisfies the integral attributes.

- Disjunctive Model

oA brand is selected that has satisfying levels of a chosen

attribute.

4. Purchase Decision – collective decision guided by the

perceived risks associated with the product plus the key

influencers.

• Perceived Risk Factors

- Personal

- Product

- Information availability

- Financial

- Situational

5. Post Purchase Behavior – higher satisfaction and

lower dissonance. Risk taking and expectation level is

low.

Customer satisfaction is the key to building a profitable

and sustainable relationship with customers.

Marketer Implications

• A prudent marketer should take initiatives that can assist the

consumer in his decision making process and thereby gain from

the consumer’s behaviour.

• The marketer should become connected with what excites the

consumers most and try to find out ways to direct their

behaviour

Environmental Factors Influencing the

Decision Making Process:

1. Sociocultural

2. Technological

3. Economic

4. Political Environment

S

T

E

P

Overview of Topic

• Socio Cultural Factors

a) Culture

b) Social Class

• Groups

a) Associated Groups

b) Reference Groups

c) Opinion Leaders

• Family

a) Family Orientation

b) Family Size

c) Family as a buying unit

• Sociability

a) low sociability villages

b) High Sociability villages

Socio Cultural Factors: (a) Culture: (Behavior, Norms, Belief, Values and Customs)

1.Collective Process: Collective Social Sanction (Wisdom of

elders, advice of educated, suggestion of leader’s)

2. Values: They value simplicity, honesty, unity and hard work

(Escorts Villages, Nirma Villages)

3. Customs & Traditions: Local Myths, Belief in religion and

Worship, marriage systems, joint family systems

4. Social Norms: “Respect for elders", "Save for future", "Don’t

Lend or Borrow", "Be Simple and honest", "Service to humanity is

Service to god",

These Norms Guide rural customers Decision making

IMPLICATION FOR THE MARKETERS:

1. Conservative in their outlook

2. Take longer time to get influence

3. Traditional ceremonies and social norms can be regarded as

opportunities

4. Occasions for purchases must be utilized

Social Class (Rural Customers are

Heterogeneous Based on their incomes)

1. Lower income Group: (Leased Land Farmers and Labors):-

Buy's Essential commodities “Food, Clothing, Shelter"

2. Middle Income Group Members: (Shop Keepers and Small

Business man):- Sewing Machines, two-wheelers, Mixer-Grinder

and refrigerator or a piece of land (Income Yielding asset)

3. Upper Middle Income Group: (Govt Teachers, Doctors,

Engineers, Officer )Close Substitutes of Premium Products.

4. Higher Income Group: (Sarpanch, Landlord’s, Contractors)

IMPLICATIONS OF MARKETERS:

1. Make Them Spend On Consumables

2. Providing Value for money products

3. Improvement of lifestyle rather than spending

on assets like gold and jewelry

4. Stimulus creation with the help of Media.

Groups

Rural people live in small group/communities detached from

mainstream of urban life. (They have close knit relationships)

(a) Associated Groups:

1.Primary Groups: Informal groups regular and influential (family,

friends and neighbors)

2. Secondary group: Formal Groups (Offices, Political groups

and self-help groups) Ex. Yuvashakti Groups, D.W.A.C.R.A.

(Development of Women and Children in Rural Areas)

(b) Reference Groups : ( aspirational groups (sport teams,

Cultural associations)

Groups Contd.

Types of influence: • Informational influence: Fellow members use the same products

• Normative influence: Serves the hedonic needs and is utilitarian

• Identification influence: Provides vale expressive influence

(c) Opinion Leaders: • Sarpanch, Teacher, Village Development Officer, Doctor, Social Worker

IMPLICATIONS OF MARKETER’S:

1. Making use of group Dynamics

2. Spotting opinion leaders

3. Positive word of mouth

4. Colgate Tapped into school teachers to reach school kids

"Bright Smiles Bright futures Programmed"

Family

Family: A Collective Organization of peoples serving various

purposes

• Family Orientation: It is very strong in rural areas. Children

shape their values and perceptions by observing and socializing

with Parents.

• Family Size: It is a key factor in rural India joint family structures

are an attractive proposition for marketers

1. Family as a buying unit makes a buying decision.

2. Traditional S.R.O. (Sex Role Orientation)-Husband

predominated in all family affairs.

3. Nuclear and extended families are coming in picture.

4. Older and educated children are influencing their parents

brand choices by virtue of their exposure.

IMPLICATION FOR MARKETER

• Need to recognize various family sizes

• Structure of influence in decision making

• Target promotional communication to the right members

Sociability

1. Interaction is the most common and prominent

phenomenon

2. People like to share as much with as many as possible.

3. Interaction is frequent with same people richness of

interaction is limited

4. villages now have access to television internet and

newspapers which has impacted sociability of people.

5. various organization's, Political, NGO'S, Anganwadi

Workers, N.S.S. (national social service) has improved

community relations.

IMPLICATION FOR MARKETER’S

1. Various Programmes for low sociability villages & High Sociability

villages(corridor and accessible villages)

2. Companies like HUL and Colgate have rural educational

programmes.

3. Extended reach to the remote villages through local bodies.

4. Example: Shaktivani Programme (educates rural communities about

basic health practices)

TECHNOLOGICAL FACTORS

• Biotechnology Development’s: BT Crops have increased per

hectare and reduced the cost of seeds.

Monsanto India is providing G.M. seeds and various other

services to farmers.

• Digital and satellite technologies: Increased penetration of FM

Radio, TV’s, Video Cameras, Cameras are slowly becoming part

of rural world

• Information and communication technology Revolution:

Today more then 15 million villagers know about internet. People

Seek various information from internet like Govt. Schemes, Job

Opportunities, Career Counselling, Land Records Etc.

TECHNOLOGICAL CHANGES OVER TIME Aspect Traditional Modern

Agriculture Bullock cart,

Low-Yeild

Seeds,

Conventional

Manure

Tractors,

Harvesters,

G.M. Seeds,

Pesticides,

Fertilizers,

Pump Sets,

Motors,

Generators

Lifestyle Neem Sticks,

Bicycle, Post

Cards

Tooth Paste,

Two-Wheelers,

Mobile Phones

ECONOMIC FACTORS

• The entire economic environment shows a much

improved prosperity due to new and improved techniques,

higher quality of inputs and increasing awareness and

education on agriculture.

• Banking is reaching out to the door steps of more and

more farmers. Finance is now more readily available and

so is credit.

Impact of globalization

Influence of competition

Influence of recession

Impact of inflation

Availability of micro credit.

Political Factors

The fortunes of rural people are greatly influenced by the

decisions of ruling party. Schemes launched by

government has led to the development of rural areas. The

government of india is empowering the panchayti raj and

other village institutions by making available developmental

funds. This has resulted in major purchases of equipment

and materials needed for infrastructure development.

30% compulsory representation of women in local bodies is

leading to the empowerment, encourage in rural india to

explore income generation and entrepreneurial activities.

Buyer characteristics

The characteristics of the buyer that affect the buying

process include

• Age and lifecycle stage

• Occupation

• Economic situation

• Lifestyle

• Personality and self concept

• Psychological factors

Age and lifecycle stage

Consumption by age and lifecycle stage

Age Lifecycle stage products

Up to 12 Child Baby foods, diapers, shampoos, toothpaste, toys,

slate ,books , pencil ,noodles, etc.

13 to19 Teenage Two- wheelers, cycle, gym and yoga services

20 to 40 Young Readymade garments ,cellphone ,motorbikes

,computers ,TV , services for communication skills

and for appearing in competitive examinations

40 to 60 Middle – aged Credit cards, bank accounts, etc

Above 60 Old Books, medicines, old-age homes, TV , etc

Cont’d • Children - favored consumer

India has the largest kid segment in world

Children as a decision maker

• Youth – liberated consumer

• Key characteristics of the youth are:-

• They have urban exposure and brand

knowledge

• Users of internet

• Consumption oriented

• Ambitious

Occupation

Goods and services bought by a person are influenced by

the occupation of the individual.

Economic situation

Rural economy is basically savings oriented due to

• Uncertainty

• Long gap in realizing agriculture income

Implications for marketers

• Offer low priced pack sizes

• Pricing the goods moderately

• Offering installment purchase scheme

• Giving heavy discounts or incentive goods with purchase

Lifestyle

Lifestyle is a person’s pattern of living and it is determined

by :-

• Activities

• Interests

• Opinions

• Expressions like “quality of life” and “lifestyle” becoming

popular.

Personality and self concept

Two aspects to be considered to relate personality to the

products people purchase are –

• Situation

• Person

Psychological factors

The three psychological factors that help describe what

goes on in the mind of consumer:-

• Perception

• Cognition

• Motivation

Perception

• It is the process by which people select, organize and

interpret information to form meaningful pictures of the

object.

Implications for marketers

• Try to create positive impressions

• Consumer centric

Cognition Process of information gathering and processing and results in learning and creation of knowledge and attitudes.

Knowledge helps make decisions

• Learning is slow and step by step

• Non verbal communication

• Subject is simple and not abstract

• Learning is by experince

Beliefs and attitude

Beliefs - based on knowledge, opinion ,faith or emotion

Attitude -

• Functionality is more important than style and frills

• Multiple uses of a product

• Any product is ok

Motivation

• Maslow (theory of motivation)

Self actualization- krishi pandit award

Esteem needs- refrigerators, coolers, jeeps

Social needs- entertainment equipment's, kitchen appliances

Productivity needs- tractors, cycle, insurance, two wheelers

Basic needs – houses, seeds, agriculture implements, bullock carts

Differences

• Value for money

• Don’t trust outsiders easily

• More brand loyal- the literacy level is low they recognize

the brand more through colour, symbol and logo.

• Traditional values, customs and perceptions have a

stronger hold on the rural customers than urban

customers

Buying behavior pattern

Buying behavior can be

explained on 2 factors

1) Degree of involvement

2) Time spent

1. Degree of involvement

DIFFERENCE AMONG

BRANDS

INVOLVEMENT LEVEL

HIGH LOW

SIGNIFICANT COMPLEX VARIETY

SEEKING

FEW DISSONANCE

REDUCING HABITUAL

Complex buying behavior

• Seen in case of products such as computer, refrigerators

and automobiles.

• Help consumer learn about the product.

• Comparative analysis of features and benefits in print

media

• Train and motivate sales personnel.

• Generate word of mouth advertising

• Influence word of mouth.

Dissonance reducing behavior

• Products like carpet and furniture are expensive and also

they have few difference.

• Reflect their social status and lifestyle

• Appearance and performance is what matters

• Marketers should give them right amount of logical

information.

• Ads should be frequently released.

Habitual buying behavior

• Products like salt, wheat, cigarette and pan masala where is involvement is very low and low cost.

• Customer is not bothered about brand

• Do not postpone the purchase

How to market them?

• Rationale: raising the consciousness level in individuals, relate to the benefit of the product. E.g.- Medimix

• Emotional: associate with it emotions like love fear, jealousy. E.g.:- Wills- made for each other.

Variety seeking behavior • When purchasing is less expensive and frequent.

Products have significant difference.

• A consumer prefers to buy a different items of same brand

or different brands to experience a different sound, smell,

touch and taste.

• Brand switching occurs because of dissatisfaction arising.

marketers

availability

attraction

variety

II. Amount of time spent

Planned Buying

Emergency Buying

Impulse Buying

Brand loyalty

• First impression- pioneer creates a lasting impression

• Lack of alternatives- the entry of new brands in the

rural market is a difficult proposition.

• Perceived risk- does not easily switch brand due to

fear associated with trying a new brand

• Collective decision- belonging to relative closed

societies, rural consumers are slower to adopt new

brands,.

Innovation Adoption

• Buyer show different degrees of readiness to adopt them.

Time Lag in

Adoption

Groups Probable consumer

No Innovator A farmer better educated and more

efficient

Very less Early adopter Efficiency conscious farmer with

adequate resources

Less Early majority A hesitant but adaptive farmer with

moderate resources

Large Late majority Less efficient farmer with moderate

resource

Very large Laggards Less efficient farmer with meagre

resources.