Saturday, July 19, 2008

Consumer Behaviour & Decision Making Process

India’s way is not Europe’s. India is not Calcutta or Bombay. India lives in her seven hundred thousand villages. (Mahatma Gandhi, 1926.)

Every business activity begins with an attempt to understand the consumer. What are the consumers’ desires and requirements? How do they behave in the market place while they seek to fulfill their desires? How the firm can develop and create need satisfying products to generate the greatest consumer satisfaction as well as corporate return? With urban markets being saturated for several category of consumer goods and with rising rural incomes, marketing executives are fanning out and discovering the strengths of the large rural markets as they try to enlarge their markets. Today the idea has grown of its infancy and dominates discussions in any corporate boardroom strategy session. Adi Godrej, Chairman of the Godrej Group, unhesitatingly proclaimed, “It is a myth that rural consumers are not brand and quality conscious.” Since the liberalization and growth of Indian economy in early 1990s, the Indian rural consumers are witnessing an increasing exposure to new domestic and foreign products. In fact, it is larger than the urban market for both FMCGs (53% share of the total market) and durable (59%). Today large number of businesses are diversifying their focus on rural market while aligning their strategies to meet the demands of the high volume customers there. India's rural majority today accounts for more than US$100 billion in consumer spending, making them by far the biggest buyers in the country and contributing significantly to India's gross domestic product. However, despite enhanced socio-economic status of the rural community, the rural penetration rates are low, due to lack of strong business system infrastructure, high cost and geographical notabilities, thus offering tremendous potential for growth. It is rightly observed by C. K. PRAHLAD, THE MANAGEMENT GURU, “Selling to the poor may be more profitable than selling to you and me. This is where the future is. Opportunities are every where. The digital divide is not about lack of opportunity, it is about the lack of imagination.” Success in rural marketing calls for a sound network and a thorough understanding of the rural psyche. (Godrej black hair dyes were used on buffaloes in Raichur so as to give them a presentable look in the village haats.)

From the age of “Buyer Beware” the Indian consumer is progressively moving into the concept of “ Seller Beware”. This is also true for the rural consumers as compared to their urban counterpart who are exposed more to all the information at the click of the mouse. A rural consumer may be illiterate but he is intelligent and very conscious of value for money and expects good value in return. In recent times, Indian consumers are at a point where there is multiplicative effect of income growth, aspiration to consume and changed consumption friendly ideology, particularly in rural India. The buying behaviour of rural consumers are of special interest these days to the marketing analyst because rural India is zealously consuming everything from toothpowder to motor cycles. The purchase decisions in Indian homes have become a collective process with women and teenagers playing the vital role on product and brand choices. It is the joint process in the family where woman being the initiator, man the financier and child the influencer. To understand rural buying behaviour a marketer must comprehend the factors that influence buying behaviour and the variations present in behaviour. The behaviour variations that are unique to rural markets are influenced by the place of purchase and occupation and sometimes get reflected in the creative application or use of products. They exhibit different purchase behaviour as compared to their urban counterpart. Thus the understanding of rural consumer purchase behaviour is a must for the marketers in tapping the large latent rural markets.

(Full paper published by IIM Kozhikode, April 2008)


Sutanuka said...

I feel some of the factors which influences rural buying decisions are:cultural factors,traditional life,lower per capita income etc.

Philips battery free radio is a gud example where the manufacturer gave special heed to the rural consumers.

but still..rural marketing and understanding the consumer behaviuor and needs of the rural people has a long way to go...

munshi said...

i again i am proud that ur r my guru,
wat a article.
congrtualations mam.

Vineet Mittal said...

Good article, however I believe for understanding rural consumer same marketing principles need to be followed as for other consumers.

Many a times consumer understanding for urban areas comes due to proximity and part of being same community and to understand rural consumer one needs to travel more

viren said...

mam,really a nice write up. how can i read ur full article mam. i shall be grateful if u plz mail me this complete article at