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CHAPTER 2
METHODOLOGY
Review of Literature
Statement of the Problem
Specific Objectives of the study
Statement of Hypothesis
Design of the questionnaire
Pilot study
Selection of Sample
Collection of Data
Analysis of Data
Depiction of hypotheses
Outline of the Thesis
Limitations of the study
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Chapter 2
Review of Literature and Research
Methodology
2.1) Review of Literature:
Research Paper:
Dr. Surinder Singh Kundu."Customers’ Perception towards the
Fast Moving Consumer Goods in Rural Market: An Analysis",
International Journal of Techno-Management Research, Vol. 01,
Issue 02, September 2013 - Dr Kundu observed that a
consumer sets a frame of references in his/her mind to choose
or purchase a product or service of same or different brands or
producers. Keeping in view the frame of references the present
paper is an attempt to study the factors affecting the purchase
decision of consumers towards purchase of the Fast Moving
Consumer Goods (FMCGs) and to recommend the policies
which may be adopted by the advertisers to enhance
awareness among the rural buyers. The study used primary
data collected from a sample of 1000 rural consumers from the
40 villages of 04 districts of Haryana state with the help of a
well-structured questionnaire by following "Foot-in-Door
Strategy" (FIDS) and found that rural buyers perceived that TV
commercials followed by print advertisements and word of
mouth plays a significant role for taking the decision to
purchase these FMCGs. Further, they consider their own
experience, display at shops; incentive schemes for the
purchase of these FMCGs, whereas they do not fully agree that
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advice of beautician influences their decision towards the
purchase of these FMCGs. On the other hand, rural buyers
perceived that social factors are not so strong that those may
influence their decision to purchase these FMCGs. Hence, it may
be recommended that the producers or marketers should
frame ethical advertising strategies keeping in mind that rural
people are fond of electronic and print media advertisements.
Pravin Kumar Bhoyar, Asha Nagendra."Effectiveness of FMCG
Distribution Channels with Respect to Satisfaction of
Consumers in Rural Markets", Indian Journal of Marketing,
January 1, 2012, Volume 42, Issue 1- Praveen and Asha suggest
that distribution is the most important variable in the
marketing plans of most consumer goods manufacturers. It is
estimated that there are over a million market intermediaries-
distributors, super-stockists, wholesalers, stockists,
transporters and retailers - who are involved in the
distribution of a variety of consumer goods all over the
country. This study focuses on the effectiveness of FMCG
distribution channels with respect to the satisfaction of
consumers in the rural market. Two companies - Hindustan
Unilever Limited (HUL), and Godrej Consumer Products
Limited (GODREJ), which are pioneers in Fast Moving
Consumer Goods (FMCG) in the rural market were selected to
study their distribution channels in 2 rural districts of
Maharashtra. Two different questionnaires were designed -
one for channel members, and the other for rural consumers.
Results revealed that there are two distinct segments of
consumers in the rural markets. One set who cannot read,
write or understand with ease. They do not buy branded
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products. They have their own method of identification of
products and communication with the retailers. Rarely do they
purchase branded packaged goods. The other set was the
slightly educated ones, who bought branded products and
demanded range in products. The study also revealed that
there were limited stocks of products at village retailers; hence,
customers had to wait for some days. So, it compelled them to
travel outside their villages to meet their demands. The
effectiveness of FMCG distribution channels in rural markets
depended upon the satisfaction of the rural customers. Since
there was either poor quality or prevalence of duplicate brands
in the rural market, rural customers were not getting good
quality and authentic brands in the rural market of Sangli and
Kolhapur districts. Hence, it was proved that the existing FMCG
Channels of Distribution in Rural Maharashtra did not serve the
customers well. This research was done between January 2009
and December 2009.
Md. Abbas Ali, Venkat Ram Raj Thumiki and Naseer
Khan."Factors Influencing Purchase of FMCG by Rural
Consumers in South India: An Empirical Study" International
Journal of Business Research and Development, Vol. 1 No. 1, pp.
48-57 (2012) - Md Abbas , Venkat and Naseer observed that
with more than six hundred thousand villages and more than
70% of the population, rural India has become a massive
consumer goods market. FMCG has emerged as a major
product category in rural consumption. Companies marketing
FMCG to rural consumers cannot merely extend their general
marketing strategies to rural markets. Instead, they need to
devise rural specific strategies. In this process, they need to
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understand crucial issues relating to rural consumer behavior
and more specifically relating to different geographic regions of
the country. This paper focuses on understanding factors that
affect the rural purchase of FMCG in South India. Empirical
study was conducted in 8 districts of South India to identify the
key influencing variables. Factor analysis was used to form 24
key variables into five groups (influencing factors). Influence of
retailers’ recommendations has emerged as the most
significant variable in the trust factor. According to the study,
rural consumers in South India consider that usage of FMCG
contributes to their lifestyle.
Panichukunnath Ajith “3P Framework : Rural marketing in
India”, SCMs Journal of Indian Management , January-March
2010 – Ajith Panichukunnath (2010) has emphasized on the
3ps of marketing viz push marketing, pull marketing and pull
up marketing. Taking into account the retailers of rural India
push and pull strategy may be very effective and create very
good impact in the market. As the rural traders are not
receiving equal importance as the urban one. The rural market
is heterogenous and only a retailer is brand ambassador of the
marketer towards the rural consumers. If such brand
ambassador is trained and forced to convert goods onto cash
then a firm can enjoys leadership in rural and urban India both.
Mishra Kumar Arvind , Pallavi “Rural Marketing in India
Opportunities and Challenges” Advertising Express , April 2010
– Arvind Kumar Mishra (2010) draws an attention towards non
availability of product, lack of proper communication and
ignorance of rural consumer’s expectation in terms of offerings.
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Many multinational companies have achieved very good
market share in small value products but in case of high value
products it requires more efforts and courageous steps in
terms of setup of separate network, deep distribution system,
and better customer service specifically after sales and even
before sale.
Prahalad, CK. “Nobodies the New Somebodies”, Economic
Times, 6 th Jan, 2010, p 29 – Prahalad (27) observed that in
many products, because the unit packs are small, and even
expenditures are small, if people are not satisfied, they can now
switch brands. They’ll switch either if they’re not satisfied or
better value is available. A lot of poor consumers are willing to
pay for quality. Therefore, companies have to learn that quality
is a critical component of the brand promise. That is a big shift
in India for the last 7-8 years.
Tran, Q. and Cox, C. Advances in Business Marketing and
Purchasing, Emerald Group Publishing Ltd, 2009, pp 115-194-
The retailers are often seen as irrelevant to the source of brand
value, resulting in manufacturers not targeting retailers to help
them build stronger brands. Tran et al (11) observed that
potential occurs, therefore, for some channel conflict to exist
between manufacturers and retailers. On the one hand,
retailers tend to focus on building their own, private brands to
differentiate themselves from other retail competitors and to
increase their power in relation to manufacturer brands. At the
same time, most retailers still need to create a good image in
the consumer marketplace by selling famous, manufacturer-
branded products. In other words, retailers often have to sell
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famous brands even if they would prefer to sell other brands
including their own. Manufacturers tend to focus their brand-
building efforts on the consumer market to entice consumers
to insist that retailers stock their brands, rather than placing
any real emphasis on building a strong and positive brand
relationship with the retailer directly.
Garga Pawan (2009), “Rural Marketing of Select Fast Moving
Consumer Goods in Punjab,” Indian Journal of Marketing, vol.
XXXIX, No. 5, May, pg21-27- Garga Pawan (2009) 44, in his
study concluded that, instead of smaller packages, medium
packages were reported to be the most preferred with only
exception of shampoo. From testing of hypothesis relationship
was observed to be existing: between consumer’s purchase
decisions on the basis of price and the select FMCG product
categories; consumer opinion about inferior quality of loose
products and district of respondents; consumer’s opinion
about the quality of products stocked by rural retailer and
district to which they belong; rural consumer’s trust on the
matter of the advertisements and the different districts. It is
recommended that neither rural Punjab should be treated as
single homogeneous market nor different FMCG products
categories be planned in a similar manner. Specific marketing
strategies based on the different elements of Marketing Mix
have also been developed in the paper.
Annapurna, MY. “Marketing to the Indian Rural Consumers”,
Marketing Mastermind, May 2009, p 35-39- The key challenge
that companies face in the rural market is to identify and offer
appropriate products without hampering the company’s
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profitability or margins. Annapurna (19) found that the
companies should recognize that rural consumers are quite
discerning about their choices and customize products and
services accordingly. The products should not only be made
available at the right time and right place but should also be
affordable and acceptable to the rural people. There is lack of
proper transportation facilities and logistic services,
implementing appropriate marketing communications and
challenge in training the sales force to make them understand
the rural mindset and motivating them to go and work in the
villages.
Vijayraghvan, K. “Future Group Boycotts Cadbury, Clashes with
MNC Confectionery Maker over ‘Pricing Discrimination’ Vis-A-
Vis Foreign Retailers”, the Economic Times, Pune Edition, 3rd
Jun 2008, p 1- The main reasons for conflict between
manufacturers and retailers are that the manufacturer is not
cutting uniform deals with all retailers and is giving better
deals to international retailers who may have larger stakes in
global markets and has better deals with international retailers
where there are larger stakes involved. Vijayraghvan (9)
observed that the company’s conditional terms remained
unacceptable, offering fill rates (stocks on shelf) of only 65%.
Such terms are unfair, especially when they have to pay the
rent for the entire shelf space to the developer. Another reason
is the company has also been insisting on payments only after
an external audit which, for retailers who buy and sell and not
really stock up, is unacceptable.
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Sangameshwaran, P. “HUL Provides Back- end Support to
Distributors -Outsourced Logistics Services to Ease Distributor
Burden”, the Economic Times, 29thJul 2008, p4 - To remove the
conflict between the manufacturer and its distributors, the
consumer goods giant Hindustan Unilever (HUL) has tied up
with a third-party logistics service provider to manage the
entire back-end distribution chain on behalf of its distributors.
Sangameshwaran (10) reported that the project is expected to
take away a major burden faced by several distributors i.e.,
managing stock positions and delivery schedules. The initiative
will help the distributor to focus on customers. At present, a lot
of distributors get constrained by factors like concentrating on
the backend in areas like finance, logistics and space
management. The task is to create a distributor organization
that is customer facing rather than inward looking. HUL is
encouraging its distributors to become entrepreneurs and run
the business as a professional distribution house and take on
the onus to deliver growth.
Seung -Eun, L.,Kim, KPJ.and Sherri, GA. “Small-town
Consumers’ disconfirmation of expectations and satisfaction
with local Independent retailers”, International Journal of
Retail and Distribution Management, Emerald Group
Publishing Ltd, Vol 36, Issue 2, 2008, p 143-157- Most of the
strategies performed by small -town independent retailers did
not meet their local consumers' expectations. Specially,
merchandise assortment and availability, such as offering a
unique and large selection of products, showed the largest
discrepancy between respondents' expectations and retailers'
performance, indicating that independent retailers are not
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meeting their consumers' needs in these areas. Seung-Eun et
al(4) observed that the participants who were satisfied with
their independent retailers, shopped locally, were strongly
attached to their communities, and were willing to support
their local independent retailers.
Sarangpani, A. And Mamatha, T. “Rural Consumer Behavior
with Regard to Selected FMCGs Consumption Patterns and
Brand Usage: A Study”, the ICFAI University Journal of Brand
Management, Vol. V, No 3, Sept 2008, p 22-61 - There are two
distinct segments of consumers in the rural market. Sarangpani
et al (16) studied that one set of rural consumers is less
educated or even illiterate. They cannot read, write or
understand with ease. They do not buy branded products. They
have their own method of identification of products and
communication with the retailers. For instance,they ask for
Erra Sabbu (for Lifebuoy), Pacha Sabbu (for Nirma), Neeli
Sabbu (for Rin), etc. Rarely do they purchase branded packaged
goods and values associated with them. On the contrary, there
is a different segment of consumers, the younger 18-35 years
age group; they are educated, more mobile and have urban
exposure. They are brand conscious. They ask for brands of
their choice. Their brand usage and recall rate is comparable to
their counterparts in the urban areas.
Roopa, DB. “Customer Expectation and Perception: A Study of
Retail Sector of Haryana State”, the ICFAI University Journal of
Consumer Behaviour, Vol III, No 3, Sept 2008, p 47-54 -
Modern-looking equipments and fixtures, physical facilities, the
ambience and store layout are required up to the mark by the
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retail stores. Roopa Devi (20) analyzed the consumer
behaviour, their expectations and the services actually
provided by retail stores of Haryana. If the retailers of Haryana
provide high quality merchandise according to the needs and
wants of the customer, then they would be able to satisfy and
retain the customers.
Seung-Eun, L.,Kim, KPJ.and Sherri, GA. “Small-town Consumers’
Disconfirmation of Expectations and Satisfaction with Local
Independent Retailers”, International Journal of Retail and
Distribution Management, Emerald Group Publishing Ltd, Vol
36, Issue 2, 2008, p 143-157- Most of the strategies performed
by small-town independent retailers did not meet their local
consumers' expectations. Specially, merchandise assortment
and availability, such as offering a unique and large selection of
products, showed the largest discrepancy between
respondents' expectations and retailers' performance,
indicating that independent retailers are not meeting their
consumers' needs in these areas. Seung-Eun et al (23) observed
that the participants who were satisfied with their independent
retailers, shopped locally, were strongly attached to their
communities, and were willing to support their local
independent retailers.
Sridharan, S. and Viswanathan, M. “Marketing in Subsistence
Marketplaces: Consumption and Entrepreneurship in a South
Indian Context”, Journal of Consumer Marketing, Vol 25, Issue
7, 2008, p 455-462- The businesses must follow three
principles for consumer marketing –deep understanding of
subsistence consumer psychology, social embeddedness, and
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entrepreneurial empowerment. Sridharan et al (24) studied
the innovative consumer marketing approaches for
simultaneous business success and social empowerment at the
bottom of the pyramid (BoP) or in subsistence marketplaces.
Kucuk, SU. “Can Distribution Explain Double Jeopardy
Patterns?”, International Journal of Retail and Distribution
Management, Vol 36, Issue 5, 2008, p 409-425 -There are some
important strategies in order to maximize the efficiency of
retailers' stocking decisions and manufacturers' branding
efforts. Kucuk (26) provided clear insights into the influence of
product availability, and thus distribution on double jeopardy
(DJ) patterns, for frequently-purchased products (FPP). He
provided an in-depth literature review of DJ, distribution, out-
of-stock and consumer behavioral brand loyalty in many
marketing and supply chain decisions. The results indicated
that distribution might explain DJ patterns. In addition,
distribution might create behavioral brand loyalty when FPP
are widely available (excessive availability) in the market.
Saxena, R. “Dabur Uses Astra to Boost Rural Sales”, Business
Standard, 4th Jul 2008. –Saxena (28) studied how changing
retail landscape in the country has compelled FMCG companies
to re-look at their sales and distribution models. FMCG majors
tweak their point-of-purchase presence in modern retail,
where their brands enjoy higher off-take. They have
categorized their sales and distribution channels into finer
segments, such as key grocers, mass grocers, chemist,
wholesale, small outlet and modern trade. They conduct
programme to address specific needs and expectations of each
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channel in the areas such as, trade activation programmes,
trade promotion programmes, brand/SKU focus,
merchandising and managing channel conflict.
Kannan KV. “Strategies for Chocolate Companies to Kill Fake
Products in Indian Rural Market”, www.indianmba.com-
Kannan (30) conducted a study which revealed that FMCG
industry loses around 2500 crores annually to counterfeits and
pass-off products. The fake products are affecting the sales of
leading brands to the extent of 20 to 30 percent. Top brands in
India are estimated to lose up to 30 percent of their business to
fake products. Besides the loss of revenue, the leading
companies also face the loss in the damage to brand image and
brand loyalty of consumers. It has been found out that fake
chocolates and toffees are available in more number of petty
shops for the leading brands.
Sislain.,Eric. and Ahmet, S. “Strategic Sourcing: A Framework
and a Case Study”, Journal of Supply Chain Management, Vol 36,
p 4-11 – Sislain (34) reported that many times distributors are
willing to share market related information with suppliers, but
some information may be sensitive in nature and, if shared
could place the distributor at risk of opportunistic exploitation
which results in hiding information.
Viswanathan, M. “Understanding Product and Market
Interactions in Subsistence Marketplaces: A study in South
India”, Advances in International Management, Vol 20, 2007, p
21-57- Viswanathan(5) examined the marketplace activities of
subsistence customers in South India and presented a picture
of the day-to-day behaviors and interactions of subsistence
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customers in terms of the products they purchase and their
interactions with sellers and outlets. The method involved
observations and in-depth interviews of a variety of buyers and
sellers over several years in urban and rural South India.
Needs, products, and market interactions, as well as typical
budgets in subsistence contexts are described. These
descriptions are used to derive broader characteristics of
product and market interactions in terms of uncertainty,
complexity, and lack of control; one-on-one interactions;
transactional fluidity; and make or buy decisions.
Ramachandran, S. and Gupta, SD. “FMCG Companies Face
Kerala Distributors' Ire”, Business Standard, 4th Aug 2007 – The
all India Distributors' Association expressed their concern by
holding the nationwide stir to resist 'fearful situation ahead'.
Ramachandran et al (8) reported that they raised a strong
protest with leading fast moving consumer goods (FMCG)
companies for bypassing them and selling their products
directly to large retail stores. Making direct supplies will have a
negative impact on the turnover of distributors and all actions
of these companies in destroying conventional traders should
be put to an end and the purpose was to communicate all
members of their community in all states in the country, so as
to put up strong resistance to this. If the big manufacturers
supply goods directly to monopoly retail outlets, that too
bringing in an unbalanced pricing structure, small and medium
traders are sure to be doomed.
Liu, Y. “The Long-Term Impact of Loyalty Programs on
Consumer Purchase Behaviour and Loyalty”, Journal of
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Marketing, A Quarterly Publication of the American Marketing
Association, Vol 71, No 4, Oct 2007, p 19-35 – Liu (13)
examined the long-term impact of a loyalty program on
consumers’ usage levels and their exclusive loyalty to the firm.
Using longitudinal data from a convenience store franchise, the
study shows that consumers who were heavy buyers at the
beginning of a loyalty program were most likely to claim their
qualified rewards, but the program did not prompt them to
change their purchase behavior. In contrast, consumers whose
initial patronage levels were low or moderate gradually
purchased more and became more loyal to the firm. The
findings suggest a need to consider consumer idiosyncrasies
when studying loyalty programs and illustrate consumers’ co-
creation of value in the marketing process.
Pradeep, K. “Price Not Key Driver in the Rural Market”, Lecture
in New Delhi at Indian Marketing Summit,
www.financialexpress.com, 10 th Jan 2007- In Indian
Marketing Summit, Pradeep (14) emphasized that it would be a
bigger mistake to assume that ‘price’ is the key driver in the
rural market. The consumer there often has a higher disposable
income than urbanites. Yet, if he owns less number of durables
in comparison to an urban consumer, it’s not because of price
or affordability, but due to other factors, such as infrastructure
and availability of variety of products.
Kumar, S. and Bishnoi, VK. “Influence of Marketers’ Efforts on
Rural Consumers and Their Mindset: A Case Study of Haryana”,
the Icfai Journal of Brand Management, Vol. IV, No 4, Dec 2007,
p 28-50 - Today marketers need to understand the dynamics of
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rural markets. To effectively tap the rural market a brand must
associate it with the same things the rural folks do, yet giving
them a feel of modern outlook and expression. Kumar et al (18)
clearly brought out the quantum of impact advertisement
makes on rural consumers, so the attempt was likely to
succeed; only the right approach was required. It has been
noticed that below-the-line communication like alternative and
innovative ways of communication plays a key role in building
reassurance and trust, and so it is vital. Rural consumers have a
very high level of ethos so all the care should be taken not to
hurt them in any form of advertisement. The brand to be made
relevant by understanding local needs.
Bhattacharya, K. “Rural Marketing in India –Problems,
Prospects and Emerging Dimensions”, Marketing Mastermind,
Sept 2007, p 32 –43 - The impact of spurious brands in rural
market and how it chokes the market for authentic items was
studied by Bhattacharya (29). The color and almost identical
cover graphics are used for passing off spurious products as
original. Even the names may sound similar. Many distinctive
features between the original and fake versions cannot usually
be detected by the unwary and average customer anywhere in
the market. Blockages-at present, most products reach the
rural customers generally through wholesale channels. These
intermediaries are not sufficiently under the control of
manufacturing firms, which intend to enter the rural market in
a big way. Skewed Distribution of Outlets-not surprising
therefore, 76% of the estimated 3.7 million rural outlets are
concentrated in seven states. They have all sprouted in
relatively sizeable and well-off villages where sufficient
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consumer demand exists to sustain them. Then again, there are
about 60,000 villages which do not have even a shop each. Poor
infrastructure for most villages in most areas which chronically
suffer from lack of periodic supply of goods, poor availability of
credit and capital and low purchasing power of patrons.
Anderson, J. and Billou, N. “Serving the World’s Poor:
Innovation at the Base of the Economic Pyramid”, Journal of
Business Strategy, Vol 28, issue 2, 2007, p 14-21 - There were
common challenges and approaches in serving bottom of the
economic pyramid customers, and that these could be
articulated and refined to get better business results. Anderson
(33) reported that field visits were made to China, Egypt, India,
Mexico and the Philippines, and in-depth interviews took place
with companies that had succeeded in serving customers living
in poverty. Companies were identified from the existing body
of literature personal contact. Additionally, data were collected
from developing case studies on multinational corporations
and local firms that have been successful in serving low-income
customers in developing markets. The research resulted in the
development of a structured framework for developing
strategies to serve low-income customers in emerging markets.
Sastry, BVH. and Mohan, S. “India’s Rural Market –A Growing
Business Opportunity”, Marketing Mastermind, Dec 2007, p 16-
19 -Sastry et al (36) have studied the pertinent issues in rural
market such as uniqueness of the rural consumer, uniqueness
of the structure of rural markets and the peculiarities of
distribution infrastructure in rural areas. These are special to
rural markets and hence, require unique handling. Practically
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in every aspect of marketing, rural markets pose certain special
problems, but the following are found to be important from the
marketing point of view: Distribution logistics, storage,
transport and handling, Location and degree of concentration
of demands, dealers’ attitude and motivation, consumer
motivation and buying behaviour, transmission media, their
reach and impact, & organizational alternatives. Thus, the rural
market bristles with many problems and to achieve a firm
footing, a marketer has to grasp these problems and provide
innovative solutions to them.
Coughlan.and Anne. and Evin, A. and Louis, S. and Adel, EI.
Marketing Channels, Upper Saddle River, NJ: Prentice Hall,
7thEdition 2006.- The suppliers heavily rely on distributors for
information because of their direct contact with both
competitors and end customers. Coughlan et al (23) observed
that the distributors possess information that is difficult, if not
impossible, for suppliers to obtain otherwise.
Gupta Rajendra (2006), “ Factors affecting the buyer behavior
of customers- A case study of New Generation Bikes in rural
market,” Pragyaan, Indian Management Studies, Dehradun,
Vol.3, No.3 (April), p25-29 – Gupta(42) examined the
awareness and purchase behavior of rural consumers. Simple
random sampling was done and 125 respondents from the
selected rural areas of Kanpur, U.P. were taken into
consideration.
He concluded that factor affecting customers who prefer to
purchase a new generation bike by putting more emphasis on
fuel efficiency, easy finance and whose price is within their
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affordable range may be labeled as economic benefit factor.
They are ready to compromise with luxury to some extent at
the cost of economic benefit. On the other hand customers of
second type are of aristocrat class who are least concerned
with fuel efficiency and price of the bike. They seek benefits of
luxury, safety and dignity from a new generation bike at any
cost. Factor affecting customers of this class may be labeled as
social benefit factor.
Though change is common, some changes seem peculiar and
paradoxical. Today Indian economy is witnessing one such
bifurcated change- a change from national to global on one side
and urban to rural on the other. Keeping in mind the above
facts and opinions this research is undertaken, as the rural
markets possess a vast potential, which remains untapped by
the marketers. The objectives of the research were kept in
order to understand the marketing pattern of FMCG branded
products in rural areas.
Patel, Naresh, & Prasad Reshma, (2005). The unique rural
identity Indian Management, 44, 72-76 - (Patel & Prasad, 2005)
43 in his study examines the efforts of suppliers and retailers in
the FMCG channels to adopt more efficient consumer base. He
examined the relationship between the channels and the
customers. People understand the local dialect and prefer to be
informed in their local language and dialect. Therefore it can be
useful for promotion of brands in rural markets by major
players.
Sakkthivel, A. M., & Mishra, Bishnupriya. (2005). Effectiveness
of sachets in modifying rural consumers’ buying behaviour and
66
their consumption pattern- A researcher’s view. Indian Journal
of Marketing,35, 33-38 - Sakkthivel (2005) 41 in his study ,he
examined the effectiveness of small sachets in modifying
consumer’s buying behavior and found out the quantity and
frequency of purchase of products by rural consumers. The
purposive survey was conducted among 150 consumers who
resided in Tumkur district in Karnataka and the sampling
technique used was judgment sampling.
He concluded that sachet is a bold move by FMCG
conglomerates to motivate rural consumers to try new
products. It is a positive step towards the modification of
buying behavior and consumption pattern of rural consumers
who are long neglected and hidden in shells. This new avenue
would positively create more demand and would bring more
money to companies as it introduces new products to rural
consumers. The study revealed that only some selected
products like shampoo, fairness cream, spices, mosquito
repellant etc. could create impact among the rural consumers
and rest of them could not. Hence, the companies need to focus
on the reasons behind the modification in consumers’ buying
behavior and consumption pattern toward the products
expected in medium or large containers. Yet, the study
indicates that these sachets facilitated rural consumers to try
new products and also played a vital role in modifying their
buying behavior and above all, a major change in their life
styles. Hence sachets may be viewed as a promotion tool for
modifying buying behavior rather than a yet another
innovative form of packaging.
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Saran, R. “The New Rural Consumer”, www.india-today.com, 30
th Jan 2005 - The rural FMCG market with its promise of
millions of consumers is not yet touched by the cornucopia of
brands and products. Saran (17) mentioned that it's true that of
the 122 million households in rural India, a majority are low-
income ones, dependent on subsistence farming. The author
observed that some of the biggest urban brands such as Parle
G, Lifebuoy Active and Lux are also big draws in rural India.
The basket of high-volume consumables-toilet soap, washing
powder, packaged tea, biscuits and detergent cakes -is virtually
identical in urban and rural India. That in a way proves that
some brands have gone beyond the urban-rural barrier that
assimilation of rural and urban consumers is already at work
for a wide variety of product categories.
Tao, S.and Guohua, W. “Consumption Patterns of Chinese Urban
and Rural Consumers”, Journal of Consumer Marketing , Vol 21,
Issue 4, 2004, p 245-253- Tao et al (3) conducted an
exploratory study on rural and urban consumers in an
emerging market like China and he presented empirical
evidence about the impacts of economic development on
consumer lifestyles. Chinese rural and urban consumers were
found to be statistically different in terms of their attitudes
toward the whole marketing mix: product price, brand names,
promotions and distribution. Possibly as a result of these
disparate attitudes, rural and urban consumers were found to
use different products to reflect the improvement of their living
standards. All of these previous differences might be due to the
fact that rural and urban Chinese consumers have different
68
needs, as indicated by the words they chose to describe their
ideal image.
Park, H. “US Retailers’ Cooperation with Manufacturer
Promotional Support”, Journal of Fashion Marketing and
Management, Vol 8, Issue 4, 2004, p412-424–Park(7)observed
that promotional support, as a push strategy, that
manufacturers use to encourage retailers to carry their
products needs retailers' cooperation. This study investigates
the effects of retailers' fashion and price orientations on
manufacturers' offerings of and retailers' cooperation with
promotional support. A factor analysis determined four factors:
sales support, ad/display materials, monetary support, and
selling aid samples are important in pushing manufacturers’
products in the market.
Gopalkrishnan, R. “FICCI's Rural Marketing Summit Mumbai”,
Media, Advertising and Marketing Watch, Indiantelevision.com,
5th Oct 2004– Gopalkrishnan (31) studied that the ingredients
for successful penetration into the hearts and wallets of village
consumers include long-term commitment, cost re-
engineering and sustained innovation and specialized
strategies.” He highlighted the need for the corporates to place
emphasis on going to the retailers directly rather than
depending on the wholesalers for distribution in the rural
market. He also emphasized on the need to work on
economical packaging, dual pricing and special sizes of FMCG
and household products. Several myths abound the rural sector
such as rural people not buying branded goods, going for cheap
products and market being a homogenous mass. He informed
69
that the rural people account for 80 per cent of sales for
FMCGs; they seek value for money and the rural market is
fascinatingly heterogeneous.
Balakrishna, P. and Siddharth, B.“Selling in Rural India”,
Financial Daily, Hindu Group of Publications, 16th Feb, 2004 -
Balakrishna et al (35) have given ‘4A-Approach’ to meet the
challenges in the rural market in the following ways:
Availability: The first challenge is to ensure availability of the product
or service. India's 627,000 villages are spread over 3.2 million sq km;
700 million Indians may live in rural areas, finding them is not easy.
However, given the poor state of roads, it is an even greater
challenge to regularly reach products to the far-flung villages. Any
serious marketer must strive to reach at least 13,113 villages with a
population of more than 5,000. To service remote village, stockists
use auto rickshaws, bullock-carts and even boats in the backwaters of
Kerala. To ensure full loads, the company depot supplies, twice a
week, large distributors which who act as hubs.
Affordability: The second challenge is to ensure affordability of the
product or service. With low disposable incomes, products need to be
affordable to the rural consumers; most of them are on daily wages.
Some companies have addressed the affordability problem by
introducing small unit packs.
Acceptability: The third challenge is to gain acceptability for the
product or service. Therefore, there is a need to offer products that
suit the rural market. The rural consumer expressions differ from his
urban counterpart. Consumption of branded products is treated as a
special treat or indulgence.
70
Awareness: Stockists reach out to customers by organizing
promotional events at the local level. Some companies use radio to
push their brands into the interior areas, to reach the local people in
their language. Some companies use a combination of TV, cinema and
radio to reach 53.6 per cent of rural households.
Lokhande M.A.(2004), “ Rural Marketing- A Study of Consumer
Behavior,” Indian Journal of Marketing, New Delhi, Vol. XXX1V,
No.11, p14-18 -Lokhande (38) in his study “Rural marketing- A
Study of Consumer Behavior” observed the consumption
pattern, purchase behavior and preferences of rural
consumers. His study was confined to two villages of
Aurangabad and 150 respondents were selected on random
sampling basis. He concluded that Rural India, having more
than 70% population living in 6.27 lakh villages, is a huge
market. Obviously, a number of FMCG companies are trying
their best to harness the business opportunities in rural India.
Electronic media, efficient transportation system, increasing
income levels and strategic marketing policies are the major
contributing factors to enhance the scope of rural marketing.
Rural consumer is changing his consumption habits to suit
himself to changing environment.
Oza Avinash (2004), “Where the FMCG market sizzling,” Indian
Management, New Delhi, Vol: 43, Issue.3, p56-59 - Oza (40) in
his study “Where the FMCG market is sizzling- A Study of Rural
Markets,” examined the rural consumer’s psyche for FMCG
products. The survey was conducted with a sample size of 200
in villages of Baroda. Convenience sampling was used.
71
He concluded that using easily available technology, strong
local area knowledge, short supply chain and quality raw
material regional players are giving big brands a run for their
money. The regional brands are making their aggressive
presence in smaller towns by participation in melas and
exhibitions. They are giving distributors and retailers better
margins in rural areas.
Raman .N. (2003), “Strategies of Multi National Companies in
Rural Marketing,” Indian Journal of Marketing, New Delhi, Vol.
XXXIII, No.7 (July), p5-11 - Raman (39) in his study “Strategies
of Multi National Companies in Rural Marketing,” analyzed the
strategies of MNC’s to enter into rural areas for the
introduction of new products. He examined areas like
automobiles, telecommunication and service sector where
strategies like joint venture have been used to enter into rural
area. He concluded that the growth and success of the MNC’s in
rural areas depends on how they adopt different strategies in
marketing their products. The strategies to be adopted by the
MNC’s may be based on the cultural, sociological, economic and
psychological background along with a factor of 4P’s in that
area. Further, these strategies have to be changed over a period
of time to meet the varied demands of the consumers. After a
decade of experimentation the multinationals have settled on a
strategy “think small and keep the product simple”. This
strategy is identified and implemented by many of the MNC’s in
the rural areas.
Corsten, D. and Gruen, T. “Desperately Seeking Shelf
Availability: an Examination of the Extent, the Causes and the
72
Efforts to Address Retail out-of-stocks”, International Journal of
Retail and Distribution Management, Vol 31, Issue 12, 2003, p
605-617- Retailers have been struggling with considerable out-
of-stocks for decades –with little evidence of improvement.
Corsten et al (6) conducted a major, worldwide study of the
extent, causes, and consumer responses to out-of-stocks in the
fast-moving consumer goods industry believed that retail out-
of-stocks have gone down over the last ten years is wrong. A
similar wrong belief is that shoppers are also still unwilling to
accept low service levels. In fact, increasingly, consumers
switch brands when they do not find the brand they wanted.
But retailers must be wary, because the results of our research
show that increasingly shoppers switch stores quickly and may
never come back. In this article, we report these findings and
provide insight to solve this chronic industry problem.
Saxena, R. Marketing Management, New Delhi, Tata McGraw
Hill Co Ltd., 2002, pp 403 - Many a time conflict occurred
because of role ambiguity. This was a common cause of conflict
in multi-channel system. Saxena (12) reported that the
automobile components distributors bypassed the wholesalers
and sold to retailers; wholesalers revolted and started pushing
competitor’s products.
Adelina, B. and Eric, C. “Rural Grocery Shoppers: Do Their
Attitudes Reflect Their Actions”, International Journal of Retail
and Distribution Management, MCB UP Ltd, Vol 30, Issue 8,
2002, p 394-406 - There are some factors and attitudes that
influence customers’ store choice decisions and their attitudes
towards their local shops. Adelina et al (22) investigated the
73
grocery shopping habits of residents in rural communities in
Western Stirlingshire, Scotland. Findings revealed that
although respondents held a positive overall view of their local
shops, less than one-third purchased a high proportion of their
food shopping in local shops. While it is unlikely that local
traders will reverse out shoppers’ shopping behaviors, with a
re-evaluation of their overall offer, they may be able to
establish themselves as a reliable supplementary or secondary
choice option, thereby maintaining the local shop as a viable
function.
Thakur, M. “Dump Dumping in India”,
http://www.botree.co.in/ industryanalysis.php – Thakur (37)
has given the most important channel trends identified in their
study:
Wholesaler-distributors will continue play an important
role in marketing channels and supply chains. Wholesale
distribution remains an important force in market-oriented
economic systems. In the United States, it contributes 7
percent of U.S. national income and accounts for one in
every 20 US jobs.
Customers will adopt new e-business technologies when it
benefits them and limit technology usage when the
technology does not help them. The authors found that the
percentage of orders received on-line will grow
substantially, but not overtake more traditional methods
within the next five years.
The distribution sales force will be under increasing
pressure. As customers begin to educate themselves by
74
relying on the manufacturer for product information, the
value of a distributor’s sales force is being reduced in the
eyes of customers. They will bypass sales channels and
directly gather product specifications, warranty and rebate
information, material safety data sheets, and potential
suppliers.
Manufacturers will explore new distribution options. Third-
party logistics providers, who have traditionally been
package-handling enterprises, are moving “inside the box”
by offering product-handling services such as warehouse
management, order processing, pick/pack/ship, just-in-time
parts delivery, and many other “wholesale distribution”
functions.
Manufacturer-Distributor relationships will evolve.
Manufacturers and distributors continue to rely on each
other’s actions and resources. Simultaneously, each side
struggles to maintain autonomy and control over its own
operations in this era of dynamic uncertainty.
Mehra, P. “Crusade Against Counterfeit”, Business Line,
Financial Daily, 2nd Jul, 2001- The study by Mehra (32) revealed
that the Government's loss on account of tax evasions by
unauthorized manufacturers is around Rs 600 crore. Marketing
and Research Team (MART) has undertaken an impressionistic
survey to access the impact of fakes on the rural market. It
shows that the phenomenon is rampant and much more
virulent than in the cities. The researchers found that the
absence of original branded FMCG products was 100 per cent.
The fact that duplicate products, look-alikes and spell-alikes
exist cheek by jowl with genuine products on the same shelf,
75
are less costly and earn the retailer higher profits was always
known. The Brand Protection Committee has put in place a
four-fold strategy including a focus on enforcement and
application of laws; publicizing the negative economic impact
of fake products; taking direct action against illegal
manufacturers, traders, wholesalers and retailers; and
enhancing communication among the stakeholders.
Rajiv, M.,Trina, L. and Bert, R. “The Influence of Leadership
Style on Co-operation in Channels of Distribution”,
International Journal of Physical Distribution and Logistics
Management, Vol 26, No 6, 1996, p 32-59-Rajiv et al (2)
examined how co-operation among distribution channel
members can be fostered through the use of participative,
supportive and directive leadership styles foster channel
member co-operation and assesses the relationship between
co-operation and channel member performance. Develops a
conceptual model and empirically tests the linkages among the
variables on data drawn from a survey of key informants in a
sample of dealerships. Shows that participative, supportive and
directive leadership styles are directly related to channel
member co-operation, which, in turn, is positively associated
with channel member performance.
Verbeke, W.,Farris, P. and Thurik, R. “Consumer Response to
the Preferred Brand out-of-stock Situation”, European Journal
of Marketing, Vol 32, Issue 11/12, 1998, p 1008-1028- Verbeke
et al (25) studied to gauge brand loyalty. To do this, a brand
loyalty acid test was used, which involved an out-of-stock
(OOS) experiment where the complete product line of a brand
76
was removed from several stores in order to estimate the OOS
responses of consumers. Three types of OOS responses were
identified: switching brands; switching stores to get one’s
favorite brand; and postponing purchase of a specific brand.
The present study revealed that the brand loyalty of the
consumers participating in the OOS experiment was
substantial, as a large percentage of them switched stores or
postponed purchase. The study also showed that neither
competitive conditions of the retailer nor assortment change
had any effect on consumers’ OOS responses. The most potent
variables that affected OOS responses were the way consumers
organized their shopping trips: store loyalist more than others,
switched stores by OOS; and consumers with a small purchase
amount per shopping trip were less likely to switch stores and
more likely to postpone purchase. There also was a slight
tendency for the consumer to spend less in the store during the
OOS period. This paper suggests the implications of these
findings for retailers and manufacturers.
Chiung-Ju, L. and Wen-Hung, W. “An Insight into the Impact of
a Retailer’s Relationship Efforts on Customers’ Attitudes and
Behavioural Intentions”, International Journal of Bank
Marketing, Vol 25, Issue 5, p 365-366 – The retailers who
undertake relationship efforts with loyal customers can
positively affect these customers' attitudes and behavioral
intentions. Chiung-Ju et al (21) suggested that financial services
with different attributes require different kinds and levels of
customer treatments and relationship efforts. They support the
contention that the aggregation of customer satisfaction from
continuous exchange leads to trust between the retailers and
77
customers. They also suggest the direction of resource
reallocation. Consequently, managers and employees of retails
need to be trained, motivated, and rewarded for making
relationship efforts with regular customers.
Panda, T. Rural Consumer Behaviour, Marketing Management
Text and Cases, 2nd Edition, Excel Book, p 709-710 - The
literacy rate in the villages has increased considerably and thus
by bringing in a shift of taste of the people. Unavailability of
persuasive media and poor level of literacy demands personal
selling to convince consumers to buy a product in the market.
Panda (15) reported that the marketer has to develop products
that suit cultural practices, identify a suitable target audience
and design media and message that reflect social behaviour,
design the distribution to reach the places where the consumer
traditionally makes his purchase. Small pack sizes get
acceptance in markets, by rural buyers who can pay only a
small price because of the nature of income receipts. He buys
his provisions daily and does not have a big amount to spend. It
is not true that only cheap brands sell in rural markets. In as
many as 18 products categories, consumption of branded items
account for 80% of sales. This indicates the potential for
national brands if they can find a way to package their offering
to compete effectively with regional brands. The attitude of the
rural consumers favors quality products and brands pricing
has to take into account both the income level and the income
flow of the consumers. A group of consumers can, can not only
afford, but are also willing to buy, high priced brands.
78
Day and George. “The Capabilities of Market Driven
Organizations”, Journal of Marketing, Vol 58, October 1994, p
37-52 -Day et al (1) studied that the firm’s capability to
compete largely depends on its ability to obtain information
about customer preferences, competitor actions, and channel
member behaviour.
According to market research agency The Nielsen Company
Madhya Pradesh reported 22% growth in rural sales during
January-September 2010, up from just 7% growth a year
earlier. Sales growth in Karnataka went up to 29% in 2010
from 8% a year ago.
According to white paper prepared by CII –Techno park the
rural market grew at an impressive 25% in the year 2008 and
is expected to have appropriately 720-790 million customers
with a size of US$425 billion in the year 2010-2011. Rural India
has emerged as a large market for numerous goods and
services such as financial services, FMCG, health care and
telecommunications.
Susrita(July 2010) Markets in rural India are small and
scattered, making them both inaccessible and unviable.
However ensuring that your product is available is just the
start. Large parts of Rural India remain media dark. Low
literacy rate and poor infrastructure add further as limiting
factor. But it is important for organizations to understand that
it should not let it hamper them even as others overcome it
with innovation. Economic and technological progress is
making it easier to communicate with a rural audience. The
challenge however lies in engaging with the rural population,
79
understand them and develop a communication that connects
with them. However the biggest challenge in rural marketing is
that of influence. Across product categories, rural penetration
and awareness remain low. And the need is not just to reach or
communicate but to actually influence consumption and buying
behaviour.
At a conference organised by the confederation of Indian
Industry (CII- Northern region), Somak Ghosh, President,
Corporate finance and development banking said, “India’s rural
markets are growing at double the rate of urban markets. The
total of rural households is expected to rise from 135 million in
2001-02 to 153 million in 2009-10 giving a tremendous push
to the rural retail opportunity.
As per research of Purba Basu, (faculty of ICFAI business
school)2009, Rural market is one of the best opportunities for
the FMCG sector. In some sense we can say that rural market is
future of FMCG. The lifestyle of rural consumers is changing.
Rural Indian market and the marketing strategy have become
the latest marketing buzzword for most of the FMCG majors.
She added the strategies of different FMCG companies for
capturing rural market like Titan’s Sonata watches, Coco Cola’s
200ml bottle, different strategies of HUL and Marico etc. She
takes into consideration the study of National Council for
Applied Economic Research (NCAER). According to the NCAER
projections, the number of middle and high-income households
in rural area. India is expected to grow from 80 million to 111
million by 2007. In urban India, the same is expected to grow
80
from 46 million to 59 million. Thus, the absolute size of rural
India is expected to be double that of urban India.
According to FICCI, in 2007 approximately 143 million people
from rural areas used FMCG products, compared to 136 million
in 2004. According to latest estimates released by Industry
chambers Assocham the attention of 180 million rural and semi
urban people has already been drawn towards FMCG products.
The sale of DABUR’s rural toothpaste brand BABOOL has
grown 35% in rural areas.
Rajesh K Aithal of IIM(L),2005 had done his research on rural
telecom in India .He explained that Rural markets are an
important and growing market for most products and services
including telecom. The characteristics of the market in terms of
low and spread out population and limited purchasing power
make it a difficult market to capture. The Bottom of the
pyramid marketing strategies and the 4 A's model of
Availability, Affordability, Acceptability and Awareness provide
us with a means of developing appropriate strategies to tackle
the marketing issues for marketing telecom services in rural
areas. Successful cases like the Grameen Phone in Bangladesh
and Smart Communications Inc in Philippines also provide us
with some guidelines to tackling the issue.
In 2004 , Pradeep Kashyap, head of MART ,In the seminar in
Bangluru “The challenges of rural marketing in the 21st
century” arranged by the rural network, an alliance of rural
marketing organisations , the specialist rural marketing and
rural development consultancy ,highlighted that the rural
81
population was responsible for 59% of consumer durable sales
and 53% of FMCG sales.
Hansa Research(2003) said that the penetration of consumer
durables has risen sharply in India's villages between the years
2000 and 2005. In color TVs segment, sales are up 200%; in
motorcycles, 77%. In absolute numbers, however, the
penetration of durables is still low. Coke, for instance, reaches
barely 25% of the rural market. This means the potential is
huge for companies that develop effective rural marketing
strategies.
According to Maison et al (2001) Consumer researchers of the
mind 20th century assumed that consumers behavior increased
and ample evidence rationally. In the sixties, interest among
psychologists in consumer behavior increased and ample
evidence became available to justify that the behavior of a
customer is not the consequence of an entirely rational
cognitive process, especially in relation to fast moving
consumers goods (FMCG).It also becomes evident that
emotions and unconscious motives could be taken into
consideration in understanding responses to advertising and
other aspects. Tremendeous interest among researches in
studying the attitude of consumers towards business (gaski
and Etzel 1986). As consumer perceptions significantly affect
their behavioral responses to marketing activities, consumer
attitude towards marketing have been found to be linked to
several key.
According to a National Council for Applied Economic Research
(NCAER) study, there are almost equal number of 'middle income
82
and above' households in the rural areas as there are in the urban
areas. There are also, almost twice as many 'lower middle income'
households in rural areas as in the urban areas. And at the highest
income level there are 2.3 million urban households as against 1.6
million households in rural areas.
Articles:
Dr.S.Sakthivel Rani (Jan2010) In the marketing literature much
attention has been devoted to urban consumers. As there exists
two countries namely developed and developing countries. The
markets of urban and rural areas can be characterized by
developed markets and developing markets. This is due to the
fact that most of the markets are untapped in these regions.
Balaji Sathyanarayanan (Sep2010) said most brands compete
in an environment of cutthroat competition. As rightly said, the
cost of acquiring new customer is much more than of retaining
the existing ones. Of late, companies are resorting to an
intelligent marketing tactics called “Compulsive Retention”.
This article explains that how much companies retain their
customers by tying them into buying their products and
services again and again. It also explains the limitation of
compulsive retention.
Suvadip Chakraborty(Sep2010) said that India’s rural market
is a gold mine, but largely remain untapped by the Indian
corporate sector. During recent time some companies and
organizations have implemented some innovative projects to
tap the rural market and deliver value added services to the
doorstep of the rural people. This article discuss some of the
internet-based marketing initiatives taken up in the recent
83
past, which have contributed positively to the economic and
social life of the rural population.
Dr. Pinaki Ranjan Bhattarcharyya & Dr.Sitaram Mazumdar (Aug
2009) Consumer attitude towards marketing activities are
important from both theoretical and marginal standpoint
(gaski and Etzel 1986) consumers make product choices based
on a combination of product attributes that best meet their
needs on dimensions of values , cost and prior satisfaction
(kotler 1997).
Bala Balachandran, one of the longest serving members of the
Godrej Consumer board and a professor at Northwestern
University’s Kellogg School of Management, recalls a strategy
meeting that led to this reorientation towards rural markets
and low income housing. Asked what they think Godrej
Consumer’s main product was, most executives came up with
Cinthol or Godrej No. 1. But Adi Godrej, who is known around
the office for his punctuality, said it was something more,
including the brand’s connect with the customer and its
distribution system. “All the focus on rural and the segment
that he concentrates come from the ‘customer centric culture’
of GCPL [Godrej Consumer Products],” says Balachandran.
“That also determines the acquisition strategy as he is rapidly
building inorganic growth both within [and] outside the
country.”
Godrej says he has used the slowdown as an opportunity to add
talent and buy ad space for the rebranding campaign sensibly.
Godrej Properties and Consumers have acquired top-tier talent
as has the newly set up strategy office. He says the cost-cutting
also allowed Godrej Consumer to spend almost twice as much
84
on advertising and double profits. “This is our only
extravagance,” says Dalip Sehgal who heads Godrej Consumer
Products, referring to his new office. “Even here, we spent
sensibly.”
Over the last year, the group has created task forces to reduce
costs, and strategic groups across companies to deal with a
market situation they have never seen: The yo-yoing of
commodity prices, closure of modern trade stores and the
move of some consumers to smaller pack sizes and lesser
known brands. “We pulled forward some initiatives like
increasing penetration in the rural market,” says Sehgal.
Sunil Duggal, CEO, Dabur in Business Today, June 2009 said the
rural market, though, is expanding. For many companies,
particularly the smaller ones, the rural market is still
unexplored and as they spread in India’s interiors their
volumes tend to get a significant boost. Says R.K. Sinha, Chief
Operating Officer, Godrej Consumer Products: “Rural market is
a faster-growing segment and is still under-penetrated. We are
still not available in many rural areas as developing
distribution takes time.” With consumer-spending power on
the upswing in the rural areas, this is a good time for mid-sized
companies to gun for growth.: “Our overall strategy this year is
to focus on the rural market, and with the government’s rural
push, we see good potential.” FMCG giant HUL already has a
fairly sizeable presence in the rural market.
Saugata Gupta, consumer business division CEO of Marico, the
maker of Parachute hair oil and Saffola cooking oil in
Economics Times, January 2011said "A bigger shift from agri-
business and increased accessibility to smaller towns is helping
85
us take our products in places where penetration was not
thinkable few years ago,"
Venkatesh Tamlurkar(Sep2006) Article “ Assessing the
marketing for rural India” gives a sweep of the Indian rural
scenario for marketers income available with this segment
approaches to marketing that marketers can use and above all
the enormous potential this segment has for marketers.
Bikram Jit Rishi (Assistant Professor at Institute of
Management Technology Ghaziabad India),2005 November
said :Go Rural ......is the marketing mantra of many
organisations’ today. However, until a few years back, the rural
markets were mostly ignored and were not considered
profitable. But with many Indian brands entering into the rural
markets, this myth has now been completely removed.
Nonetheless, operating in a rural area is not an easy task and
requires serious efforts. Many companies have failed to target
their strategies in the correct direction and have hence faced
tough times. This article aims to highlight the significance of
rural markets and strategies to overcome the obstacles and
operate profitably. .
The Marketing Mastermind (2003), Hindustan Lever rural
marketing Initiatives by "A Mukund" Marketing Mastermind
has given the perspectives in which HLL has approached
towards rural markets.
Assocham president Venugopal Dhoot said : The factors
responsible for increased market penetration in rural FMCG
sector comprise higher consumption patterns of rural
population for products such as consumer durables – as rural
86
India is getting connected with power facilities, personal care
products , toiletries and soaps and soft drinks.
Rajendra Aneja, Group head at foods group/ United Arab
Emirates !Consumer Products said: The major reason for the
small size of rural market are low purchasing power, slow rate
of change in attitude, wide spread dispersal of villages,
inadequate road networks and frail communications .The other
factors impeding rapid growth of rural markets are inadequate,
find tuning of the marketing mix of rural areas, slant marketing
research, poor media reach, a limited number of retail outlets
and the courage of spurious products.
According to Pradeep Tognatta, (former vice president of LG)
The economic growth in India's agricultural sector in last year
was over 7%, compared with 3% in the industrial sector .This
implies a huge market potentiality for the marketer to meet up
increasing demand. Factors such as village psyche, strong
distribution network and market awareness are few
prerequisites for making a dent in the rural markets. The
model is of the stolid Anglo-Dutch conglomerate Unilever
Group, which has enjoyed a century-long presence in India
through its subsidiary Hindustan Lever Ltd. It was Hindustan
Lever that several years ago popularized the idea of selling its
products in tiny packages. Its sachets of detergent and
shampoo are in great demand in Indian villages. Britannia with
its low priced Tiger brand biscuits has become some of the
success stories in rural marketing.
Rural Industrialization has been vital issue for the country to
ensure socio economic development of the nation. The
experience gained all over the world has amply shown that
87
industrialization is essential for development as it ensures the
supply of goods and services required for improving quality of
life and provides opportunities for employment (Tahori and
Singh, 1993).
Papola (1985) cited in Tahori and Singh (1993) has rightly
observed: “In a way, industrializations as much an essential
ingredient of rapid and self sustained development of rural
areas as it is of development of the entire country.” But the
rural development cannot be obtained only by heavy
industrialization rather small scale and micro enterprises are
more sustainable way to benefit the rural poor. There is a need
for “production by Masses, rather than mass production.
(Schumacher, 1977:68 cited in Tahori and Singh, 1993).
Rural development is the need of the hour future lies on how it
accelerates further. Despite of lot of effort put by current
government, there are several problems in achieving the rural
growth momentum. The researchers have tried to indentify
certain key problems of rural marketing one of the very
important parameter of rural growth and development
Books:
According to Dr S.K Baral and Dr. S.C Bihari, 2012 , In their
book “Rural Marketing and Micro Finance – Text & Cases” The
FMCG producers now realize that there is a lot of opportunity
for them to enter into the rural market. The sector is excited
about the rural population whose incomes are rising and the
lifestyles are changing. There are as many middle income
households in the rural areas as there are in the urban. Thus,
the rural marketing has been growing steadily over the years
88
and is now bigger than the urban market for FMCGs . Globally
,the FMCG sector has been successful in selling products to the
lower and middle income groups and the same is absolutely
true in India. Over 70% of sales is made to middle class
households today and over 50% of the middle class is in rural
India. The sector is excited about a burgeoning rural
population, whose incomes are rising and which is willing to
spend on goods designed to improve lifestyle.
Today there are over 15 million villagers in India who are
aware of the internet and other means of communication. Ten
years back, history was created with public call office phone
booths (essentially manually operated payphone facilities),
opening in every corner of the country. This experiment was an
instant success and contributed to hundreds of thousands of
jobs in the rural. The existing 6 lakhs public call offices in India
will soon be transformed into public ‘Tele-info-Centres’
offering a variety of multimedia information services. The rural
consumers spend time and money to access higher level of
information. Consumerism has altered rural buying behaviour
in recent years.
It becomes amply clear that rural India has to be the hot target
in future for FMCG companies as it presents a plethora of
oppurtunities, all waiting to be harnessed. Many of the FMCG
companies are already busy formulating their rural marketing
strategy to tap the potential before competition catches up.
With extensive competition not only from MNCs but also from
the numerous regional players and the lure of an untapped
market has driven the marketers to chalk out bold new
strategies for targeting the rural consumer in a big way. All big
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players in the industry be it HUL, Marico, Colgate-Palmolive or
Britannia, are showing deep interest in rural India. However
not everything is all rosy and there exist some gray areas in the
rural strategies also. To increase sales, growing the consumer
pie rather than sharing it, has emerged as one of the key
strategies being used by FMCG majors. Offering more product
varients, categories , price points, sizes, and different
marketing and distribution channels , all form part of a FMCG
corporate’s strategy. To gaugethe extent of shift in focus of the
FMCG giants just sample this; recently Godrej Consumer
Products Ltd. (GCPL) did something that it hadn’t done before:
it introduced smaller pack sizes of some of its soaps and put
them on the market for Rs. 5 and FMCG giant HUL has just
launched a green variant of Lifebuoy soap, which, it hopes will
be a winner in the rural areas.
According to Prof. S.C Jain, In his book “New trends in rural
marketing” The Indian rural market with its vast size and
demand base offers great opportunities to marketers. Two-
thirds of the country’s consumers live in rural areas and almost
half of the national income is generated here. It is only natural
that rural markets form an important part of the total market
of India. If we consider the features of rural markets really it’s a
challenge for the organized retailing in our country.
The Indian rural market offers great opportunities to
marketers. Nearly three fourths of the country’s consumers are
in the rural market and one half of the national income is
generated there. The rural market of India is a geographically
scattered market. Whereas the urban population of India is
concentrated in 3200 cities and towns, the rural population is
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scattered across 5,70,000 villages. Rural consumers continue to
be marked by low purchasing power/low per capita income.
Similarly, they continue to be a tradition-bound community,
with religion, culture and tradition strongly influencing their
consumption habits.
In recent years rural consumers have been increasingly drawn
into the saving habit. As much as 70 percent of the rural
households now save a part of their income. The rural market
is not only scattered but also diverse and heterogeneous. Rural
consumers are diverse in terms of religious, social, cultural and
linguistic factors. It has been estimated the rural India has a
literacy rate of 28 percent compared with 55 percent for the
whole country. In recent years, many corporates have been
trying hard to develop a market for their products in the rural
areas, investing substantially in them. The buying behaviour of
rural consumers, just like their lifestyle, has been undergoing a
change in recent years. Rural consumption accounts for a
larger share than percent. The opportunity in the rural market
becomes all the more rosier when the corporate see it in just a
position with the growing competition in the urban markets.
The heat of competition in the urban market actually serves as
the stronger driver behind the growing interest of corporate in
the rural market.
According to Arun Bhargava, 2010 , In his book “Rural
Marketing and Agribusiness in India” Agrarian economy has an
important place in India, even though it is no longer the sector
that contributes the highest percentage to the growth rate.
Indian rural scene is rather dismal, with agriculture
deteriorating into a rather unglamorous and unremunerative
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sector. There is an urgent need to strengthen the social
infrastructure so as to fight illiteracy and poverty, and
simultaneously , strengthen the physical infrastructure like
health services, roads, drinking water, dwelling houses,
irrigation facilities, quality agricultural inputs, processing units,
produce storage units, marketing etc. Also bank credit has to be
delivered timely and cost effectively.
According to Kamlesh Kumar Jha , 2010, In their book “Rural
Marketing – Challenges and oppurtunities” The rural consumer
of today is no longer bound by limited finances and urban
brand elitism, as incomes increase and communication
technologies improve, the rural customer has become as well
aware as his urban counterpart of the options choices and the
quality of products that he/she is entitled to buy. The T.V and
the internet today inform the rural consumer of not just the
plethora of choices in goods, arena of marketing faces immense
challenges as well as contemporarily cannot be fulfilled by
mere advertisements of local products on painted walls.
The focus is on comprehending the logistics of rural marketing
in a scenario wherein it is essential for marketers to cater both
rural and urban consumers in order to expand their business
and the advantages, issues and prospects offered by it. In
addition, it also gives space to analyze current trends and
developments, and undertake an exploration of the way it is
shaping up.
According to CSG Krishnamacharyulu and Latitha
Ramakrishnam. 2009, In their book “Rural marketing – Text
and cases” Though change is common, some changes seem
peculiar and paradoxical. Today we witness in Indian economy
92
one such bi-faceted change – a change from national to global
on one side and urban to rural on the other. Ruralise is among
the buzz words of the new era, viz. Globalize, liberalize,
privatize, and computerize.
Thanks to FMCG companies like HCL, Godrej, Dabur, P&G,
Colgate-Palmolive and consumer durable makers like LG,
Maharaja, Philips etc. for exhibiting such a leadership i.e. a
visionary entrepreneurship . Today many Indian corporate and
MNC’s look at these markets by compulsion as well as by
choice. Compulsion because markets are saturated, and there is
nowhere to go. Choice because they are attractive and viable.
Sanal Kumar Velayudhan (Oct 2007) said about the unique
insights into the essential features of rural markets in India as
well as challenges posed by the rural consumer. Retaining the
managerial perspective and examines in greater detail the
concept of rural markets and rural marketing. He also
illustrates how social and cultural habits influence rural
consumer behaviour.
The Ramaswamy and Namakumari (2007) explore the
problem of rural market. They say that the problems arise
basically out of the peculiar dynamics of rural market of India.
The uniqueness of the rural consumers, the uniqueness of the
rural market and the peculiarities of the distribution
infrastructure in the rural area.
The special problems in physical distributions in rural context:
Transportation
Warehousing
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Communication
Distribution in rural market is also handicapped due to
adequate banking and credit facilities. Even after the expansion
in rural banking facilities in recent years, there is only one
branch for every 50 villages.
Ruchika Ramakrishnan (Sep 2006) Over the years, marketers
and researchers have realized that urban markets in India are
fast reaching saturation levels and consequently rural markets
in India have a huge untapped potential. Specific reasons for
growing importance of rural markets and defines some key
relevant concepts. Moreover, the geo-demographic, economic
and cultural environment along with the status of rural
infrastructure has also been discussed in detail. It also
describes various aspects related to product and pricing and
examines various decisions that the companies would have to
make with regard to these two elements of the rural
marketing-mix various strategic and managerial implications
for marketers and researchers engaged/interested in India's
vast rural market.
Pradeep Kashyap And Siddhartha Raut (2005) Rural markets
throw open a lucrative challenge to the Indian marketer. The
Rural Marketing Book is replete with critical information and
has a profusion of Practical Caselets, At a time when it has
become imperative for products and services to make a
beeline for rural markets, the book illustrates the trend with
focus on Project Shakti, echoupal, a large format retail stores,
Project Shakti, echoupal, overview of rural markets,
haats/shandies, HP rasoi Ghar and ShriRam Finance.
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Excerpts from Corporate speak on Rural Marketing
Targeting barbers and salons in rural areas, Godrej Consumer
Products Ltd. has decided to engage them in a branding
exercise with its toiletries and hair coloring portfolio.
According to Mr. Dalip Sehgal, Managing Director of the
company, "We are focusing on rural India and believe that
barbers are great influencers.
It's probably this resilience that's prompting companies such
as Airtel, facing slower urban sales following the global
financial meltdown, to make a dash for the hinterland despite
the lack of basic infrastructure. We started focusing
on the rural markets about a year-and-a-half ago, and today 60
per cent of all our new consumers are from the rural
areas, says Sanjay Kapoor, Deputy CEO, Bharti Airtel.
Rural demand has grown by 20 per cent in the last two
quarters, with no downgrading of brands if anything, people in
rural areas have moved from unbranded to branded items,
points out Pradeep Kashyap, Founder & CEO of the rural
marketing consultancy, MART. A case in point, he says, is the
foray of products such as the malt-based drink Horlicks and
Dove soap among the up market rural segment.
The slowdown has not impacted the rural markets as much as
their urban counterparts simply because the upswing was also
not felt here with the result that the rural populace is playing
catch up with the urban consumers and hence fuelling demand,
says Anil Jain, Managing Director, Jain Irrigation Systems,
which supplies drip irrigation systems to farmers.
Earlier, we had a lot of decentralized rural marketing efforts,
which were largely dealer-driven. Now, they are more
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centralized. This includes a 500-strong sales force on the full-
time rolls of our dealers to target rural sales
specifically, points out Anil Dua, Senior Vice President,
Marketing, Sales and Customer Care, Hero Honda. The
company, in end-2007, also launched a rural vertical Har Gaon,
Har Aangan (Every village, every house).
IFFCO Tokio General Insurance tied up insurance with
fertilizer. For our Sankat Haran Policy(non-crop insurance), we
offered farmers a free insurance cover worth Rs. 4,000 with
every fertiliser bag, with the sale receipt also doubling up as
a policy document, says N.K. Kedia, Director, Marketing, IFFCO
Tokio General Insurance.
The $40billion global white goods major LG Group expects rura
l consumers to push its revenues in India this year. In fact, the
semi-urban and rural markets are expected to contribute early
half of LG Electronics India's revenues in India. The company
also plans to enhance its manufacturing capacity by about 30
per cent by deploying innovative processes in its plants, which
will translate into greater efficiency, said Mr V. Ramachandran,
Director, Sales and Marketing, LG Electronics India.
The food outsourcing business from India has an opportunity
of $5 billion as of today, said Mr Piruz Khambatta, Chairman &
Managing Director, Rasna Pvt Ltd, at Amaethon- the fifth
edition of the Agri-Business Summit of the Indian Institute of
Management, Ahmedabad. "Agri business for rural India can do
what Information Technology has done for urban India. India
should be promoted as the food factory of the world in terms of
both production and marketing," he said.
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According to Mr N. Raveendran, Managing Director, Alegion,
test marketing with one refurbished Maruti van has showed
that it is possible to sell insurance products cost effectively in
small towns and villages. Now, Alegion intends to buy 30 more
such vehicles, initially, to cover the four southern States. The
grand plan is to buy at least 500 vans, one for each revenue
district in India, over the next 18 months. "I have already
spoken to Maruti," says Mr Raveendran. Alegion intends to sell
both life and non-life. "Most of the rural folk have never bought
an insurance product because they've never been sold one,"
says Mr Raveendran. Now, the man in the van will do that. The
vans, linked to a 'control centre' in each State, will be able to
cover a lot of ground. Each van will cover the entire district at
least once in a fortnight.
The Review of literature on ‘rural marketing’ thus, throws the
light on the fact that there are gaps in the studies on this subject.
Most of the studies covered some aspects of the rural market but
it has not covered the complete area of rural marketing. In the
light of this, it is assumed that the present work would make an
addition to the existing works on rural marketing.
2.2 Statement of the problem:
Marketers face problems in distinguishing urban markets and rural
markets due to spread of consumers across various population
categories and with different demographics. Marketers have to
ensure that all the members of channel of distribution would get all
the FMCG products well on time and motivate all the channel
members to stock their products at all levels.
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Making products available at rural retail and marketers have a big
challenge ahead for regular supply with less lead time. Distributors,
wholesalers, stockists, super-stockists and retailers are the channel
members in rural market and this chain plays a crucial role in the
profitability of the company and their satisfaction also in terms of
benefits as given to their urban counterparts is also very crucial as
per the company’s business point of view.
Professional management and competitive attitude are essence for
improving overall efficiency and effectiveness in every business,
which makes business organization more effective in terms of
political and economic development. Sales promotion activities
should be planned according to the market needs and marketing
initiatives taken without keeping the long term objectives of the
business may dilute the brand equity. Dabur India Ltd. and Godrej
Consumer Products Ltd. are the professional players of the modern
business arena and their business strategies are designed
accordingly with the aim to satisfy the rural consumers. Therefore
the statement of the problem under the study that has been selected
is “Rural Marketing Strategies of Fast Moving Consumer Goods: A
Comparative Study of Dabur India Ltd and Godrej Consumer
Products Ltd”.
2.3 Specific objectives of the Study:
To compare the marketing strategies of FMCG products as
adopted by Dabur India Ltd. and Godrej Consumer Products
Ltd.
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To assess and compare the advertising media mix used by
Dabur India Ltd. and Godrej Consumer products Ltd. for
FMCG products.
To study the role of distributors, wholesalers and the
retailers in the profitability of the company.
To assess the relevance of heavy investment/expenditure on
packaging.
To analyze the different promotional tools of Dabur India Ltd.
and Godrej Consumer Product Ltd. in rural areas.
2.4 Hypothesis Formulation:
A hypothesis is a tentative statement that proposes a possible
explanation to some phenomenon or event. A useful hypothesis is a
testable statement which may include a prediction. A hypothesis
should not be confused with a theory. Theories are general
explanations based on a large amount of data. For example, the
theory of evolution applies to all living things and is based on wide
range of observations. However, there are many things about
evolution that are not fully understood such as gaps in the fossil
record. Many hypotheses have been proposed and tested.
A hypothesis is a specific statement of prediction. It describes in
concrete (rather than theoretical) terms what you expect will
happen in your study. Not all studies have hypotheses. Sometimes a
study is designed to be exploratory (see inductive research). There
is no formal hypothesis, and perhaps the purpose of the study is to
explore some area more thoroughly in order to develop some
specific hypothesis or prediction that can be tested in future
research. A single study may have one or many hypothesis.
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Usually, we call the hypothesis that you support (your prediction)
the alternative hypothesis, and we call the hypothesis that
describes the remaining possible outcomes the null hypothesis.
Sometimes we use a notation like HA or H1 to represent the
alternative hypothesis or your prediction, and HO or H0 to represent
the null case. You have to be careful here, though. In some studies,
your prediction might very well be that there will be no difference or
change. In this case, you are essentially trying to find support for the
null hypothesis and you are opposed to the alternative.
Statement of the Hypothesis:
Keeping in view the objectives, the following hypothesis will be
formulated for the study:
- Rural marketing strategies of Dabur India Ltd. and Godrej
Consumer Products Ltd. for FMCG products are not effective and
there is no significant difference in between.
2.5) Design of the questionnaire
There are two different questionnaires – one for channel members
and the other for rural consumers. The questionnaires were designed
covering various attributes and variables influencing the rural
purchase of FMCG like Promotions, Packaging, Availability ,
Affordability , Advertising media and role of the channel members
including Distributors, Wholesalers, Super- Stockists and Stockists
and Retailers. The second point kept in mind was the satisfaction of
rural consumers i.e. whether they, in turn, are served well by the
existing FMCG channels in the rural market which decides the
effectiveness of these channel members.
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The questionnaire for channel members focused on reasons for
satisfaction or dissatisfaction and the questionnaire for consumers
focused on shopping behaviour, purchase habits, brand awareness
and preferences, levels of consumer satisfaction and consumerism.
Accordingly the researcher used closed/ open ended, multiple choice,
nominal and ordinal questions. Necessary care was taken to ensure
that they were simple, direct, and unambiguous and maintained an
appropriate sequence. The draft questionnaire was designed keeping
in view the research objectives. It was reviewed and scrutinized at
various stages of discussion with experts.
2.6) Pilot Study
While trying to prepare a design of the survey it was thought
necessary to conduct a pilot survey to ensure the workability and
viability of the design before giving a final shape. The pilot survey
was mainly conducted for three purposes:
To determine the sample size.
To test the questionnaire and
To improve the fieldwork organization.
The reason for conducting the pilot survey was to ensure that the
questionnaire that has been designed looks simple and unambiguous
to the designer will appear equally so to the respondent. Therefore, it
is very much essential to check the viability of the questionnaire in a
pilot survey before the main launch. It is the humbling experience for
the designer to find what can go wrong.
As a part of the pilot study, two different questionnaires were
administered – one for distributors, wholesalers, and retailers who
deals either with Dabur India Ltd. and Godrej Consumer Products
101
Ltd. or both and the other one for fifty rural consumers in rural
districts of Rajasthan. In the light of the experience gained, as well as
the valuable opinions / suggestions received during the pilot study,
the questionnaires were reviewed and edited, and technical
flaws/inconsistencies were removed making them more
comprehensive, compact, meaningful and purposeful. The samples of
the final questionnaires are attached in Appendices ‘A’ and ‘B’.
2.7) Selection of the Sample
Two companies – Dabur India Limited (DIL) and Godrej Consumer
Products Limited (GCPL) which are pioneers in Fast Moving
Consumer Goods (FMCG) in the rural market were selected to study
their marketing strategies in rural districts of Rajasthan.
The sample study bears the following characteristics:
1. Different questionnaires were obtained from each level of
distribution and at the time of consumption.
2. The nature of firms includes either their association with
Dabur India Ltd or GCPL.
3. Distributors, stockists and super-stockist were exclusive for
either Dabur India Ltd. and GCPL & wholesalers and retailers
were not exclusive.
4. These companies are pioneers and hold the good FMCG market
share together.
2.8) Collection of Data
Primary Data: This data is collected afresh and for the first time
from different sources, and thus happens to be original in character.
Primary data is first hand information collected through various
methods such as observation, interviewing, mailing, filling
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questionnaires etc. It is the first hand information collected directly
from the respondents. The researcher is able to collect the required
data precisely according to his research needs.
The tool used here is questionnaire. Primary data is collected through
survey among rural respondents and the interview of different
channel members including super-stockist, stockists ,wholesalers,
distributors ,retailers, corporate people and rural customers from
Jaipur and Alwar districts’ rural market.
Secondary Data:
It is collected through Internet and Books.
Annual General reports of Dabur India Ltd. and Godrej
Consumer Products.
Circulars issued by Dabur India Ltd. and Godrej Consumer
Products Ltd.
Published and Unpublished matter of Dabur India Ltd. and
Godrej Consumer products Ltd.
Newspapers , Journals , Magazines
2.9) Analysis of data
1. The field survey and personal interview technique was adopted in
illuminating responses.
2. The data collected has been tabulated and presented in the form of
tables, charts and graphs.
3. Percentage method is used to analyze the collected data.
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2.10) Depiction of hypotheses
To depict hypotheses, researcher used the statistical tools like Pie-
charts and Bar Graphs.
2.11) Outline of the Thesis
Chapter 1
Introduction of Rural Marketing
This chapter deals with the introduction of Marketing and overview.
It also includes the detailed discussion of the Four P’s of marketing
which is generally being referred as “Marketing Mix”. It also
highlights the effective techniques which can be used when pricing a
new product. It also includes the introduction of rural markets and an
overview of Indian rural market. Rural Marketing was discussed in
detail with its features or characteristics. Beside that the problems in
the booming rural marketing have been discussed considering
opportunities and challenges. Furthermore, few live examples were
discussed which clearly elaborates the picture of rural marketing in
India. Various initiatives of different FMCG companies have discussed
which highlights their continuous and sincere efforts in developing a
brand image in rural markets. A basic approach was discussed in this
chapter which is considered to be important in getting success in
rural market.
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Chapter 2
Review of Literature and Research Methodology
The focussed and detailed review of literature is done as a part of this
study concerning rural marketing strategies and various aspects of
rural marketing. Also, the detailed overview of the research
methodology used for this study is mentioned here in this chapter.
This chapter covers statement of the problem, specific objectives of
the study, statement of hypothesis, design of the questionnaire, Pilot
study, selection of sample, collection of Data, scoring, Analysis of
Data, Validation of hypothesis, Summary of the thesis, limitations of
the study.
Chapter 3
Introduction of FMCG
This chapter deals with the introduction of FMCG products and major
segments of the FMCG industry. Here, various positive and negative
aspects of FMCG sector are highlighted which is quiet helpful for
conducting this research, all the information generated are based on
previous researches. Beside, rural consumer behaviour towards
FMCG products is also considered as useful for this study. It also
includes the current trend and possibility of growth in FMCG sector
in India. It also comprises of factors which will change the fortune of
the FMCG industry in coming ten years. A brief introduction of Dabur
India and Godrej Consumer Products is given for understanding the
history and various business areas of these 2 FMCG players.
Furthermore, various promotional strategies used by DIL and GCPL
are discussed in detail.
105
Chapter 4
Introduction of Product Planning
The brief description of product planning and different phases of
product planning is mentioned here in this chapter. Also the
complete product life cycle theory is discussed for a better
understanding of product planning. Beside various stages of new
product development are highlighted here in this chapter. The
complete product width of Dabur India and Godrej Consumer
Products is mentioned which clears the business areas of these
companies. It also comprises of present product policies of Dabur
India and GCPL. Furthermore, Impact of product policies on product
success in terms of profitability is also mentioned in this chapter.
Chapter 5
Introduction of Pricing and Promotional Strategies and Channel
of Distribution
This chapter deals with the introduction of pricing and promotional
strategies. Various channel of distribution and discussed in detail to
understand the winning formula of rural market. To understand the
pricing strategies in a better way, various models of pricing were
discussed in this chapter. Various internal and external factors which
influences the price of the products of Dabur and Godrej Consumer
were highlighted. Beside, various initiatives for developing the
awareness through promotional campaigns of Dabur India and
Godrej Consumer are discussed here in this chapter. Serious efforts
were made in understanding the channel of distribution of Dabur
India and Godrej Consumer and the details are mentioned here for
better understanding.
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Chapter 6
Data Analysis and Interpretation
In detail, it explains the various methods used for analysing the
collected data. It also discussed the various statistical tools used for
the analysis. During this research, pie charts and bar graphs are used.
Percentage method is used to analyse the collected data. Microsoft
Excel was used for analysis purpose of the collected data.
Advertising in rural areas is considered to be important and the
presence of celebrity or mascots develops a curiosity among rural
people which ultimately affects the sales of the product. Generally
customers are more influenced by offers followed by Gifts with
purchase, coupons and at the last money back offers. Most of the
channel members said promotional activities in rural areas are quite
similar to urban areas, companies doesn’t plan any specific strategies
or promotional activities. Rural markets are full of challenges; every
company should promote innovative and customized products which
will satisfy the needs of each customer. Customizing products and
services is among the most critical means to deliver true customer
value and achieve superior competitive advantage. The challenge for
any company is not to customize products and services in itself – but
to do it in a profitable way. Nowadays rural consumers buying
behaviour has changed, they are no more considered as price
sensitive buyers, they now look for good quality products and value
for their money. Most of the channel members were of the opinion
that attractive and convenient packaging always attracts more
customers but the cost of the product will go up. In modern time,
urban and even rural consumers are ready to pay higher price for the
product but it should satisfy their needs. Better quality packaged
107
goods attracts higher sales. In rural areas, retailers’ advice is
considered as very important and rural consumers take opinion from
retailers before they make any purchase. For the rural customer the
choices or even alternatives available are limited. So the retailer
plays a crucial and advisory role in the purchase decision. Several
researches on the buying behaviour of rural consumers indicate that
the rural retailer influences 35% of purchase decisions. The rural
customer doesn’t change the shop very easily until and unless the
product is not available at his shop and he always goes to the same
shop to buy his things. Retailers and distributors are the backbone of
the company and the success depends on the extensive distribution
channel comprising distributors as well as retailers who are covering
the deep interior parts of rural India. As rural folks are highly
influenced by the influence groups and word of mouth, direct
marketing can play a crucial role in increasing the marketing base.
When channel members were interviewed and asked to comment on
the rural marketing strategies of Dabur India Ltd and Godrej
Consumer Products Ltd and their experiences with them. Which
company between the two is more aggressive in rural areas of
Rajasthan and have they formulated different strategies for rural
areas. Chunk of the respondents say 90(75%) said Dabur India Ltd is
more aggressive in the rural areas of Rajasthan. Infact, they were of
the view that Dabur India Ltd is targeting more in northern region of
India while GCPL is dominating in southern part of the country. While
30(25%) were of the opinion which states that GCPL has got more
aggressive policies for rural areas in Rajasthan.
Preference for attractive packaging is noticed in rural marketing.
Packaging creates a favorable impression in rural customers’ minds
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which impacts their buying behaviour. Rural people would
remember an FMCG by its packaging. It is recommended to allot great
deal of attention towards designing attractive packaging while
keeping the costs low. Also the rural marketers can promote their
FMCG on the basis of attractive packaging. Rural Consumers who are
more affluent likes to buy small packets or sachets for trial purpose
only otherwise they decide the product quantity on the basis of their
family size. Shelf display is a part of in-store advertising and it
contributes to promotion of FMCG, it emerged as one of the key
variables contributing to the Promotion Factor. Visibility in the retail
outlet is a very important aspect. Customers take decisions basing on
the visibility of a FMCG on the retail shelves.
Today, television has proved to be an effective medium for
communication with the rural masses. Television reaches the larger
segment of rural population than any other form of mass media
except Radio. But people like to see to believe. Television has proven
advantageous in communicating with the rural people due to the low
literacy levels. It was observed that rural consumer preferred
medium and not low priced products therefore organizations cannot
be competitive in the rural market of Rajasthan on the basis of lower
price alone. Rural consumers don’t like to have high-priced
commodities due to their low income. So Price can be kept low by
small unit packing resulting in higher sales. Rural customer
understands and demands value for money in every purchase that he
makes. Pricing offered to consumers should be for value offerings
that are affordable. Price sensitivity is extremely high and
comparison with competitive prices is common. Even now, rural
people travel to their nearby towns for buying FMCG products.
Competitive prices and more alternatives are the reasons for the
109
travelling. Rural consumers don’t change the retailer frequently as a
bonding develops between the two and the retailer provides credit
facility t those who buys the products frequently from his shop.
The products of Dabur India are quite popular in the rural regions of
Jaipur and Alwar but rural consumers don’t know the complete
product width of the company, Similarly Godrej consumer products
are popular among rural consumers but it is restricted on few
products only. Television is the main source of information for the
products of Dabur India as well as Godrej Consumer products Ltd.
Chapter 7
Findings, Conclusions and Recommendations
It highlights the conclusions based on the analysis carried out. It also
provides the findings from the study and contribution. Based on the
findings and conclusion chapter also includes suggestions for
managerial implications.
The primary vehicle that facilitated digital marketing has been the
Internet. Internet has so far been experienced by people through PCs.
As a result the internet penetration has remained limited to less than
10-15% in a country like India. According to the channel members
including retailers, rural consumers are not price sensitive
nowadays. They have named on to higher price products. Rural
consumers don’t prefer low quality products but they look for those
products which value for given money. Channel members think every
FMCG company has got a chance to grab the larger portion of the
market share, it totally depends on their aggressive rural strategies
and supply chain management. They don’t think FMCG giant HUL
pose any threat to the chances of growth of any company. Rural
110
consumers and even channel members advocated the attractive and
colourful packaging of FMCG products but it affects the cost of the
product, it has now become a trend to get the packaging attractive
features such as easy to hold or dispense, those with airtight or leak
proof caps, measured pouring while others may value eco-friendly on
bio-degradable packaging. According to channel members involved in
the promotion and selling of products of Dabur India and GCPL,
Dabur India has more aggressive rural strategies for rural Rajasthan.
When rural consumers were interviewed, it was observed that the
awareness among rural masses in the district of Jaipur and Alwar for
the complete product width of GCPL is higher than the DIL. But the
popularity of Dabur Products is higher than the products of Godrej
Consumer Products among rural masses in Jaipur and Alwar. It
shows despite having aggressive rural strategies and good brand
image and awareness, GCPL is less effective in terms of popularity
among rural masses in the district of Jaipur and Alwar. Though
television is the main source of information for both DIL and GCPL
followed by word of Mouth and Internet etc. Godrej Consumer
Products Ltd should re-strategize their marketing strategies in rural
region of Jaipur and Alwar. Even the brand awareness about the
different products of GCPL is higher, they haven’t been able to take
the advantage of it. Majority of rural consumers select the product on
the basis of the celebrities who endorsed the advertisements. The
celebrities in India are the role models for majority of Indians. The
consumers seek variety of aspects like credibility, likeability, fit
between the brand and the celebrity. The companies believe that the
celebrity changes the purchase decision or intention of the rural
consumers in India.
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Rural consumers and even channel members in rural Rajasthan
believe that in-store advertising or shelf display affects the purchase
decision of a consumer and even it affects the buying behaviour of
rural consumers. In-store advertising includes placement of a
product in visible locations in a store, such as at eye level, at the ends
of aisles and near checkout counters (i.e POP-Point of Purchase
display), eye-catching displays promoting a specific product, and
advertisements in such places as shopping carts and in-store video
displays. They both believe in the universal mantra which works in
rural India “Jo Dikhta Hai Woh Bikta Hai”.
Approximately same percentage of rural consumers purchase their
daily consumable items from the same place or village while others
buys from nearby towns or cities, these rural consumers are affluent
and they make bulk purchase. Rural consumers prefer to purchase
their daily consumable items from one retailer, they shared few
reasons for this association like extension of Credit, Good Behaviour
and courtesy of Retailer, Nearer to Home, Supply of quality goods and
they pass on every information related to various schemes available
on various FMCG products so it directly or indirectly benefits the
consumer.
It was found that local shopkeeper charge additional amount on the
products, it affects the cost of the product and it makes the item
costly. Those rural consumers who can afford to buy in bulk quantity,
they travel to nearby city or town and they get discounts and even
free home delivery facilities.
When the researcher tried to understand the buying behaviour or
motive behind purchasing smaller or larger packs of FMCG items, it
was found that it depends on the family size of the household and
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their income level. Those rural consumers have higher disposable
income and can afford to buy larger packs of FMCG items seek
additional benefits in buying a larger pack. Rural consumers prefer to
buy low or medium priced products and they expect value for money
for each product that they buy.
It is very important for DIL and GCPL to find out the most effective
advertising technique for rural consumers, Melas/Fairs were found
as the most effective advertising technique followed by Media & Print
Media than Radio and wall paintings. Television advertisements are
more influencing as rural consumers can easily identify the product
the product as it was shown on the television. Earlier, Radio was
considered as a well established medium in rural areas. Television
has proven advantageous in communicating with the rural people
due to the low literacy level.
A very interesting fact was discovered in the research, researcher
found that rural consumers are very rigid by nature, they don’t easily
switch to another brand/product in case the product is not available
with the retailer, they ask the retailer to make the brand available in
next few days or if the retailer shows his incompetency in making the
product available than they try another retailer and search the same
brand at the another retail outlet.
DIL and GCPL have adopted various promotional schemes to
influence rural customers, it was found that money back offer is the
most effective and it affects the buying decision of a rural customer. It
is followed by other promotional schemes like prizes on bottle cap
and prizes on the specific number of bottle caps etc.
Rural consumers take advice from retailer when they buy any
product; In fact in rural areas shopkeepers’ recommendation is
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considered to be most important and trustworthy. “Word of Mouth”
is considered as a very important tool in rural areas. Both these
FMCG giants are using this promotional tool in spreading out their
messages among the rural consumers which are ultimately the target
audiences of all the FMCG companies.
Hence it can be concluded that if the Indian organizations want to
reach out to the rural India in an efficient and more effective manner,
they have to re-strategize their policies and should consider rural
perceptions, values and traditions. It has to immerse itself in rural
colours, customs, traditions and modes of communication so that
they can satisfy the needs and desires of rural society. All the
different aspects of rural marketing were studied for this study;
Dabur India Ltd and Godrej Consumer Products Ltd were selected as
two FMCG companies for the study. Their rural marketing strategies
including pricing, promotional strategies and channel of distribution
were studied in the rural regions of 2 districts of Rajasthan i.e. Jaipur
and Alwar.
During the interview it was found that channel partners have similar
opinion as that of rural consumers. According to channel partners,
Dabur India Ltd is more aggressive in rural regions of Rajasthan as
well as Northern regions of the country while Godrej Consumer
Products Ltd is aggressive in southern regions of the country and it
is a part of their business strategies. Similarly the products of Dabur
India are more popular among rural masses in the district of Jaipur
and Alwar. Hence, the rural marketing strategies of Dabur India
Limited were found to be more aggressive and result oriented in the
rural district of Jaipur and Alwar. They were timely announcing
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different promotional activities and their advertising was found to
be more influencing and effective.
2.12) Limitations of the Study
The limitations of the various tools and techniques proposed
are applicable to this study also.
The study proposes have to greatly rely on the data provided
by the companies, distributors, wholesalers and Retailers.
The proposed study is limited to cover major Indian FMCG
companies only.
Limited information is accessible on company’s websites.
Very limited researches have been done on Dabur India Ltd.
and GCPL in Rajasthan so the data are not easily available.
Besides the retail traders, with the age old and traditional
outlook so not maintain record. Moreover, there is no statutory
provision to maintain records compulsorily.
The secondary data used in this study are not sequential and
not relating to the latest period since no significant study was
carried out by any agency. However it is quite discernible that
there is no significant change at present when compared with
the past with regard to structure, spread etc.
Despite these limitations, the findings of this study will provide some
basic understanding of rural marketing ,environment, practices,
structure and problems which are of relevance not only to the chosen
villages under study, but also for the rural markets elsewhere in the
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country. Thus, this would be useful addition to the limited literature
available on the subject.
Sampling :
Sample size: The size will be chosen from the two FMCG majors
selected for the study .Since the population is quite large, the sample
will be 120 including Managers, Sales Staff and channel partners. The
figure for structures interview within (Managers and Sales field staff
including Sales officers) will be atleast 10 per FMCG. The figure for
questionnaire (Distributors /wholesalers and retailers) will be
atleast 50 per FMCG company and 340 rural consumers would be
interviewed.
2.1) A Proposed sample distribution is stated as below:
PROPOSED SAMPLE DISTRIBUTION OF RESPONDENTS:
DABUR GODREJ TOTAL
A .Managers and Sales Officers 10 10 20
B. Super-stockist, Stockists,
Distributors, Wholesalers and
Retailers
50 50 100
C. Rural Consumers 340
Total 460