Rural buyer behavior - word of mouth influence & risk aversion

Abstract

Seventy percent of India’s population lives in 627000 villages in rural areas. Ninety percent of the rural population is concentrated in villages less than 2000. According to the NCAER projections, the number of middle and high-income households in rural India is expected to grow from 80 million to 111 million by 2007. In urban India, the same is expected to grow from 46 million to 59 million. The unique features of rural India that set it apart from the urban India and hence pose a challenge to the marketers are as follows: Traditional outlook: The rural customer values old customers and traditions. Basic cultural values have a very strong hold on the psyche of the rural consumers. Buying decisions are highly influenced by social customs, traditions and beliefs in the rural markets. Levels of literacy: The literacy rate is much lower in rural areas as compared with urban areas. This poses a challenge in the way of promoting the product. Advertising is very expensive making it difficult to communicate with the target audience. Lack of proper communication and infrastructure facilities: Nearly fifty percent of all villages in the country do not have all-weather roads. The infrastructure facilities like roads, warehouses, communication systems, financial facilities are inadequate in rural areas making physical distribution costly. Many languages and dialects: The number of languages and dialects vary widely from state to state, region to region, and may be even district to district. Even though the number of recognized languages is only 16, the dialects are estimated to be around 850. Low per-capita income: Even though 33-35 percent of the Gross Domestic Product is generated in the rural areas, it is shared by 74 percent of the population. Hence the per capita income is low compared to the urban areas. Normally, the rural consumers spend a majority of their incomes in basic necessities, which makes them very price-sensitive.The success of a brand in the Indian rural market is as unpredictable as rain. It has always been difficult to gauge the rural market. Many brands, which should have been successful, have failed miserably. More often than not, people attribute rural market success to luck. Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern. While the rural market certainly offers a big attraction to marketers, it would be naive to think that any company can easily enter the market and walk away with sizable share. Actually the market bristles with variety of problems. The main problems in rural marketing are: Physical Distribution Channel Management Promotion and Marketing Communication The problems of physical distribution and channel management adversely affect the service as well as the cost aspect. The existent market structure consists of primary rural market and retail sales outlet. The structure involves stock points in feeder towns to service these retail outlets at the village levels. But it becomes difficult maintaining the required service level in the delivery of the product at retail level. As a general rule, rural marketing involves more intensive personal selling efforts compared to urban marketing. Marketers need to understand the psyche of the rural consumers and then act accordingly. To effectively tap the rural market a brand must associate itself with the same things the rural folks do. Utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, melas and CCS Project Report activities where they assemble, can do this. Segmentation or identification of a “rural consumer” has to be based on culture, language, religion, consumption behaviour etc. This is important because even though in terms of demography the rural customers may seem alike, they differ widely based on the marketing and marketing communication required to target the different groups.