47

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

48

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

49

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

50

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

51

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.

52

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

53

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

54

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.

55

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

56

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

57

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

58

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

59

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

60

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

61

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

62

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

63

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

64

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

65

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.

67

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

89

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

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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

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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.

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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

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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

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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

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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