Influences on Rural Purchase of FMCG in Emerging markets A ...

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Influences on Rural Purchase of FMCG in Emerging markets

– A Study in South Asian Countries

Dr. Naseer Khan, Associate Professor of Management, & Acting Dean,

College of Business Studies, Al Ghurair University, Dubai

Dr.Venkat Ram Raj Thumiki, Assistant Professor,

Dept. of Business & Economics, Modern College of Business & Science, Muscat, Sultanate of Oman

Dr. Mohammed Abbas Ali, Professor of Management & Director,

International and Media Relations, Al Ghurair University, Dubai

Abstract

Emerging world lives in villages. Emerging nations have been perceived as agro-based economies

mainly depending on traditional technology. With rising income levels and penetration of media, rural

markets in emerging economies have become very attractive for a range of goods and services. FMCG

market is one of the first to emerge in the transformation of rural areas into huge consumption markets.

The current paper emphasizes on the rural consumption of FMCG in South Asian countries, India and

Sri Lanka. 1849 fully completed questionnaires were received basing on which analysis was made.

Awareness and availability emerged as the most influencing variables emphasizing on effective

promotion and distribution of FMCG in rural markets. It was found that rural consumers seek quality

and are prepared to buy high priced FMCG. Findings revealed that while product promotions have

more influence on female buyers, shop keeper’s recommendation has high influence on less educated

consumers. Interesting finding was that influence of low price is highly correlated with influence of

attractive packaging and not with quality. It was also found that rural consumers who purchase FMCG

only when need arises are not significantly influenced by attractive packaging. The current study has

implications in South Asian rural markets which are emerging as massive markets for a variety of

goods and services.

Key words:

Rural consumption, Trust, Emerging markets, brand visibility, shop keeper’s recommendation

Introduction

The thrust on rural development in various emerging countries have transformed their rural economies

into vibrant and growing economies (Arnold & John, 1998). Rise in income coupled with increased

awareness and need for possessing modern goods, has influenced the rural marketing environment

(Prahalad, 2005). Penetration of media, rising aspiration of rural people and packaging revolution have

contributed to the growth of rural markets in emerging economies (Bijoor, 2005). Emerging markets

can be defined as economies which earlier had lower per capita income (Samuel & Douglas, 2011) and

are now experiencing rapid growth in economy (MSCI Report, 2011). The contribution of the rural

sector to the growth of emerging economies has been phenomenal (Central Bank of Sri Lanka, 2009)

as the transition started with improvements in farming methods (The Sunday Times, Oct 11, 2009).


According to MSCI index (Figure 1), China represents 17% of emerging markets, Brazil 15% and

India 9%. Rural markets are potential not only for agri-inputs like seeds, fertilizers, pesticides, cattle

feed and agriculture machinery, but also for a range of goods and services (Franda, 1979). There are

divergent views on the term ‘rural’. The word ‘rural’ is ‘a place far away from towns and cities’

(Collins Cobuild Dictionary, 2001) and it broadly comprises of consumer markets, institutional

markets and services (Lancaster, 2003). Chart 1 presents various constituents of rural markets.

Chart 1: Constituents of rural markets

Consumer markets Institutional markets Services

Fast Moving Consumer Goods & personal

care (oral care, hair care, soaps, cosmetics

and toiletries and household care-fabric

wash and household cleaners)

Agricultural and allied activities

(food processing, poultry farming

fisheries, cottage industries,

schools, NGO's)

Banking, Insurance,

Healthcare, IT,

Power, Telecom

Consumer durables (home appliances,

watches, bicycles, TV sets, radio,

automobiles)

Products like agri-inputs, animal

feed, fuel, engine oil etc and agri-

implements like tractors, pumps

sets etc.

Source: Compiled from various sources

Major income for the occupants of rural markets comes from agriculture (Table 2).

Table 1: Sources of rural in income in emerging countries

Source of income Proportion

Agriculture 53%

Business, crafts, non-agri wages, salaried class, others 47%

Source: Braming, Stephanie (2011). Emerging markets: Essential sources of Global Economic Growth.

Emerging markets are spread across the world. Though there are many other nations which are

categorized as emerging markets, Table 2 presents some of them.

Table 2: Emerging Markets in the world

Continent Countries

South America Brazil, Columbia, Peru

Asia India, China, Philippines, Sri Lanka, Bangladesh

Africa South Africa, Nigeria

Source: MSCI Emerging Market Indices (2012).


Literature review

According to Velayudhan (2002), rural Marketing includes various activities related to

understanding and converting the rural purchasing power into an effective demand with the objective

of creating rural customer satisfaction which essentially aims at improving their standard of living.

Rural marketing is a two way process that includes the flow of goods and services from rural to urban

areas and vice-versa (George & Mueller, 1955). Rural marketing is any marketing activity in which

one dominant participant is from rural area (Kotler, et.al., 2009).

Fast moving consumer goods (henceforth referred to as FMCG) companies like Colgate-

Palmolive and Unilever have already a rural marketing strategy in place (Samantha & Budhika, 2012).

One cannot ignore the social angle for one’s rural initiatives (Prahalad & Lieberthal, 1998). The rural

business models can succeed only when profit and social motive are integrated into the rural strategy.

Rural markets are potential for several goods and services (Chowdhury, 2009) though they pose many

challenges (Prahalad & Lieberthal, 1998), the rural marketers must perform rural marketing in an

effective manner (Mair, et al., 2012). The rural tastes need to be studied and safer products need to be

offered to them (Kotler, et al., 2009). Rural communication must be straight and simple so that

messages are communicated effectively (Bijapurkar, 2000).

Various factors influence the purchase decisions of customers (Blackwell and Talarzy, 1977).

Rural consumers are forced to limit their purchases to low-priced and unbranded products (Goldman,

Arieh, 1978) due to low income levels. However, marketers should not ignore the fact that their rural

consumers seek quality products (Prahalad, 2005). In a rural setup female family members make

purchase decisions and are likely to be influenced by promotional attempts (Chowdhury, 2009) as rural

women actively participate in the rural economic activity (Gamawelagedara, et al., 2011). Rural

purchases are influenced by awareness and availability, and further due to consumption of various

goods the rural consumers’ modernity levels increase (Layton, 1986). According to Layton, the

modernity score is calculated basing on purchase of household goods and expensive goods by rural

consumers.

Every consumer as an individual is different from others (Schiffman, et.al. 1978). Across the

world, irrespective of the development status of the economy, urban consumer decisions are different

from the rural ones (Park, C.W. & Richard J.L., 1982). Thus, it can be understood that rural and urban

customers in emerging markets too are not alike. Rural consumers are economically, socially and

psycho-graphically different from the urbanites. Lifestyles, purchase patterns, consumption patterns,

shopping behaviour, perception of price and almost every aspect of rural consumer profile is different

from that of urban consumers (Gupta, S.L. & Pal, S., 2001). The difference can be noticed in terms of

the price-value equation and consumption patterns as the meaning of ‘convenience’ differs with

market the urban and rural market segments (Sivakumar, 2002).

Trust, according to Morgan & Hunt (1994) can be defined as confidence on the other party that

is built due to honesty, fairness and helpful nature. And the most important aspect is that the trust

factor prevails in the rural markets (Bijoor, Harish, 2005). In a rural setup retailers, village head, priest,

or a teacher are trusted by the consumers as regards their purchase and consumption (Sayulu &

Ramana Reddy, 1996). Pricing is one of the most important factors deciding buying behavior of rural

customers (Oghojafor, et al., 2012) and hence is the most powerful marketing tool (Ying Zhao, 1994).

Rural marketers must consider many issues relating to pricing such as lowering the price to cater to

low-level income people (Prahalad, C.K., 2005). According to Velayudhan (2002) price attracts the

rural population for trying new products.

Research gap

Studies conducted in South Asian countries attempted to understand rural consumer behaviour

such as influence of source on the effectiveness of marketing communication (Bright, 2009), role of

marketing in exploring and tapping the rural potential (Samuel & Douglas, 2011), market entry

strategies in emerging markets (Arnold & John, 1998) but are more about consumer durables and

services, but not on FMCG category. Hence a study is needed relating to understanding certain aspects

www.theinternationaljournal.org > RJEBS: Volume: 03, Number: 02, December-2013 4

of rural consumer behavior related to FMCG purchase and consumption in the South Asian rural

markets.

Objectives of the study

The current research has been carried out to achieve the following objectives:

To identify the key variables that influence the rural purchase of FMCG in emerging markets.

To understand the association between demographic variables of rural consumers and the variables

that influence their purchase of FMCG.

To understand the relationship between the influencing variables.

Hypotheses

From the available and accessed relevant literature it is evident that there are certain variables

influencing the rural purchase (Blackwell and Talarzy, 1977; Goldman, Arieh, 1978; Schiffman, et.al.

1978; Layton, 1986). Also there are issues related to association of demographic variables and

influencing variables (Bright, 2009; Chowdhury, 2009; Mair, et al., 2012). The current research

attempts to validate such theories and information in the South Asian markets where the survey was

conducted. Thus this study proposes following hypotheses:

Hoab : Influence of product promotions and packaging is dependent on gender

Hoabc : Influence of product promotions, low price and packaging is independent of age group

Hoabc : Influence of product promotions, packaging, shop keeper’s recommendation is independent of

education level

Hoab : Influence of packaging and low price is independent of income level

Ho : Influence of low price is independent of marital status

Ho : Customers who prefer low price do not prefer quality

Ho : Customers who prefer low price do not seek products with attractive packaging

Ho : Customers who buy FMCG that appear on the shelf are also influenced by the recommendations of

shopkeeper

Ho : Customers’ who purchase FMCG that they are aware of also mentioned that they buy those

FMCG which are exposed most to them

Scope and limitations of the study

Scope of the current study was to understand various aspects related to rural consumer behavior in

South Asian rural markets. The present study is related to FMCG and not other category of goods and

services. Various critical aspects of rural consumer behaviour such as price, promotions, changing

tastes and preferences, likes and dislikes, perceptions of rural consumers on quality vs price, etc. are

covered in the current study. Scope of the current study is to analyse and understand the role of

influencing variables on the purchase decisions of rural consumers with reference to purchase of

FMCG. Scope of the study also includes, finding out the influencing variables and understanding the

association between various demographic variables of rural consumers and their decisions to purchase

FMCG. This study is limited to South Asian countries, India & Sri Lanka.

Research methodology

Research methodology in the current research contains critical issues such as sources of data (Primary

& Secondary), sample design (sample size, sampling technique and sample unit), method of data

collection (questionnaire), data analysis tools & techniques (descriptive statistics, chi-square tests &

correlation analyses).

Sources of data: The study is based on both Primary data and Secondary data. Primary data is

collected through administering a well-structured questionnaire consisting of 5-point scale. For

convenience of respondents, the questionnaire is translated in to local languages, Telugu (India) and

Sinhalese (Sri Lanka). The questionnaire contained questions on demography (gender, age group,


income level & education level) and questions on influencing variables. Secondary data was collected

from various sources such as news papers, magazines, journals, company brochures, Internet and

Government reports. Most of the rural demographic and economic data is picked up from Census

reports of India (2011) and Sri Lanka (2012).

Sample design: Sample design for the current project constituted of Sample size, Sampling Technique

and Sample Unit. Sample size comprised of 2000 out of which 1849 fully completed questionnaires

were received (1265 from India and 584 from Sri Lanka). The respondents were selected using

convenience sampling technique. Convenience sampling technique can be used where proper sampling

frames are readily not available (Stanton, et al., 1982). Sample unit consisted of rural population living

in villages who are both buyers and consumers of FMCG. The data was collected from two villages

from Southern Sri Lanka (Kataragama & Tissamaharamaya) and two villages from South India

(Venkatapur & Bejjanki).

Data analysis tools & techniques: The data was analysed in percentages through tables, graphs and

figures. To understand the association between the rural demography and influencing variables, Chi-

square tests were conducted and to understand the relationship between the influencing variables,

Correlation analyses were conducted (Green et al., 2008).

Discussion of the results

Sample characteristics Table 3 presents gender proportion in the data. Out of 1849 respondents, 973 were males (52.6%) and

the 876 were females (47.4%). According to Census of India (2011) & Sri Lanka (2012), the sex ratio

is 1.05 males to 1 female in India and 0.96 males to 1 female in Sri Lanka. The Next important

demographic information of the respondents is their age group. Table 4 presents the distribution of age

group among the respondents. More than 70% of the respondents are below 35 years age.

Table 3: Gender composition

Gender No. %

Male 973 52.6%

Female 876 47.4%

Total 1849 100%

Table 4: Age groups of the respondents

Age group No. %

20-25 569 30.8%

26-30 571 30.9%

31-35 196 10.6%

36-40 306 16.5%

41 & above 205 11.2%

Total 1849 100%

Table 5: Income levels of the respondents

Income level No %

500-1000 252 13.6%

1001-1500 698 37.8%

1501-2000 567 30.7%

2001-2500 219 11.8%

2501 & above 113 6.1%

Total 1849 100%


Income is one of the important demographic variables in rural areas as the Income levels in rural areas

are relatively lower (Samuel & Douglas, 2011). Most of the respondents are in the income group of

Rs.1,001 to Rs.1,500 (42%) per month (Table 5). Table 6 presents the education levels among the

respondents with illiteracy levels still appearing to be significant with 15% while majority of the

respondents are only with school level educational qualifications. 88.7% of the respondents are

married (Table 7).

Key individual variables that influence rural purchase of FMCG

Understanding different variables that influence the rural purchase of FMCG is crucial as this

understanding can help managers in devising fruitful strategies (Katona, George, & Eva Mueller,

1955). Current study enabled us to understand and further analyse key influencing variables. The

questionnaire comprised of 24 variables which were presented on a 5-point Likert’s scale. The

respondents expressed their level of agreement with each of the statements on the questionnaire as

Never, Rarely, Sometimes, Mostly or Always. Table 8 presents findings from the current study, details

of some of the important individual variables that influence the rural purchase of FMCG. Never and

Rarely are presented as having less influence, Sometimes as having moderate influence and Mostly

and Always as having high influence in rural purchase of FMCG.

Table 8: Important variables that influence the rural purchase of FMCG

Variable Description Degree (%) of

influence

Total

Less Moderate High

Shopkeeper

recommendation

I buy FMCG suggested by shopkeeper 9% 17% 74% 100%

Low price I buy FMCG that are priced low 1% 32% 67% 100%

Need based purchases I buy FMCG only when needed 4% 7% 89% 100%

Awareness I buy FMCG that I am aware of 1% 7% 92% 100%

Product promotions I buy FMCG that are advertised/

promoted

2% 11% 87% 100%

Availability I buy FMCG that are conveniently

available

1% 4% 92% 100%

Quality I buy FMCG that is of good quality 17% 28% 55% 100%

Packaging I buy FMCG wrapped in attractive

packaging

21% 18% 61% 100%

Commitment (of shopkeepers) and trust (in shopkeepers) can be the foundation for building long

lasting relationships in the markets (Morgan & Hunt, 1994). In the current research, 1368 (74%) of the

TABLE 6: Education levels of respondents

Education No. %

Uneducated 278 15%

Schooling 977 52.8%

College 426 23.1%

University 167 9.1%

Total 1849 100%

Table 7: Marital status of the respondents

Marital status No. %

Single 209 11.3%

Married 1640 88.7%

Total 1849 100%


respondents mentioned that they would follow the recommendation of shopkeepers. Thus it can be

interpreted that as middlemen play crucial role in effective supply chain (Abeysekera & Abeysekera,

2006) the ‘Trust factor’ that prevails in rural market can help managers in performing effective rural

marketing. Accoring to Prahalad, C.K. (2005) one cannot conclude that rural consumers buy only low

priced and low quality goods as they started seeking good quality products and prepared to spend

more. In the current research, quality emerged as one of the influencing variables with 55% of the

respondents seeking good quality FMCG.

Interesting finding is that only 67% of the respondents preferred low priced FMCG. Thus from the

above two findings it can be interpreted that the rural markets in South Asia are emerging as attractive

markets beyond traditional view points of ‘low quality for low price’. It was also found that rural

consumers do not stock goods and instead purchase goods only when needed (89% of the

respondents). Awareness is key to success (Kotler et al., 2009). 1701 out of 1849 (92%) of the

respondents mentioned that they would buy those FMCG products and brands that they are awareof.

Advertisement sells (Arens & Bovee, 1994) even in rural areas (Surender, 2004) and in the current

research it was found that 87% of the respondents’ purchases are influenced highly by product

promotions and advertisements. It was also found that 92% and 61% of the respondents’ purchases are

highly influenced by availability and attractive packaging respectively. Other variables that were found

to be influencing the rural purchase of FMCG include, shelf display, brand visibility, friend’s or family

member’s recommendation, celebrity endorsement (having moderate influence), product education and

size of FMCG (having low influence).

Association between demography of rural consumers and the variables that influence their

purchase of FMCG

Available literature (Vanitha, et.al., 1999; Sakkthivel, 2009) indicates that the marketers must

understand the association between the demographics of their target rural customer segments and

influencing variables so that they can mould their offer accordingly. Chi-square tests of independence

were conducted (Katz, 1953) for this purpose. Table 9 presents the summary of chi-square test results:

Table 9: Summary of Chi-square (χ2) test results

Demographic

variable

Influencing

variable

Significance Chi-Square

statistics

Conclusion (cross

tabs)

Gender

Product

promotions

P value: Significant

at 1%

Ho: Rejected

χ2

Value : 18.601

Critical value:13.28

Dof: 4 α: 0.01

Product

promotions have

more influence on

females

Packaging P value: Not

significant at 5%

Ho:Not rejected

χ2

Value : 7.339

Critical value: 9.49

Dof: 4 α: 0.05

***

Age group

Product

promotions


at 1% Ho:

Rejected

χ2

Value : 411.175

Critical value:

32.00

Dof: 16, α: 0.01

Product

promotions have

more influence on

smaller age groups

Low price P value: Significant

at 1% Ho:

Rejected

χ2

Value : 59.481

Critical value:

32.00

Dof: 16, α: 0.01

Low price of

FMCG has more

influence on

higher age groups

Packaging P value: Significant

at 1% Ho:

Rejected

χ2

Value : 275.860

Critical value:

32.00

Dof: 16, α: 0.01

Attractive

packaging has

more influence on

smaller age groups


Education

level

Product

promotions


at 1% Ho:

Rejected

χ2

Value : 428.721

Table value: 26.22

Dof: 12, α: 0.01

Product

promotions

influence higher

educated people

more


at 1% Ho:

Rejected

χ2

Value : 105.333

Table value: 26.22

Dof: 12, α: 0.01

Attractive

packaging

influences higher

educated people

more

Shop keeper’s

recommendation


at 1% Ho:

Rejected

χ2

Value : 67.443

Table value: 26.22

Dof: 12, α: 0.01

Influence of shop

keeper’s

recommendation

is more on lower

educated

Income level


at 1% Ho:

Rejected

χ2

Value : 77.651

Critical value:

32.00

Dof: 16, α: 0.01

Attractive

packaging has

more influence on

higher income

group people

Low price P value: Significant

at 1% Ho:

Rejected

χ2

Value : 663.570

Critical value:

32.00

Dof: 16, α: 0.01

Low price of

FMCG has more

impact on lower

income groups

Marital status Low price P value: Significant

at 1%

Ho: Rejected

χ2

Value : 302.664

Critical value:13.28

Dof: 4 α: 0.01

Low price has

more influence on

married people

From Table 9 it can be seen that gender of the respondents and influence of product promotions on

their purchases are not independent (null hypothesis rejected as the critical value (13.28) is less than

calculated value of chi-square (18.601) at Dof:4 and α:0.01). Thus it can be interpreted that product

promotions of FMCG companies and the gender of rural customers are dependent with more effect of

promotions on purchases by females (59.6% of females mentioned that they would buy FMCG that is

advertised compared to 41.7% of males). As the female consumers have become an attractive

consumption group in a rural set up (Velayudhan, 2005; Gopalakrishnan, 2006), the above finding

attains significance in the current rural marketing scenario in South Asia. Influence on packaging is

equal on both male and female buyers in rural markets (P value not significant at 1%). Age group of

rural consumers and influence of low price are not independent (Ho rejected due to significant P value

at 1% and the calculated value of chi-square, 59.481 being greater than critical value, 32.0 for 16 Dof

at 0.01 probability). Through cross tabulations it was found that consumers of lower age groups are

more influenced by product promotions. 62.2% of respondents among the lower age groups mentioned

that they would buy FMCG that is advertised or promoted compared to less than 10% of the

respondents within the higher age groups.

It was found that higher age group consumers are more inclined to buy low priced FMCG.

80.8% of respondents within the higher age groups preferred to buy low priced goods as against only

64% of respondents among the lower age groups. It can be concluded that as the youth population is

relatively higher across all markets, the rural marketers need not worry about offering FMCG always

at low price and instead can emphasise on need and want fulfillment through effective product

promotions. Further it is also found that rural consumers of younger age groups are more influenced by

attractive packaging (83% of younger respondents mentioned that they would buy FMCG wrapped in

attractive packaging as against only 15.3% of respondents under higher age groups). So in order to


target the youth segment in rural markets, more importance needs to be given to the packaging of

FMCG.

It was found that education level of the consumers and influence of product promotions are not

independent as the null hypothesis is rejected due to significant P value at 99% confidence level.

Through cross tabulations it was further found that influence of product promotions is more on higher

educated people (91.5% of respondents under higher education category as against only 11% under

low education category). As the education levels in India and Sri Lanka are increasing (Census of

India & Sri Lanka), it indicates that promotions work in rural markets in this part of the world. Same

with the case of influence of packaging and shop keeper’s recommendation on the rural consumer

behavior with reference to purchase of FMCG. P value being significant at 99% confidence level, the

null hypothesis was rejected and interpreted that ‘packaging and shopkeeper’s recommendation are not

independent of education level’ of rural consumers. Further through cross tabulations it was found that

attractive packaging influences higher educated consumers (79.3% of respondents with university level

education) while shop keeper’s recommendation influences consumers with lower education levels

(77.5% of uneducated). Low price influences people with low income group (88.2% of respondents

within the lower age groups) and also those who are married (81.5% of respondents who are married)

mentioned that they would buy FMCG priced lower.

Relationships between influences of the rural purchase of FMCG

Pearson’s correlation coefficient was calculated to find out the relationship between the

variables that influence the rural purchase of FMCG. Table 10 presents the summary of the correlation

coefficients that were calculated for the sake of analysis.

Table 10: Summary of correlation test results (r)

Hypothesis Influencing

Variable 1

Influencing

Variable 2

Correlation

coefficient

Conclusion

Consumers who prefer low price

do not seek attractive packaging

Low price Attractive

packaging

.785** High positive

correlation

Consumers who prefer low price

do not seek quality goods

Low price Quality -0.099 Correlation

coefficient not

significant

Consumers who prefer to buy

FMCG that appears on retail

shelf are also influenced by

shopkeeper’s recommendation

Shopkeeper’s

recommendation

Shelf display .841** High positive

correlation

Consumers who are influenced

by shop keeper’s

recommendation buy only those

FMCG that they are aware of

Shop keeper

recommendation

Awareness .068* No correlation

Consumers who buy FMCG that

they are aware of also mentioned

that they buy FMCG with high

brand visibility

Awareness Brand visibility

through

promotions

.856** High positive

correlation

Consumers who buy FMCG only

when needed also buy those

FMCG that are conveniently

available

Need based

purchases

Availability .704* High positive

correlation

Consumers who buy FMCG only

when needed do not prefer

attractive packaging

Need based

purchases

Attractive

packaging

.186 Correlation

coefficient not

significant

** Correlation is significant at 0.01 level

* Correlation is significant at 0.05 level

It was found that rural consumers who seek low price FMCG wanted the goods to be wrapped in

attractive packaging (high positive correlation with .785 correlation coefficient significant at 1%). It is


common to conclude that consumers who seek low price goods do seek quality. But it is not true in

case of rural marketing. Rural marketers must work on offering world class quality goods at low prices

(Prahalad, 2005). In the current study it was found that there is no correlation between influence of low

price and quality. Respondents who mentioned that low price influences their purchase of FMCG did

not specifically seek either high quality or low quality FMCG, as no significant correlation was found

between low price and quality. This means, rural marketers cannot conclude that they need not

maintain quality as they offer goods at low price. As opined by experts like, Prahalad & Lieberthal

(2005), Rama Bijapurkar (2000) and Harish Bijoor (2004), the rural marketers must emphasize on

quality while maintaining low prices for their goods and services.

Rural consumers who are influenced by shop keepers’s recommendation also prefer FMCG

that appears on retail shelves (high positive correlation with .741 correlation coefficient significant at

0.01 level). Hence, it can be interpreted that when a rural consumer visits a rural retail outlet, the goods

should be available, must be stacked in such a way that they are seen and also must be supported with

shop keeper’s recommendation. Another result is that no correlation was found between influence of

shop keeper’s recommendation and product/ brand awareness (.068 correlation coefficient at 5%). It

can be interpreted that even if desirable brand awareness is not attained, rural marketers can push their

FMCG products/ brands through shop keeper’s recommendation. This emphasizes on the importance

of shop keepers in rural marketing. A highly motivated, trained and enthusiastic rural retailer can play

a crucial role in rural marketing.

As high positive correlation exists between brand visibility that is created through aggressive

product promotions and brand awareness (.865 correlation coefficient significant at 1%), it can be

interpreted that consistence in marketing communication will prove fruitful in rural marketing.

However, one cannot ignore the importance of distribution in rural marketing. Product availability is

one of the important variables influencing the rural purchase of FMCG and through correlation

analysis it was found that it correlates highly with rural consumer behavior of purchasing only when

needed (.704 correlation coefficient significant at 5%). Another important finding is that there is no

significant correlation between need based purchases and attractive packaging (Table 10). This

indicates that rural marketers cannot conclude that rural buyers who make need based purchases do not

prefer attractive packaging. In any case, the goods must be wrapped in attractive packaging. For this

purpose, rural marketers need to follow the sachetization strategy (Sakkthivel & Mishra, 2005 &

Krishnamacharyulu C. S. G. & Ramakrishnan L., 2011) and also ensure effective distribution.

Conclusions

Rural marketing has become an area of specialization. The current research on marketing of

fast moving consumer goods to rural consumers in South Asian countries has provided important

insights. As rural consumers are influenced by shop keeper’s recommendations (Table 8), it is

suggested to make rural retailers an integral part of rural promotion. Though price plays a very

important role in the buying decision of rural customers, consumers in high-income group are not very

much influenced by low-price (Table 9). As the income levels are rising, marketers need to work on

issues other than price along with serious pursuit of low-price strategy. Strong bondings in villages

may be a cause for the influence of friend’s recommendation on FMCG purchase by a rural consumer.

Hence, it is recommended to create customer satisfaction through superior performance so that

satisfied customers can suggest FMCG products/brands to their friends and relatives.

As influence of quality is not correlated with the influence of price, managers marketing in

rural areas must devise cost effective strategies while maintaining quality. Rural customers (61% of

respondents) are influenced by attractive packaging with equal influence on both males and females

(Table 9) and attractive packaging having more influence on higher educated and high income people.

A great deal of effort must go into packaging in the form of sachetization. This also caters to the rural

consumer behavior of not stocking the goods and buying in small quantities when required (Table 8).

Rural marketers need to create awareness of their products and brands among their target consumers as

the awareness influences the rural purchase of FMCG (Table 8). Also as awareness strongly correlates

with the brand visibility that is created through effective marketing communication rural marketers


need to devise effective communication strategies along with effective distribution (Table 10).

Advertising and product promotions create visibility and in turn influence the rural purchase behaviour

favorably (87% of the respondents influenced with more influence on female buyers, consumers of

smaller age groups and higher education levels). Main task of managers marketing FMCG in rural

markets is to create high impact visibility of their products and brands.

Scope for future research Future is bright for rural research particularly in FMCG category not only in South Asian

markets but also across the world. Research can be done to suggest how marketing of FMCG in rural

areas can also be done through encouraging rural entrepreneurship. Existing business models can be

studied and improvised models can be suggested. Also in future, research can be oriented towards each

sub-category of FMCG like, hair care, child-care, house cleansers, premium product categories like,

colour cosmetics and body deodorants, etc.

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