Introduction and Influencing Factors

Rural customers do not want to spend money on buying products and services because they feel that they can do without these products and services. The self-sufficient economy and the close community of villages have allowed rural consumers to carry on with their lives without much help from the outside world. Both these edifices of rural consumers are crumbling and it is the most opportune time to draw them into the commercial world. But they will want to remain in their own world of self-sufficiency and social bonhomie for as long as possible. Low prices of products and services are just inducements to get over this reluctance and inertia of rural consumers. Marketers have to do much more than offer products and services at lower prices to keep rural consumers in the marketplace. Most rural consumers do not have a steady and regular source of income. They get their income when they sell their crops after the harvest. Therefore most rural consumers receive money in lump sum a few a times a year depending upon the number of crops they are able to grow. This money is normally controlled by the eldest male member of the family. Other members of the family do not have cash and they have to route their requirements through this eldest male member. Though the major part of the harvest is sold in bulk, all rural households always have some grains in the house. This grain is the currency of other family members besides the one who controls the cash of the family.

Companies have to understand the revenue cycle and management of cash of rural consumers. If a company wants to sell a consumer durable product like a refrigerator, it has to be ready to accept payment after the harvest. Smart companies will be willing to extend credit till harvest time because they will understand that the rural consumer will not have cash before that. Retailers dealing in fast moving consumer goods should also understand this revenue cycle. They should not insist on cash payment after every purchase. They should keep on supplying products on credit and ask for lump sum payment at the time of harvest. Smart rural retailers will accept grains as payment at the time of harvest, because rural consumers are more comfortable spending grains than spending cash. Retailers of consumer durable products should also be willing to accept payment in grains. It is important that companies understand the difficulties and payment preferences of rural consumers and encourage their rural retailers to adopt these practices. These at-the-end-of-harvest payments are made by the eldest male member of the family who is designated to control the funds of the family. But other family members also make small purchases. Retailers have to accept payment from them in grains. Such payments are often done clandestinely by female family members when they buy products for themselves, and the retailer has to guard this secret from the eldest male member if it wants them to continue buying from him.

If companies want to continue to sell to rural consumers, they have to adopt these two practices: extend credit till harvest time, and accept payment in grains. Rural consumers will be reluctant to buy if they fear that they will be pestered to pay, when they clearly cannot.