A REPORT ON

CONSUMER BEHAVIOUR

- Early Joining Case

FACULTY:

Prof. Arvind Tripathy School of Management, KIIT University

Roll No.: 11202144 MBA II (2011-2013) School of Management, KIIT University

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TABLE OF CONTENTS

1. ABSTRACT ................................................................................................................................. 4 2. LITERATURE REVIEW ................................................................................................................ 5 A. B. C. D. E. WHAT IS CONSUMER BEHAVIOUR? ..................................................................................... 5 CONSUMER MARKETS.......................................................................................................... 5 CONSUMER MARKETING ..................................................................................................... 5 BUSINESS/ORGANIZATIONAL MARKETING .......................................................................... 5 CHARACTERISTICS AFFECTING CONSUMER BEHAVIOUR .................................................... 6 CULTURAL FACTORS ................................................................................................................. 6 SOCIAL FACTORS ...................................................................................................................... 6 PSYCHOLOGICAL FACTORS ....................................................................................................... 7 SITUATIONAL FACTORS ............................................................................................................ 9 3. INTRODUCTION ...................................................................................................................... 10 A. B. TYPES OF RURAL MARKETS ................................................................................................ 10 CHARACTERISITCS OF RURAL MARKETS ............................................................................ 11

4. RESEARCH OBJECTIVES ........................................................................................................... 12 5. RESEARCH METHODOLOGY.................................................................................................... 13 6. ANALYSIS & INTERPRETATION ............................................................................................... 14 7. SUGGESTIONS......................................................................................................................... 25 8. CONCLUSION .......................................................................................................................... 26

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A Study of the Consumer Behaviour towards FMCG Products in Rural Areas Of South 24 Parganas, West Bengal

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1. ABSTRACT

The Rural population is nearly three times the urban, so that Rural consumers have become the prime target market for consumer durable and non-durable products, food, construction, electrical, electronics, automobiles, banks, insurance companies and other sectors besides hundred per cent of agri-input products such as seeds, fertilizers, pesticides and farm machinery. The Indian rural market today accounts for only about Rs. 8 billion of the total ad pie of Rs. 120 billion, thus claiming 6.6 per cent of the total share. So clearly, there seems to be a long way ahead. Although a lot is spoken about the immense potential of the unexplored rural market, advertisers and companies find it easier to vie for a share of the already divided urban pie. The success of a brand in the Indian rural market is as unpredictable as rain. It has always been difficult to gauge the rural market. Many brands, which should have been successful, have failed miserably. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India. The I n d i a n est ablishe d Industries have t he advantages, which MNC do not enjoy in this regard. The strong Indian brands have strong brand equity, consumer demand-pull and efficient and dedicated dealer network which have been created over a period of time. The brand has to be made relevant by understanding local needs. Even offering the same product in different regions with different brand names could be adopted as a strategy. The rural market has a grip of strong country shops, which affect the sale of various products in rural market. The companies are trying to trigger growth in rural areas. They are identifying the fact that rural people are now in the better position with disposable income. Marketer should understand the price sensitivity of a consumer in a rural area. This paper is therefore an attempt to promote the brand image in the rural market.

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2. LITERATURE REVIEW

A. WHAT IS CONSUMER BEHAVIOUR? Consumer behaviour is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. Successful marketing requires that companies fully connect with their customers. Adapting a holistic marketing orientation means understanding customers, gaining a 360degree view of both their daily lives and the changes that occur during their lifetime so that the right products are marketed to the right customers in the right way. Studying consumers provides clues for improving or introducing products or services, setting prices, devising channels, creating messages and developing other marketing activities. To implement marketing strategy, marketers examine-what, where, when and how consumers buy. B. CONSUMER MARKETS Consumer markets are the markets for products and services bought by individuals for their own or family use. Goods bought in the consumer market can be categorized in several ways such as: Fast-Moving Consumer Goods (FMCGs) these are high volume, low unit value but with fast purchase e.g. ready meals, newspapers, soap, and cooking oil Consumer Durables these have low volume but high unit value e.g. cars, fridges/freezers, cookers, television sets, washing machines, computers etc. Soft Goods these are similar to consumer durables except that they wear out more quickly and therefore have shorter replacement cycle e.g. clothes, shoes etc. C. CONSUMER MARKETING Consumer Marketing refers to the marketing of the above goods and services for personal consumption. However, there could be exceptions whereby Cars are bought for both personal and organizational use. D. BUSINESS/ORGANIZATIONAL MARKETING This involves marketing products or services to other companies, government bodies, institutions (such as schools, hospitals and churches) and other organizations. McDonald's and Burger King buy products such as salt, and services to use in the production of their products. The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others.
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E. CHARACTERISTICS AFFECTING CONSUMER BEHAVIOUR CULTURAL FACTORS

Culture Culture is the fundamental determinant of a persons wants and behaviour. The growing child acquires a set of values, perceptions, preferences and the behaviour through his or her family and other key institutions. A child grown in USA is exposed to the following values: achievements and success, efficiency and practicality, progress, material comfort, individualism, freedom and youthfulness. What about a child grown in Ghana? Subculture Each culture consists of smaller group (subculture) of people with shared value systems based on common life experiences and situations. These subcultures can be ethnic, religious, racial or regional groups as well as those that form around music groups. Nestle Gh Ltd (MaggieHomowoCooking contest) Guinness & MTN have been exploiting our festivals to promote and build their brands and Corporate Image. Social Class Virtually all human societies exhibit social stratification. It is a relatively homogeneous and enduring division in a society, which is hierarchically ordered and whose members share similar values, interests, and behaviours. Social classes reflect not only income but also other indicators such as occupation, area of residence, education, and wealth. Social classes show distinct product and brand preferences in many areas, including clothing, home furnishing, leisure activities, automobiles, and media consumption

SOCIAL FACTORS

Group Membership: Anyone who has ever gone along with the crowd" knows that people act differently in groups than they do on their own. Since many of the things we buy are consumed in the presence of others, group behaviours are important to marketers Primary Groups: A person has continuous /informal interaction including family members, friends, neighbours, and co-workers with these groups. Reference Group: These are groups that have direct/face-to-face or indirect influence on a persons attitudes and behaviours. A set of people a consumer wants to please or imitate. Consumers refer to these groups in evaluating their behaviour i.e. what they wear, where they go and what brands they buy Secondary Group: A person has formal relations and less continuous interaction including religious organizations, professional associations, and trade unions with these groups.

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Opinion Leader: Is a person who influences others' attitudes or behaviour because others perceive him/ her as possessing expertise about the product. Opinion leaders are often among the first to buy new products, so they absorb much of the risk, reducing uncertainty for others who are not as courageous. Marketers try to reach opinion leaders by identifying demographic and psychographic characteristics associated with them and coaxing them especially the celebrities to use their products sometimes before they are launched. The Family: This is probably the most important consumer buying organization in society. Family members constitute the most influential primary reference group. Marketers are interested in the roles and relative influence of the husband, wife, and children in the purchase of a large variety of products and services.

PSYCHOLOGICAL FACTORS

Psychology helps marketers understand the why and how of consumer behaviour. In the psychological situation, consumer buying behaviour is influenced by four factors including: Motivation, Perception, Learning, and Beliefs & Attitudes. a. Motivation

Motivation is an inner state that energizes, activates, moves or channels behaviour towards certain goals (Assael). Motivation arises from perceived needs. These can be grouped into biogenic and psychogenic needs: Biogenic needs: arise from physiological state of tension e.g. thirst, hunger, discomfort Psychogenic needs: arise from psychological state of tension such as esteem, belongingness. Maslows theory of motivation states that needs are satisfied based on importance. He argues that a consumer will satisfy the most important need first Maslows Hierarchy of Needs Physiological Needs (water, sleep, food) Safety Needs (security, shelter, protection) Social Needs (love, friendship, acceptance by others, belongingness) Ego Needs (Self-esteem, prestige, status, recognition, accomplishment) Self- Actualization (self-fulfillment, realization, and enriching experience)

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The theory helps marketers understand how various products fit into the plans, goals, and lives of consumers. b. Perception A motivated person is ready to act. How the motivated person actually acts is influenced by his or her perception of the situation. Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful image of a situation. Selective Attention- Listeners select part of the message that interests them. Sexual attraction are used to attract attention Selection distortion- here receivers distort the information they receive if the information does not agree with their existing beliefs, opinions Amplification- the receiver adds things to the message that are not there. Different people in the same motivated and objective situation may act quite differently because each perceives the situation differently. For example, one person might perceive a fast talking sales person as aggressive and insincere, another as intelligent and helpful. People can emerge with different perceptions of the same object because of three perceptual processes: selective distortion, selective attention, and selective retention. In marketing, people's perception are important than the reality. c. Learning

Learning involves changes in an individuals behaviour arising from experience. Most human behaviour is learned. Learning theorists believe that learning is produced through: Drive: Strong internal stimulus that compels a person to act in a particular way (motive) e.g. thirst, hunger, discomfort etc Response: Action taken as a result of the cue, e.g. purchase of beer, soft drink or airconditioner Reinforcement: If experience (from using the beer, soft drink, or air-conditioner) is rewarding /satisfying, the person will continue to take same action anytime he feels thirsty/uncomfortable. Habit is then formed which may result in brand loyalty. d. Beliefs & Attitudes Through doing and learning, people acquire beliefs and attitudes and these in turn influence buying behaviour. A persons belief is the descriptive thought that he/she holds about something. His attitude is his/her enduring favourable or unfavourable evaluation, emotional feeling and action tendencies toward some object (product/service) or idea, e.g. attitudes towards religion, politics, music which may be positive or negative. Marketers need to decide

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which part of an attitude is the most important driver of consumer preferences e.g. ( Diet coke/Pepsi in blind/branded test) Lifestyle: Is a pattern of living that determines how people choose to spend their time, money, and energy and that reflects their values, tastes, and preferences Consumers often choose goods, services and activities that are associated with a certain lifestyle. Analysis of consumer lifestyles (i.e. psychographics) is important in producing insights into consumer behaviour. For instance, lifestyle analysis is useful in segmenting and targeting consumer markets Personality: Each person has personality characteristics that influence his or her buying behaviour, By personality, we mean a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli. Personality is often described in terms of such traits as self-confidence, dominance, autonomy, deference, sociability, defensiveness, aggression, and compliance. Personality can be a useful variable in analyzing consumer brand choices. The idea is that brands also have personalities, and that consumers are likely to choose brands whose personality matches their own. We define Brand Personality as the specific mix of human traits that may be attributed to a particular brand. Self-Concept: Is an individuals self-image that is composed of a mixture of beliefs, observations, and feelings about personal attributes. Self-image is how a person thinks of himself or he thinks others think of him.

SITUATIONAL FACTORS

Some important situational cues are; The Physical Environment: Marketers are aware that factors such as decor, smells, lighting, music, crowding, and even temperature can significantly influence many purchases. Many retailers are focusing on adequate packing, cyber-hangout and in-store display to influence the consumer decision-making process. Time: Marketers know that the time of day, the season of the year, and how much time one has to make a purchase affect decision-making. Time is one of consumers' most limited resources. The sense of time poverty makes consumers responsive to marketing innovation that allow them to save time including such services as drive-through lanes at fast food restaurants and ordering products on the web.

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3. INTRODUCTION

The logic for companies going rural has been impeccable. As many as 742 million Indians live in rural areas. The rural market was tempting since it comprised 74 per cent of the country's population, 41 per cent of its middle class, 58 per cent of its disposable income and a large consuming class rural incomes have been increasing thanks to increasing agricultural productivity and a growing non-farm sector which now constitutes more than half of the rural economy. Things are changing fast now. The increasing literacy level and media explosion, people are becoming conscious about their lifestyles and about their rights to live a better life. Brand consciousness is on the rise. This, clubbed with increasing disposable income of rural households, has made the rural consumer more demanding and choosier in his purchase behaviour than ever before. And the dusky village damsel has now learned to pine for a satin rose. The rural India offers a tremendous market potential. A mere one percent increase in I ndias rural income translates to a mind-boggling Rs 10,000 crore of buying power. Nearly two- thirds of all middle-income households in the country are in rural India. And close to half of Indias buying potential lies in its villages. Thus for the countrys marketers, small and big, rural reach is on the rise and is fast becoming their most important route to growth. Realizing this Corporate India is now investing a sizeable chunk of its marketing budget to target the rural consumers.

A. TYPES OF RURAL MARKETS Haats /Mandies (mostly for weekly market for all commodities) Mandis Commodity Specialised Markets

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B. CHARACTERISITCS OF RURAL MARKETS There are certain characteristics of rural market, which every prospective marketer needs to be aware of before unleashing his product: Low income influenced by seasonal fluctuations Low literacy Diverse customs, languages and social structures Resistant to Change Price sensitive High brand loyalty Influenced by traditions Moderate inspirational levels Quality Conscious Low to moderate risk taking ability

These typical characteristics of the rural market make it evident that there are huge challenges, which a marketer will face. These challenges need to be tackled using appropriate strategies and proper planning. The major obstacles can be classified as follows: Poor infrastructure facilities, which hamper the effective distribution of products and make the task of reaching the target consumer difficult. Traditional media is ineffective due to illiteracy and non-availability There is insufficient past research to provide some insight about consumer behavior Disposable income is highly dependent on good monsoons and a rich harvest. Varying linguistic and socio-cultural norms compel the marketer to vary his marketing message for different parts of the same country. Role of women in buying process is still not independent of family constraints. Inadequate credit availability hampers the ability of rural retailers to carry stocks.

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Category Toilet soap Washing cake Edible oil Tea Washing powder Salt Biscuit

Category penetration 91% 88% 84% 77% 70% 64% 61%

Brand with highest penetration Lifebuoy Wheel Double iron mustard Lipton Taaza Nirma Tata salt Parle G

Source: http://www.etstrategicmarketing.com/smJune-July2/art6_1.htm

4. RESEARCH OBJECTIVES
To study the consumer behaviour of rural consumer for FMCG products. To identify their level of satisfaction in purchase of various FMCG products. To find out the brand preference of FMCG consumers. To determine the various factors influencing the behaviour of FMCG consumer

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5. RESEARCH METHODOLOGY

The study conducted followed a descriptive research design. The design produces the picture of the phenomenon in which the decision maker is interested. Since only small amount of secondary data was available on the subject, the research focused on collection and analysis of primary data. Survey method was adopted to collect the primary data. A structured, non-disguised questionnaire acted as the research instrument. It was pre-tested on 5 respondents for the purpose of examining the relevance and ambiguity of the questions. Necessary additions, corrections and deletions were incorporated accordingly. Most of the questions were closed ended types with a few open ended questions also included. Further, in closed ended questions, dichotomous questions, multiple choice, importance scale and rating were incorporated. The Sample Universe was the rural people in the outskirts of Kolkata city, South 24 Parganas, West Bengal. Respondents were individuals who are using FMCG product. This, being a pilot study, the sample size was kept at 50 from different locations. The sampling plan used is Simple random Sampling. For the purpose of Data Analysis, the responses to each question was calculated and shown in the form of tables and bar graphs or pie charts and from these results had been carried out.

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6. ANALYSIS & INTERPRETATION

Table 1: Showing no. of People using FMCG products Responses Yes No No of respondents 50 0

Table 1 depicts that the respondents which were selected for the survey or study were FMCG product users.

Table 2 & chart 2: Showing Occupation of respondents Table 2 Agriculture Employee Labor Businessman Chart 2 28 15 3 4

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Table 2 & chart 2 depicts the occupation of the respondents. Out of which 56% of the respondents are farmers, 30% of them are employees, 6% are laborers and remaining 8% own a business. Table 3 & Chart 3: Showing from where they buy FMCG products Table 3 local retailer local mandi local wholesaler Haat Any other place 36 8 9 1 0

Chart 3

Table 3 & chart 3 shows the place from where the respondents like to buy there FMCG products which they use, where most of the respondents like to buy FMCG products from the local retailer. Local wholesaler is the second most preferred place among the respondents.

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Table 4 & chart 4: Showing brand consciousness for FMCG products Table 4 Yes No 48 2

Chart 4

Table 4 & chart 4 depicts that 96% of the respondents out of total respondents are brand conscious with regard to FMCG products. And only 4% of respondents are not brand conscious with regard to FMCG products.

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Table 5 & Chart 5: Showing which of the following FMCG products do they use Table 5 Toothpaste Toilet soap Detergent powder Shampoo Talcum powder Any other 48 37 38 32 14 0 Chart 5

Table 5 & Chart 5 depicts that what all kind of FMCG products do respondents use. More than 70% of respondents use all the FMCG products which were stated in the structured questionnaire, instead of Talcum powder. Only 28% of respondents use talcum powder.

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Table 6 & Chart 6: Showing which toothpaste do people use Table 6 Colgate Promise Babool Pepsodent Any other 33 10 3 10 1

Chart 6

Table 6 & chart 6 depicts which brand respondents do use as toothpaste. Most of the respondents use Colgate. Promise and Pepsodent share the second place. Babool is the 3rd preferred brand.

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Table 7& chart 7: Showing which detergent powder do people use Table 7 Rin Wheel Nirma Surf Any other 21 19 5 6 1

Chart 7

Table 7 & chart 7 depicts which brand respondents do use as detergent powder. Rin is the most preferred brand among the respondents, where wheel is the 2nd most preferred brand and surf is on the 3rd number.

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Table 8 chart 8: Showing which toilet soap do people use

Table 8

Lux Lifebuoy Nirma Santoor Any other

37 9 3 3 0

Chart 8

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Table 9 &chart 9: Showing factors influence the purchase

Table 9

Availability of commodity Affordable price Brand Quality Promotional Schemes Advertisement

10 21 29 25 20 16

Chart 9

Table 9 & chart 9 depicts the various factors which influence the buying behavior of the respondents. Most of the respondents are attracted by the Brand of the product followed by quality of the product. Promotional schemes also attract the respondents, whereas availability of commodity influences the least. Brand got the 1st Rank followed by quality as 2nd Rank, promotional schemes on 3rd.

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Table 10 &chart 10: Showing from where they came to know about the FMCG products

Table 10

TV Newspaper Radio Hoardings Friends Chart 10

28 21 5 5 30

Table 10 & chart 10 depicts the source of information from where the respondents come to know about the FMCG products they are using. Word of mouth or from friends was the most common response of the respondents. After that, most of the respondents responded that they come to know through TV. Newspaper also plays an important role here. Radio and hoardings are at least rank.

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Table 11 & chart 11: Showing For how long stick to a particular brand

Table 11

More than a 12 months About 6 months Less than 6 months

6 39 5

Chart 11

Table 11 & chart 11 depicts that 78% of the respondents stick to a particular for an average time, whereas only 12% of the respondents stick to a brand for a longtime. 10% of the respondents often change their brand.

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Table 12 & chart 12: Depicting satisfaction with all brands

Table 12

Yes No

47 3

Chart 12

Table 12 & chart 12 depicts the 94% of the respondents are satisfied with the brands which they are using with regard to FMCG products, whereas on 6% of the respondents are not satisfied with the brands they are using.

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7. SUGGESTIONS

As is evident from the data, the following suggestions are recommended for FMCG companies pertaining to rural markets:

Without a doubt, FMCG companies must focus product availability in rural points

POS (both in primary & secondary) must be added prolifuratiously to foster visibility as there is a ready market for branded products

Organisations must focus on TV ads keeping the rural markets in mind, since a big chunk of audience is influenced by the same

Organisations can no more be complacent about their rural positions and must work on brand retention, since maximum people have an average life in the same

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8. CONCLUSION

Companies should try to explore rural market There is a huge growth opportunity out there Rural India has a potential of $500-bn

They want to try new products. They are becoming brand conscious

People are becoming more and more aware about different brands available

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