3. RURAL AND URBAN CONSUMER

Transcription

1 3. RURAL AND URBAN CONSUMER 3.1. DEFINITION OF RURAL MARKETING AND ITS CRITICISM Rural Marketing has quite often been defined in a narrower sense to include only marketing of agriculture produce. Marketing of agriculture produce has received adequate attention by researchers, policy makers and central and state government. Before green revolution (before 1960) Rural marketing referred to marketing of rural products in rural and urban areas and agriculture inputs in rural markets. It was similar to Agricultural Marketing rather they Rural Marketing. One the prominent reason in that phase was dependence of rural population on agriculture. Most of generic products are available at that time (unbranded). Green revolution has changed the face of rural market as well as raised the pace of development or increase in per capita income. Due to green revolution demand for quality agro-input has been raised which includes - irrigation facilities and equipment - pesticides - high yield seeds - harvesters - pump sets and sprinkles. As the income of rural farmer has been increased the consumption of tea, toiletries, detergents, bakery products, shoes, textile, transistors, television sets, mopeds, basic furniture, bulbs, fans etc. electrical products for household purpose. Not only this but in last 20 years due to various scheme of central government and state government had launched various welfare programmes. In early 1990 s various domestic companies feel saturation in the urban and metro market and prepared for rural areas. Thus, in right way we can say that rural market was tapping by various companies since last 20 years. Due to size and purchasing power one cannot effort to ignore rural market which has more than of total population and having more than 136 million rural households. 67

2 Census Table-2 DEFINITION OF RURAL INDIA BY DIFFERENT ORGANISATIONS Definitions of Rural Village: Basic unit for rural areas is the revenue village, might comprise several hamlets demarcated by physical boundaries. Town: Towns are actually rural areas but satisfy the following criteria: Minimum population >= 5,000 Population density >= 400/ sq. km. 75% of the male population engaged in RBI Locations i with ti it population up to 10,000 will be considered as rural and 10,000 to 100,000 as semi-urban. NABARD All locations irrespective of villages or town, upto a population of 10,000 will be considered as 'rural'. Limitation Term 'rural' is not defined. The definition does not specify the population strata. Term 'rural' is not defined. The definition does not rule out 5,000+ population villages. It does not include 10,000+ pop. villages in rural definition. On the contrary, the definition Village and town characteristics are not defined. Planning Commission Towns with population upto 15,000 are considered as rural. Sahara Locations having shops/ commercial establishments' upto1,000 are treated as rural. LG Electronics The rural and semi urban area is defined as all cities other than the seven metros. Town characteristics are not defined. Population criteria and other characteristics are not taken into consideration There is different opinion about rural market amongst various government agencies. There is lack of uniform parameters for recognizing particular area as rural or urban which ultimately creates confusion. Government have to define certain parameters for determining particular place or city as rural or urban area. The parameters for defining rural and urban area are to be published along with the new census. 3.2 EVALUATION OF RURAL MARKETING Before the evolution of an urban market for marketing was undertaken, there seemed little need to differentiate between needs and wants. With the emergence of urban markets, the very context within which marketing had to work got redefined. Modem marketing has evolved around meeting demand in urban markets. The urban approach seems inadequate to understand and 68

3 address the needs of rural India. There is a definite need for a separate set of marketing strategies to tap rural markets and a need to redefine strategy based on a whole new set of parameters. A totally different paradigm is Rural face required to satisfy a market that is more a mindset, rather than a geographical and demographic reality. The term 'rural marketing', which was earlier used as an umbrella term to refer to all commercial transactions of rural people, acquired a separate meaning of great significance in the 1990s. Phase 1 (Before the 1960s) Rural marketing referred to marketing of rural products in rural and urban areas and agricultural inputs in rural markets. It was considered synonymous with 'agricultural marketing'. Agricultural produces like food grains and industrial inputs like cotton, sugarcane, etc. were the primary products marketed during this period. The scope of farm mechanization equipment (tractors, pump sets, threshers) and agriculture inputs like fertilizers, seeds and pesticides was very limited, as the rural economy was in a primitive stage, with traditional farming methods being used in agriculture. Instead, the marketing of products like earthen and metallic utensils, ploughs, bamboo baskets, ropes and wooden products like bullock carts, window and door frames by skilled workers in rural areas (blacksmiths, carpenters, pot makers) was an important activity. This market was totally unorganized. Phase II (1960s-1990s) The Green Revolution changed the face of rural India, ushering in scientific farming practices with the advent of agricultural inputs and implements. Povertystricken villages turned into cash-rich centres. As a result, the demand for agricultural inputs soared. Better irrigation facilities, use of fertilizers, pesticides, high-yield variety seeds, coupled with application of implements like tractors, power tillers, harvesters, pump sets and sprinklers resulted in the exponential growth of agricultural production, changing the very content of rural markets. During this phase, apart from conventional 'agricultural marketing', a new area 'marketing of agricultural inputs' emerged. This period saw the emergence of companies such as Mahindra & Mahindra, Escorts, Eicher, Sriram Fertilizers and IFFCO. During this period, the marketing of rural products received considerable attention through agencies like KVIC (Khadi and Village Industries Commission), Bunkar (weaver) societies, and handicrafts emporiums. The promotion of village industries, supported by the government through exhibitions and 'Gram Shree Melas' and 'shilpa melas', resulted in the inflow into urban markets on a large scale, of products like handicrafts, handloom textiles, leather products, etc. 69

4 Phase III (1990s to the Present) During the first two phases, the marketing of consumables and durables to the rural markets was not considered seriously. The prime reasons for this were: The potential of rural markets was not visible. The existing rural markets for these products were not sizeable enough to attract the attention of urban marketers. Rural markets were not very accessible. The poor infrastructure of widely scattered villages made them unreachable and expensive in terms of logistics. The growth of urban markets during this period kept marketers busy. Consequently, rural markets were conveniently ignored, as they were seen as extensions of the urban markets. However, from the 1980s India's industrial sector gained in strength and maturity. A new service sector emerged, signifying the transition of an agricultural society into an industrial one. Meanwhile, the increased Plan outlay of Central and State governments for rural development and strengthening of local governance witnessed socio-economic progress. In addition, the economic reforms further 3.3. PROFILE OF RURAL MARKET OF INDIA : The rural market structure is based on many factors which includes Demographic environment, house holding pattern, occupational pattern, and consumption patterns. Socio-economic aspects of the rural areas of the country are more responsible for the rural consumer behaviour. Indian rural consumer is also affected by the cultural and sub cultural factor to greater extent. Specifically the behaviour of rural consumer is outcome of their perception, experiences and expectations. Followings are various aspects of the rural market structure. Rural Market is quiet different as to its counterpart Urban one in respect of income, population, infrastructure, in house facilities and of course life style. Followings are the different grounds on which rural market can be compared with urban one. 70

5 Demographic Environment: The population is playing very vital role in market structure. Indian rural market consumers are more than total consumers of United States and UK both. Any multinational company is not in a position to afford to ignore Indian Rural market. In the late eighties the population growth rate and total population has been seen as an obstacle to the growth of Economy but now same population has been seen as the positive or in terms of consumers. Following table will give clear picture about the population and its growth rate and its impact on Indian rural market. Table-3 Population of India Total Population (million) Rural Population (million) Rural proportion to total population (%) Decadal variation Source: Census of India The table indicates that the overall there is reduction in the population growth of the country on decadal basis as well as the rural population has been reduced since last decade. As the rural population share is reducing it gives clear indication of the increase in the urbanization of the Indian towns or tier three cities to greater extent. The increasing share of the urban population is the good sign for the marketers as they can capture more population with the same efforts. The age group data of Indian population shows the result very bright. As share of Indian young and earning population is highest in the country. Thus the purchasing power is in the hand of rural youth and marketers which compels the makers to design specific offerings for the rural consumers. Not only is this but the second largest section of the society kids under the age group of 5 to 14 which is to be treated as separate new segment for marketers. Other observation from the table is there is transfer of population from rural area to urban area as there is reduction in the rural proportion and increase in the urban proportion of the population of the country. Urbanisation is the biggest challenge to India in coming years. 71

6 Table-4 Source: Census of India 2001 The population of senior citizen is less than the one tenth portion of the total population in rural and urban both area which indicates that the government burden for the pension and other scheme is less. Consumer durables, housing, transportation, communication, banking and insurance will be booming sector due to demand from Urban and Rural Consumers. As there are more than 40% habitants is between the age group of 21years to 54 years Indian middle class having highest purchasing power not only this but this class is massive in terms of consumption quantity as to any other class. Marketers generally classify this class into different segments and then sub classify them and then select the target market. But ion any case this is very lucrative section of the Indian market as penetration of almost all the electronic and consumer durable products the products in this class is very low. The significant characteristic of this group is the nature of income of such class which is more or less stable. The life stage of such consumer is such that they require services also like banking, transportation and communication. 72

7 3.3.2 Literacy Level: The most important aspects of rural market structure are Education level or literacy level across the country. Due to the various initiatives at state level as well as at central level for enhancing education programmes the overall literacy level of the population is increased and came to 74% in The literacy level enhancement can give direct positive impact on the brand awareness and rational behaviour towards marketing initiatives of the marketers. Not only is this but there direct relationship between the educational level and life style and of course the income generation capacity. Literacy level is to be treated as the most important and key factor for rural consumer profile and marketers considers it before determining integrated marketing communication. During the 2001 more than half of the rural population is literate which positive and good sign. Table-5 Rural Literacy in percentage Rural Literacy % of Literates Source : Census of India, 2011 The literacy level had been increased at 23% in last 20 years from 1981 to 2001 which makes tremendous changes in terms of life style and adoption of the various produces in rural India. Literacy level is the one of the key factor for the development of society. Due to higher literacy level consumer awareness towards any product or band will be higher as well as decision for purchase of any product will be more rational one. Higher education level brings social changes as well as it rings social changes which results into economic changes. Indian government is spending less than 15% of total budget expenses for health and education which results into poor health and education system. But in last ten years situation is absolutely different and now country is enjoying fruits of the efforts in terms of higher literacy rate. As per population census 2011 country s literacy rate is 74%. 73

8 Table-6 Source: Census The above chart indicates that the many part of the rural population has left the education in the initial sate itself while in case of urban population nearly one third is between matriculation and Graduation who are taking much matured decision as to others. The above graph also indicates that the rural India is less educated as to urban one in the higher category. In the category of Graduation no of graduates in the rural areas are just one third of graduates in the Urban area. Similarly in the lowest category situation is reverse. The result shows absolute disparity in terms of education facility in the country. Rural India is ignored for providing higher education where more than 60% population is living. The low level of education is becoming hurdle for marketing communication strategy for every marketer. Marketers are supposed to change language, positioning strategy, media and other aspects also for rural market. Different novel and unconventional methods are to be selected for such Housing Pattern and Family Structure Housing pattern and Family structure is playing very important role in the consumer buying behaviour specifically for consumer durables. Rural households have grown by 26 million during last decade. Interestingly, during the same period, the average size of the rural family has been decreased due to movement of more families from joint to nuclear one. As the number of 74

9 nuclear families increases in the rural and urban areas demand of various allied services along with housing will increase as well as consumption of the consumer durables and other daily items will increase at higher rate. The population density of the rural area is lower as to average Indian population density the problem of housing may be less faced by the rural consumers. Villages comprise homestead land (abadi) and cultivated land. The settlement pattern of household is either in a cluster in the abadi or in individualized land holding. The rural consumer or population live in kuccha house as the affordability is low. It is quiet common in a village to find houses according to the kinships, caste or religious groups. Sometimes entire villages are classified on the basis of predominant characteristics. Traditional households in the rural areas are Joint families but due increase of pressure of educational level, separate source of income, migration etc. joint families are converted into nuclear family. Still in India average dwelling for citizen in very very difficult. In spite of the government efforts for constructing affordable houses many people are not availing basic facilities which can be depicted from following table. Table-7 Total No of Households and it s Average Family Size during 1991 and 2001 Particulars Rural Urban Total Rural Urban Total Households (Million) Family size (Number) Source : Census of India 2001 Table-8 Family Structure Type of Household Rural Urban Joint Nuclear without elders Nuclear with elders Others Source : Indian Readership Survey,

10 The above table focuses on the family type of Indian population. Near to one fifth of Rural India is still living in the joint family system where family size is mire then six. At the same time counter part s household in the same category is little lower. In the rural areas nuclear family with the elders are 17.1% which is slightly higher which indicate little dominance of senior person in the family decision. The significant change in the second item of the table which shows the figure of the Nuclear family in the Urban area pure nuclear families are just 2/3 of total households which indicates that the family are living independently and taking important decision of consumer behaviour their own way. It indirectly indicates higher consumption of the personal care products. More surprisingly the Rural India is not far behind to its counterpart but just 60%of the households are living separately which is tremendous social change and marketers are supposed to analyse its impact on purchasing pattern of rural and urban area also. But due to such situation the buying behaviour for many products will be similar in the both regions in many families so far as final decision for brand in concern as life style is similar to certain extent. The size of family in the rural and urban India is almost same. But still more than one quarter rural households are with more than 7 members in the family Table-9 Household Size (%) Size of Household Rural Urban 1-2 members members members and above Source : Indian Readership Survey,2005 Table-10 Penetration of various consumer durables in rural areas Assets Number of household (lakh) Percentage of households Electricity 1, LPG TV Telephone wheeler wheeler Source : Market Skyline of India,

11 The above table shows the penetration various important items of household equipments. More than two third Indian houses are with electricity which if good sign and comfort in the daily routine life of people thorough use of various household equipments. The most important and poor situation is about availability or penetration of LPG in the rural areas. Just one fourth of total households have accessed LPG out of total households. The positive sign is the penetration of Television set which is used by more than 41% households. This is to be treated as most influensive and effective media of advertisement in the rural areas. But still much more can be done in the area of household appliances for use in kitchen as well as in case of two wheelers. Telephone penetration is very poor. Not only this but the penetration of two wheeler is higher than the Telephone which means there more requirement of the transportation need rather than communication need. Housing patterns determines the lifestyle of the rural consumers of the country which is presented below. Majority of the rural hoses are in the pucca houses but nearly one third are still living in the semi-pucca hoses which indicates the potentiality of the small durables penetration. Distribution is the most challenging task in the country like India as well as population is very wide spread. The Villages of less than 500 populations generally do not have any shop but the number of such villages has decreased by 5% over the last ten years villages in less than 500 population category has been upgraded to the 500+ population category. Villages in the population strata are the most prosperous. Marketers are much more interested in those strata and in case consumer durables market such strata are to be treated as influencer or initiator for others in the villages. Following table shows that there is15% village where population is less than 200 and 21.4% villages who has population between 201 to 500. Looking to the combine effect nearly 36% (more than one third of total villages have population below 500. Not only this but nearly one fourth of the total villages having population more than 500 and less than If we take into account all first three categories to gather then more than 60% villages having average population of less than This is very difficult for the any FMCG company and Consumer durable company to distribute their goods to distribute goods 77

12 in the hinterland or hinterland. Not only this but from the traders view point in such villages profitability very low. Due to very less population in majority of villages deep distribution function increases cost to the marketers as well as other issues of controlling and making product available is very difficult task. Generally speaking in case of Consumer durables the companies are following dealer and distributor network for capturing market. However it creates poor control over retailers and very poor after sales service. Rural consumers generally facing problem in the after sales service which compels him to bring such goods to nearby town or city or select high priced zero defect product. Table-11 Inhabited villages classified by population size, 1991 and 2001 Population Villages in size group (1991) Village in size group (2001) Number Percent Number Percent Less than , , , , , , , ,001-2, , , ,001-5,000 62, , , , , Total 580, , Source : Census 1991 and 2001 Rural India is inextricably linked to towns, especially in the periphery of villages. Many towns are actually overgrown villages and are classified as town only because they have municipalities. It indirectly reveals that there is lack of several basic marketing infrastructures. Such disparity in terms of growth increases the cost to the marketers as well as it restricts access to the wide variety of products. Though the demand and consumption level is high several products are not even viable to launch or offered to towns with high population but with less marketing infrastructure. The most important problem of the rural marketing is distribution which results in to low accessibility which depicted in the following table in the 78

13 form of wide spared population in small towns and tier two to three cities. Looking to the following table more than 615 population is living in the town whose population is above 1lakhs which having highest population decadal growth of 24%. Table-12 Town Class with population Town Class Population No. of towns % of total towns % of pop Decadal growth ( ) Class-I 1 lakh and above Class II 500,00-99, Class III 20,000-49,999 1, Class IV 10,000-19,999 1, Class V 5,000-9,999 1, Class VI Less than 5, , Source: Census of India Electricity : Electricity is basically a prime and fundamental requirement for usage of any type of consumer durables. India is facing electricity shortage to great extent. Even the Metro cities are running their activities on inverter for few hours on daily basis. But, the following chart shows that nearly 2/3 rd households of the country having electricity access which indicates comfort in usage of consumer durables. Other way round electricity is also to be treated as source of energy in extreme weather condition in several States of country. Table-13 PERCENTAGE OF HOUSEHOLDS HAVING ELECTRICITY, LPG, TV, TELEPHONE, ACCESS Electri city LPG TV Teleph one 2 wheel er 4 wheel er Percentage of households Source : Market Skyline of India,

14 Occupational Pattern: Occupation is to be treated as the most important key factor for the determine source of income as well as it determines the consistency of the income. The occupation is also to be treated as one of the most important and significant basis of the segmentation for taping rural consumers. The table below shows that out of total consumers of rural areas nearly 40% obtains income from agriculture followed by Wage earners with 35%. Hence nearly three fourth population of rural India having instable income or income based on monsoon. In relation to such urban population contains 40% are earning income from salary which is stable and consistent. Thus the most important decision making point is the designing offering for rural consumer whose income is unstable. Table-14 Source: 80

15 Table-15 Distribution of Households by Occupation in Rural India Occupation July 2000 June 2001 (NSS 56 th round) 81 January-June 2004 (NSS 60 th round) Self-employed in nonagriculture Agricultural labour Other labour Self-employed in agriculture Others Source: National Sample Survey Organisation, (Nos. per thousand households) The dominance of the agro activities in providing employment has been reduced marginally amongst rural people. At the same time there has been reduction of no of household depending upon labour work and odd jobs. But still the income of the rural people is not stable as well as not permanent as the economy is based on agriculture and para-agriculture activities Economic aspects Savings and Consumptions: Over the last ten years there has been a shift in the distribution of households from lower income to higher income groups. The higher income class in rural areas grows six times. The lowest income group segment has been reduces in the last decade and lower income households has been shifted to the lower middle incomes contains me. The most important is the top of the pyramid which consist of 7% household as to just 1.7% in Thus the lower income households share is constantly reducing and upper and middle income group has been expanding. Table-16 Household and Income comparison between Rural and urban. Average Income Annual Income<Rs. 75,000 Annual Income between Rs.75,000 and Rs.1.50 lakhs Annual Income between Rs.1.50lakhs and Rs.3 lakhs Annual Income> Rs.3 lakhs All Households Rural 41, , , , ,284 Urban 48, , , , ,753 Total 41, , , , ,113 Source: The Indicus Consumer Hand Book

16 From above table we conclude that rural India is just equal to Urban India in terms of income. The rural India a counter part of urban one is not significantly different to in terms of income spread amongst different class except for the lower income group. The lower income group having income less than Rs p.a. is to be treated as bottom of the pyramid customers but such are less than second last category. Marketers of consumer durables are not targeting such lower income group or provide offerings at very low rate as well as with easy small and affordable installments. The population across income cuts and sector (Table Below) shows the in the category of higher income bracket contribution of Urban Consumer is higher as to Rural one but surprisingly in the second category of income cuts contribution of Rural population is higher significantly. It indirectly informs that the rural India have more aspirants as to urban one. Marketers should eye on this great Indian middle class of the rural areas as well as premium segment of the urban area having highest purchasing power. In other way round we can say the income for Urban population and Rural population having no significant difference. The difference appeared is diluted due to high cost of living in the urban area as to rural area. But the income disparity is less effective but the other aspects like drinking water, roads, communication facilities and opportunities or earning is still very low in rural areas. Table-17 Source : The Indicus Consumer Handbook. 82

17 Savings Rate: Saving habit of the consumer make him self-sufficient and financial strengthen. The saving is to be treats one of the feature or characteristic of the Indian consumers. The savings of the consumer make him able to attract towards various services and consumer durable which makes his life smoother. The following table shows the comparison of the rural and urban consumer s saving pattern across different income groups household. Surprisingly the most upper class of income (whose income is higher than Rs. 10 lakhs p.a.) in the rural area is doing more savings as to urban area. Table-18 Source: The Indicus Consumer Handbook Consumer Expenditure Pattern: Per capita consumption expenses has been raised four times in last twenty years as well as the non-food items expenditures have been increased from 34% to 41% which indicates that the rural consumer have changed their priority from food to services and other items. The data given below show a trend of reduction in the food and beverages expenses and increasing trend in case of Medical and Health segment, Transportation and Communication area. Thus there is slowly and gradually change in the development of life 83

18 style of consumers of rural area. Not only this but several services are more important for the consumers. The expenditure in the entertainment and recreation has been increased by 1% in time span of five years. Surprisingly rural consumer is spending 40% for the consumer durables as well for the FMCG or other personal care products. Table-19 Share of items in private final consumption expenditure (%) Items Food, beverages & tobacco Clothing & footwear Gross rent, fuel & power Furniture, furnishing, Apple Services Medical care & health services Transport & communication Recreation, education & cultural services Miscellaneous goods & services Private final consu.exp. in domestic Source: The Indicus Consumer Handbook. The expenditure towards medical care and health services has been increased which shows awareness and action towards health consciousness Consumer Durable Others Ownership The ownership of consumer durables in the Rural and Urban area is most important from the view point of the marketers of consumer durables. Following table show the penetration level of each such item. Percentage of urban-rural and total household s population possessing various goods. The following table shows the potentiality of the market in the rural as well as 84

19 urban area. Marketers can concentrate in such market and may raise the profitability. Penetration level of various Household Items in Urban and Rural area (in % of households) Table-20 Comparative penetration of household goods in Urban and Rural areas in Percentage Household goods Urban Rural Total Mattress Pressure cooker Chair Cot or bed Table Electric fan Radio or transistor Television (black and white) Television (color) Any television Sewing machine Mobile telephone Any other type of telephone Computer Refrigerator Watch or clock Water pump Thresher Tractor None of the above Source : NFHS, Marketing Infrastructure: Marketing infrastructure consists of several services which helps marketers to attract and satisfy consumers in a better way. It includes network of retail outlets, transportation, communication and other aspects. If marketing infrastructure is strong or sufficient than at that time, marketer can easily leverage the economic condition of consumer. In a country like India, 85

20 marketing infrastructure in terms of communication, storage, banking facility, etc. are very poor in rural area. However, we have taken into account rural retail as a key for making product available and brand awareness for FMCG products as well as for consumer durables Rural retail Rural retail outlets are more generalized in nature. Three out of four shops in a village are small pan/ bidi shops or provisions stores selling consumer products like soap, washing powder, biscuits, etc. It is only in villages close to urban areas or in very large feeder villages that one sees specialized shops like chemists, textile stores, equipment repair shops and liquor outlets. The first specialized outlet is invariably a chemist, followed by an equipment repair shop. As consumer durables, jewellery and clothes are bought once in a while on special occasions like weddings, festivals, or after the harvest, rural consumers prefer to buy from a nearby town or city as the bigger shops offer a wider variety and a better choice of products. Unlike urban retail shelves, rural retail shelves are flooded with local and regional brands as these promises the retailer higher margins and longer credit periods. Table-21 Shop Size Size of shop (sq.ft.) Rural Urban Up to , > 1, Source: ACNielsen Shop Census Table-22 Retail Stocking Pattern in Rural and Urban areas No of product categories Rural Urban Up to > Source: A.C.Nelsen Shop Census

21 On an average, the number of product categories stocked by rural and urban stores does not vary significantly (19 v/s 27). But what does vary is the number of companies/brands (42 v/s 92). This difference in stocking patterns is because of poor reach and difficulty in servicing rural stores. The above table indirectly gives clear cut idea about stock keeping pattern of the rural traders. It reveals that the rural retailers are not keeping deep assortment of one brand as well as not keeping majority of brands also. It creates problems of accessibility to rural consumer. The number of brands per product category decreases as we move deeper towards smaller villages. The first task is making brands available, but simultaneously marketers also need to make efforts to ensure their visibility on rural retail shelves. Products are stocked in a cluttered and disorganized way. Slow-moving products covered with dust accumulated over a period of time are a common sight. The visibility of brands is very poor due to the absence of proper racks and display boxes and stands. Brands that are advantageous to the retailer's business are displayed prominently. Therefore, marketers need develop strategies to occupy rural retail shelf space by providing display and storage systems (wall-mounted display strips for fairness creams and ice boxes and viz. coolers for soft drinks). Shabby retail outlets are not attracting consumer which an added attitude of retailers compels the rural consumer to prefer company show room or shopping mall for consumer durables or most valuable item of households items. The other most important aspect is use of various sales promotional tools at the small outlets in the rural area. Sometime it may happened that the consumers of the rural area can t get the same sales promotion scheme which one get in the Urban area. Marketers are supposed to develop separate sales promotional tools in consumer durables product in the rural area and which are as per expectations of the rural consumers. Not only this but in the rural areas purchasing of durables and other important valuable products is executed at the time of harvesting or at the time of the festive season and special sales promotion scheme is to be developed with help of rural retailers will be more effective one. After sales service or complaint management is just ignored at the rural level and consumers in the rural areas is more concerned for warranty period and free services to their products. 87

22 Communication: The accessibility of the rural areas by the retailers is highly depending upon the communication and Transportation facility in such areas. Different media having different impact and reaches in the City and Rural areas of the country. The following table shows that Television is to be treated as the most effective and deep impact media. Marketers hence emphasizing TV commercial for their national brands. Television is playing very important role in creating brand awareness across the country. Basically speaking the communication is the most challenging area for the rural marketing as there is diversity in terms of language, culture, education level as well as availability of electricity. Table- 23 Source : The Indicus Consumer Handbook Transportation: Making product available the hinterland is the most challenging task and solution to the problem of availability aspect of the rural market. Bicycle is still today penetrated equally in the rural as well as in the urban area of Indians its penetration levels near to 50%. It is still cheap and easily accessible vehicle for both places. But the motor cycle or two wheeler is still penetrated to the extent of just 10% of the rural population households which indirectly determining the problem of transportation or rural consumers and dependency on the public transport for nearby area. From the table below it can be concluded that in totality the penetration of vehicles in the India is very 88

23 low as only 40% households are with the vehicles and still 60% do not own anything in terms of vehicle. This creates hurdles in making product available to consumers. Marketers efforts of making product available in the nearby stores or stores of nearby village can t serve the purpose at all. Table-24 Percentage of Urban and Rural Households Possessing Vehicles.( ) Means of transport Urban Rural Total Bicycle Motorcycle or scooter Animal drawn cart Car None of the above Source : NFHS, Energy sources: Energy source is also to be treated as key factor deterring living condition and other consumption pattern. In the rural areas of India still today use of firewood is very high as fuel option as it is cheap and easily available in the nearby area. Even after better transportation system in the rural India availability of LPG is can t be achieved remarkably. The table below showing expenses of monthly consumption expenses per month for the energy along with the source of the energy indicates that the firewood is still most preferred for fuel amongst all types of the income group of the society. On the basis of data of National Sample survey we can conclude that there are more than 77% households using firewood s and just 10% are using LPG as fuel. And rest people are using other old conventional ways of obtaining energy. It indirectly affects the quality of life and efforts done by the government for the same. 89

24 Table-25 Per 1000 distribution of households by primary source of energy for each MCPE class in Rural Area Primary source of energy for cooking MPCE Class (Rs.) No cooking arrangement Coke / Coal Fire wood & Chips LPG Gobar Gas Dugn Cake Char-coal Kero-sene Electricity Others NR Total All classes % Source : NSSO RURAL CONSUMER The 2008 Hansa report on Indian Rural Consumerism says India s rural population, at about three-fourths of a billion, is larger than the total population of the US and the European Union put together. Increasing agricultural productivity has lead to the growth of rural disposable incomes. The spread of education and availability of television and Cable and Satellite has a huge impact on con-sumption and ownership of a whole range of products and services. Almost three-fifths of rural homemakers in India are illit-erate, and only about 10% have attained the secondary level of education. 90

25 PENETRATION OF DIFFERENT PRODUCTS IN INDIA The penetration level of various products determines lifestyle of habitants of the country. Looking to the following table, the urban habitants are well equipped with the consumer durables as well as several household items like pressure cooker, chair, bed, table, etc. where penetration level is about 60%, but at the same time, in the urban area the penetration level is lower. The television, electric fan and pressure cooker, which is to be treated as most important for any household in urban is very low penetrated. Just 1/5 th of total household of the rural area, old such key household items. Such position may be due to low penetration of electricity as well as LPG in the rural area. Refrigerator and mobile phones in the rural area is very low penetrated which indicates that there is huge market potential for such products. Multinational companies like ITC, Samsung, Timex, LG and even Videocon is considering such market as most potential or promising SPECIAL CHARACTERISTICS OF RURAL CONSUMERS Consumer behaviour is a complex phenomenon that is influenced by various factors such as income, occupation, education, lifestyle and geographical location. To use a single factor to understand rural consumer behaviour would be misleading. Also, the assumption of urban marketers that the rural consumer is no different from his urban counterpart is a mistake that has led to many a failure in rural marketing Age and Stages of the Life Cycle The purchase of products and services and their forms and nature is influenced by age and life-cycle stages of the consumer. This gives direction to the estimation of demand, segmentation, targeting of markets and productmix decisions. 91

26 Table-26 Consumption by Age and Life-Cycle Stages: Rural Vs Urban Age Below 12 Lifecycle stage Child Teenage Young Middle aged Products & services Urban Video games, chocolates, beverages/health drinks Cell phones, motorcycles, Internet Car, personal computer, branded clothing, alcohol, stores/malls Luxury car, credit cards, house, health insurance, holiday trips Above 60 Old Clubs, theatre, parks Rural Toys, ice candy, daliya Bicycle, television, cinema Motorcycle, telephone, LPG, tailored/unbranded clothes, country/local (haat bhatti) liquor, haat Tractor, Kisan Credit Card, postal savings, mela Chaupal, playing cards, pilgrimage Products and services at different life-cycle stages may be quite different between urban and rural. India is a nation of the young, with 85 per cent of the population below the age of 45 and 55 per cent of its population below 25 years of age. Young adults, the group between 20 and 35 years account for almost one-fourth of India s consumption base. The generation that has come of age post liberalization, brought up in an age of unparalleled choice of products and services, has no sense of guilt about consumption and its conspicuous forms. That is the order of the day, in an era where the consumer has suddenly tasted freedom of choice, fuelled by the phenomenon of shrinking world, because of media. Interestingly, 6 out of 10 households today have a liberalization child. The projected increase in the economically active population of the young Indian, specially the age group, sets the imagination afire, as to the magnitude of potential market growth. It is even more exciting, to realise that almost 70 per cent of this potential lies in rural India! 92

27 Table-27 Distribution of Indian population by age (All India: Rural + Urban) in millions Year Kids 0-4 Children 5-14 Adolescents Young adults Mid aged Aged 55+ Total Source: Statistical Outline of India Occupation and Income In the rural sector, a range of goods and services beyond the very basic ones are bought by a consumer, influenced by the occupation and income of the individual. Fishermen buy a boat and large nets, whereas a farmer opts first for a tractor and pump set. The same buying behaviour and choice of products cannot be expected from a cultivator, salary earner (teacher) and petty shopkeeper, all of whom may have identical incomes. A farmer has to allow for variations in income during pre-harvest and post-harvest periods. The shopkeeper (baniya) behaves differently as he is in a position to adjust his income according to demand in village by adjusting inventory and credit, without this affecting the purchase of goods. On the other hand, a salary earner has a fixed and assured income. Add to this the fact that the rural consumer has more than one source of income supplementing the income from his main occupation (e.g. agri and dairy). Truly, the buying behaviour based on pure income parameters can cloud the understanding of priority and choice of purchase. Apart from income, consumer behaviour is also guided by the working status of the earning member/s of the family, especially the head of the household, as major purchase decisions are taken by him. If we look at distribution of products based on occupational pattern, the purchases of durable products are dominated by salary earners, businessmen and cultivators, whereas consumption of FMCG products is almost uniform (in proportion to their population). 93

28 The occupation profile of owners of three key durables indicate that non-agricultural occupation groups (shopkeepers, salary earners) are highconsumption segments and this segment is growing rapidly, with reducing dependence on agriculture. Data on occupation patterns show a decline in farmers and an increase in other sectors. Table-28 Rural Occupation and Consumption Pattern Occupation Category Rural HH (%) Contribution to TV ownership (%) Contribution to 2-wheeler ownership (%) Contribution to Refrigerators (%) Owner farmer Shopkeeper/Trader Salary earner Agri worker Unskilled non-agri. labourer Artisan Rest (leased farmers, livestock, poultry, fishery, milkman) Source: NCAER data analysed by Bijapurkar and Murthy Economic Circumstances The purchasing power of an individual plays a significant role in choice of products. People s economic circumstances, are dictated by their disposable income, savings and debts, credit worthiness and attitude towards spending and savings. The patterns of income of a farmer, is linked to the harvest and stability of income from produce and is also largely dependent on the monsoons. His urban counterpart however, enjoys a stable monthly inflow of income. The purchasing power of a daily wage earner, on the other hand, is redefined every day. The fact that a majority in the rural sector are selfemployed increases the risk of stability of income. Agriculture being the main activity in rural area, the purchasing power of rural consumer is highly unpredictable, which may lead to high variations in the demand pattern of products. 94

29 Similarly, the saving habits in the rural sector are more inclined towards fixed deposits and small savings in banks and post offices, whereas the urban consumer has minimal inclination towards long-term savings and has been swept away by the credit craze. He measures his economic status and prestige by his ability to buy now. The rural consumer is still reluctant to go in for credit purchases as it is considered to dilute his status and reputation in the village. When we compare the disposable income of the rural (per capita income: Rs. 9,481) and urban (per capita income: Rs.19,481) consumer, the marketer s myth of low rural disposable surplus is found to be highly misplaced. This is due to the fact that the lion s share of the monthly income of an urban consumer goes into paying house rent, tuition fees, food items, health, transport and telephone expenses. These become irrelevant for a rural consumer as primary education and health come free and most of the food needs are met indigenously. Also, almost everyone has his own house in rural areas. So in very real terms, a rural consumer has far more buying power than his urban counterpart with the same income Lifestyle Lifestyle deals with everyday behaviorally oriented facets of consumers, as well as their values, feelings, attitudes, interests and opinions. It embodies the patterns that develop and emerge from the dynamics of living in a society. There is a vast difference in the lifestyles of rural and urban consumers, because of the differences in the social and cultural environment, values and daily mode of living. Extensions of urban positioning therefore can become totally irrelevant. The typical lifestyle dimensions are: Activities: Allocation of time by the consumer/family (work, hobbies, social events, entertainment) Interests: Consumer preferences and priorities (food, fashion, family, recreation) Opinions: Consumer attitudes to events / issues (politics, education, social issues, future, culture) Demographics: Age, education, income, occupation, family size, geography, dwelling 95

30 Table-29 Comparison of Rural & Urban Lifestyles Dimensions Urban Rural Demographics Convent educated, salary earner, small nuclear family, large dense population, apartments house Activities Interests Office jobs, internet surfing, health club, shopping, clubs & party Chinese, Continental foods, designer clothes, beauty saloons, holiday trips 96 Govt school, self-employed, large family, small/ scattered population, ordinary spacious Agriculture, physical sports, gossip, playing cards, cinema, religious congregation Desi food, milk, bright coloured clothes, jewellery, visiting towns, markets/mela These dimensions are totally different in the urban and rural context, reflected through the lifestyle of the consumer. Over the years, the rural consumers attitudes and lifestyles have been changing, due to exposure through TV and awareness brought in by increase in literacy levels. Different research organizations have attempted to classify the lifestyle patterns of consumer in the rural context. One of the widely accepted five category classification, is done by NCAER on the basis of value of the product, reflecting economic well-being of households. Table-30 Rural Consumer Classification in % The Affluent /Very rich The Well-off The Climbers The Aspirants The Destitutes Rural Consumer Classification Households owning personal car/jeep with other products Household owning any/all of these- airconditioners motor cycle scooter, washing machine, refrigerator, colour TV with other durables but not car/jeep Household owning any/all of these- mopeds, VCR/VCP, mixer grinder, sewing machine, audio equipments, B/W TV, geyser with other durables but not those mentioned under first two categories Household owning any/all of these- bicycle, electric fans, electric iron with other durables but not those mentioned under first three categories Households other than those classified under Categories 1 to 4 above (owning any/all/ none of these- wrist watches, pressure cooker, cassette recorder, transistor/radio Source: NCAER Indian Market Demographics Report,

31 * Value of the product could be both in terms of its price and utility. An individual product (e.g. bicycle) may be low in price but high in terms of value, due to its multiple usages for transport and carriage and low maintenance Personality and Self-Concept Personality is the sum total of the unique individual characteristics that determine and reflect how a person responds to his/her environment. It provides a framework within which consistent and long-lasting behaviour can be developed. Self-concept or self-image is the way we perceive ourselves in a social framework. There is a natural tendency to buy those products and services that we think fit or match with our personality. In order to relate personality to the products people purchase, there are two aspects to be considered : situation and person. When in social gatherings, rural youth prefer to buy pan masala, tea, and namkeen, whereas urban youth enjoy popcorn and coffee/cold drinks. While travelling, rural people carry food items from their homes, or buy open food. Their urban counterparts, on the other hand, buy mineral water and packaged foods. A conservative villager may offer water or tea, whereas a person high on sociability may offer lassi or thanda to his friends. Rural marketers are becoming increasingly concerned about giving a distinct image or personality to their products as close as possible to that of the target customer. Some marketers have learned from their mistakes (their earlier assumption that the same brand ambassador will appeal to rural and urban consumers alike) and have started using separate rural brand ambassadors for targeting rural markets. Table-31 Brand name Product wise Rural Brand Ambassador Rural Brand ambassador Brand personality Cola Cola Aamir Khan Smart, colourful, youthful, Mahindra ractor Sunny Deol Rugged and relaxed, dominating, Rajdoot Dharmendra Rugged, conventional, thrifty Philips Radio Rajnikanth Modern, colourful, social Navaratan Oil Govinda Jovial, youthful, Ruf and Tuf jeans Akshay Kumar Robust, self-confident, go getter 97

32 These brand ambassadors, as idealistic role models, are perceived to have the qualities found most admirable by the rural audience, in the relevant marketing territories Personality and Psychological Factors The rural consumer, unlike his urban counterpart, is quite content to satisfy his basic needs relevant to his environment. He is less adventurous, averse to taking risk and prefers to stay with the tried and tested. A lot of persuasion by an influencer, whose achievements he respects is required to convince him to try new products. For products which are higher on the involvement scale (not necessarily more expensive), opinion leaders to play a significant role. Unlike the urban consumer, peer group pressure is not very significant in initiating product trial. He is not driven by status symbols acquired by his neighbours in order to upgrade to a better lifestyle. Though high in % self-esteem, he is quite content with his everyday life, resigned to adverse circumstances and less ambitious about comfort and material possessions, except those that seems to provide security. Typically, through his life cycle, an urban consumer moves through 5, or at least 4 of the five segments of Maslow s model of the Motivational Pyramid, i.e. Basic Needs and Needs of Security, Social Needs, Needs of Self Esteem and Needs of Self Actualisation. The rural consumer however, is mostly, quite content to stay all his life in the lower two sections of the pyramid. Figure-12 Different types of needs 5 Self Actualisation needs 4 Esteem needs 3 Social needs 2 Security needs 1 Basic needs 98

33 Perception and Brand Belief Perception plays an important role in the selection of products by a consumer. However, Perception, being an individual concept, acts more as a barrier to trial and acceptance for products in the case of the rural consumer. This perception is directly related to the level of acceptance and satisfaction of the consumer s present way of life and the role played by existing products in that life. Awareness and exposure to new media do not create a feeling of impatience with the present and aspiration for trial and change in the rural consumer, fundamentally because of his perception of satisfaction, rather than that of dissatisfaction. Quality and value, as attributes integral to a new product, are always related to the improvement they bring to consumer lives in terms of productivity and prices. Prices for such products are judged in the same manner, rather than on a comparative scale. For products that create the perception of providing comfort, or improve the quality of everyday life, price is not questioned or compared, the role played by additional features as a differentiation is not significant in influencing choice. Familiar and known sources, such as a retailer, act as a strong spokesperson for low involvement FMCGs. In high involvement products, however, an outlet away from the rural environment and retailers closely identified with the brand act as strong reinforcement for the brand Information Search and Pre-purchase Evaluation Unlike the urban model, the rural consumer primarily seeks and gets his information from opinion leaders and influencers, rather than the media. However, this information search is fueled by exhibitions and road shows, because of the opportunity of personal interaction and leisurely pace of absorbing and understanding the information and its relevance. In the case of high-involvement products, this information search needs to be supplemented by an out of village visit to a company outlet with an opportunity for personal interaction. The need to demonstrate individual accessories of the product and their performance also becomes critical. The ultimate clincher is always the touch and feel experience. Anything less will not lead to a purchase. In rural India, seeing is not sufficient to believe, using is. 99

34 The rise of consumerism The growing number of rural people working in urban India, but continuing to live in their village has brought items of conspicuous consumption (beyond the bare necessities) into the village. This is supplemented by villagers who have migrated to urban India, but visit their village during holidays with gifts for their family and friends. This has stoked the curiosity of hitherto satisfied villagers. The migrated village folk exposed to urban life, are perceived to be more knowledgeable about the larger world outside. They have emerged as a new class of Opinion Leaders and influencers, whose mobility and employment outside the agricultural sector, gives them a unique authority to recommend products and services. The rural consumer, though not dissatisfied with his shopping basket, is now ready to buy products that he does not view as basic necessities, or as essential to everyday life. The new consumer is born. And growing day by day! Increasing penetration of non-essential items The trend for consumerism is also evident from a shift in types of products purchased and consumed. Figure-13 Consumerism Shift Consumerism : The shift Loose unbranded tea Packaged, branded tea Home made sweets Branded biscuits (jaggery) Pressure cooker cooking Open vessel wood fire on LPG cooking Motorcycle Cycle Refrigerator for cold Earthen vessel for cool water water Aerated drinks Sharbat, Nimbu Paani This rise of consumerism is what makes a market as large as rural India the most promising market of the future. 100

35 OCCUPATION AND CONSUMPTION PATTERN IN RURAL INDIA The details on occupation are available from National Sample Survey and NCAER data. Although majority of the rural population is employed in agriculture, yet a large percentage of more than 30 percent employed is in the non-agricultural sector. Salary earners in the rural areas are a significant group with more than 11 percent of the head of the households as salary earners. About 50 percent of the rural population is self-employed. The income stream for the self-employed differs from those working for others. The labour constitutes more than 35 percent of the population and their income is on daily basis. In addition to designing suitable pricing, the marketer needs to design suitable product and also delivery channels to take into account the variations in the rural market. The need for segmentation and targeted marketing strategy is clearly indicated. Table-32 Distribution of Households by Occupation of the Head, in % Head's Occupation Urban Rural All Housewife Cultivator Wage earner Salary earner Professional Artisan Petty shopkeeper Businessman Others Total Source : NCAER EDUCATIONAL LEVEL OF HOME MAKER V/S PRODUCT PENETRATION (%) A homemaker s level of education sig-nificantly affects product ownership and usage. Colour TV, refrigerator and motorised two-wheeler 101

36 penetration jumps with every increase in the level of a homemak-er s education. This is also the case with slightly advanced fast moving consumer goods products such as tooth-paste and shampoo. Penetration levels of these FMCG products have not reached the penetration level in emerging markets of more universally used products such as toilet soap, washing powder, biscuits, etc. Toilet cleaners, for example, show penetration levels doubling with each progressive stage of a homemaker s education. Inter-estingly, packaged edible oil also shows an increase in penetration with increasing level of a homemaker s education. Table-33 Educational Level of the Homemaker vs. Product Penetration (%) All Rural Illiterate Literate but Below 10 th Grade 10 th Grade but not Graduate Graduate and Above Households ( 000s) Durables Any TV Colour TV Refrigerator Any motorized two wheeler FMCGs Toothpaste Shampoo Utensil cleaner Toilet cleaner Floor cleaner Packaged edible oil Source : IRS, conducted jointly by MRUC and Hansa Research EXPOSURE TO TV & CABLES V/S CONSUMER DURABLE PENETRATION The effect of TV and Cable & Satellite (C&S ) on penetration levels of the same set of products is evident on the following three levels of progression no TV at home, own TV but without a satellite connection and finally, TV with a C&S connection. Though most durables show a progressive increase in penetration at each level, the impact of C&S is most evident in 102

37 FMCG products. Most products show an increase of 50% or more in pene-tration levels with ascending order of TV access. Table-34 Exposure to TV & Cable & Satellite (C&S) vs. Consumer Durables Penetration (%) All Rural No TV TV but not C&S C&S Households ( 000s) Any TV 32.5 NA Colour TV 18.1 NA Refrigerator Any two wheeler Source : IRS, conducted jointly by MRUC and Hansa Research Table-35 Exposure to TV & Cable & Satellite (C&S) vs. FMCG Penetration (%) All Rural No TV TV but no C&S C&S Households ( 000s) Toothpaste Shampoo Utensil cleaner Toilet cleaner Floor cleaner Packaged edible oil Source : IRS, conducted jointly by MRUC and Hansa Research GENDER LITERACY AND HOMEMAKER LITERACY Rural lifestyles are changing fast due to increasing exposure through education, TV ownership and C&S availability. Literacy levels in rural India went up by as much as 7% points between the years 2000 to 2008, translating to an increase of 1% point annually. At the state level, Karnataka, West Bengal, Goa and Andhra Pradesh have seen the highest increase in literacy. Literacy growth was higher among females. These female literacy pat-terns varied by zone with growth in female literacy being relatively slow in the west. Male literacy also varied by zone with the south zone showing a notable increase in male literacy compared to the other zones. 103

38 Going beyond overall literacy, an inter-esting finding is that education is now entering many rural homes through their younger members. Often the homemaker as well as the CWE in a rural household may not be educated. From 2000 to 2008 there has been a 7% increase in house-holds where at least one member was educated up to secondary school level or beyond. This increase was the highest in the south zone, in line with the overall lit-eracy trend. States that had more than 60% of the households with at least one member educated to the secondary school level and above were Goa, Himachal Pradesh, Punjab and Kerala. States with fewer than 30% of such house-holds were Bihar, Madhya Pradesh, Orissa and West Bengal. If one were to define graduation as the measure of being rea-sonably educated, then the incidence of at least one member in the household being reasonably educated increased marginally from 6.6% in 2000 to 7.8% in The states of Goa, Maharashtra and Orissa have seen the highest increase. The growth in homemaker literacy reached approximately 8% points from The south zone continued to lead in overall homemaker literacy levels in This zone also saw the highest percentage point increase (12.5%). Table-36 Highest Educational Level in a Household 10 th Grade & Above (%) Rural India North South East West Source : IRS, conducted jointly by MRUC and Hansa Research Table-37 Homemaker Literacy (%) Rural India North South East West Source : IRS, conducted jointly by MRUC and Hansa Research 104

39 Beyond simple literacy, the homemaker s education secondary school level or above is also an indicator of changing exposure levels in the households. This parameter too, moved up from 7.3% in 2000 to 10.1% in In a span of eight years ( ) as many as seven states registered a growth of 10 or more percentage points in home-maker literacy. Four states had a home-maker literacy rate above 50% in 2000 whereas ten states achieved this rate in The newest entrants in 2008 were Maharashtra, West Bengal, Punjab, Karnataka, Himachal Pradesh and Tamil Nadu TV OWNERSHIP AND CABLE AND SATELLITE PENETRATION There has been a growth of 10% points in TV owning homes in rural India. The south zone leads in penetration as well as growth. This zone not only continues to lead but is also increasing its lead over other zones. Increase in TV ownership is the lowest for the north zone (4.2% points). More than half of the states have recorded growth of at least 10% points in TV penetration. C&S penetration in rural India has more than tripled from 2000 to As with TV, the south zone dwarfs the other zones in overall penetration levels. Though overall penetra-tion of C&S was relatively high in the west zone, the growth rate was the lowest. At the state level, fewer than half the states had C&S penetration in double digits, under-scoring the extent of untapped markets. Contrary to the popular belief that high TV penetration naturally leads to high C&S penetration, states like Punjab, Haryana and Himachal Pradesh told a different story. C&S penetration in these states was less than half of the total TV penetration. Compared to this, in Andhra Pradesh 90% of all TV own-ing homes also had a C&S connection. In fact, C&S as a percentage of TV homes was the highest for the southern states. 105

40 Table-38 TV Ownership (%) Rural India North South East West Source : IRS, conducted jointly by MRUC and Hansa Research Table-39 Cable & Satellite (C&W) Availability (%) Rural India North South East West Source : IRS, conducted jointly by MRUC and Hansa Research PENETRATION OF CONSUMER DURABLES The changes in the consumption patterns of rural consumers are evident in the pur-chase of the following products: Though penetration of durables is low in rural India, growth is exciting. Between 2000 and 2008, colour TV penetration increased by more than 400%; motorcy-cles by 150% and refrigerators by more than 50%. Coupled with an estimated population increase of approximately 15% over eight years ( ), this reflects a large growth in market demand. Colour TVs showed impressive growth across All zones increased pen-etration by at least 50%. For refrigerators, growth was steady but slow. Part of the reason is unreliable power supply that entirely defeats the purpose of having a refrigerator. Half of the states doubled their refrigerator penetration. However, in the other states, penetra-tion was still below 5%. For motorcycles, the tally doubled or tripled between the years 2000 to No state had penetra-tion in excess of 10% in 2000 whereas six states Punjab, 106

41 Goa, Gujarat, Haryana, Maharashtra and Rajasthan - reached this level of penetration in Table-40 Penetration of Consumer Durables (%) Colour TV Refrigerator Motorcycle Rural India North South East West Source : IRS, conducted jointly by MRUC and Hansa Research CONSUMER BUYING PROCESS Rural consumer behaviour is different as to its counterpart in many aspects. Rural consumers are highly influenced by several demographic factors and personal factors, which leads to prefer basic offerings, durable products and brand loyalty based on past experience. The one of the most important problems in rural market is non-availability of wide variety of products specifically with reference to consumer durables. Consumer in rural India is expecting better quality product at reasonable price and considered opinion of the retailer and experience of present user of product in determining brand of the product. By and large, rural consumer s income is seasonal which is reflected in their purchase behavioural also. Following detailed explanation of various typical factors affecting consumer behaviour specifically for rural area gives understand about rural buying pattern and other aspects Buying-Behaviour Patterns The level of involvement in buying products and services depends on various factors such as price, availability, variety, knowledge and purpose. A product like a wristwatch is less affordable to a rural consumer and hence considered a high-involvement product, whereas for an urban consumer it would be a low-involvement product. The brand differentiation is perceived as high in both rural and urban. Therefore, buying a wristwatch is characterized as variety-seeking buying behaviour in the urban sector, whereas it is complex-buying behaviour in the rural areas. 107

42 Table-41 LEVEL OF INVOLVEMENT OF URBAN AND RURAL CONSUMER AND BRAND DIFFERENTIATION High Brand Differentiation Low Brand Differentiation High Involvement Complex Buying Behaviour Dissonancereducing Buying Behaviour (Cereals and pulses) (Medical services) Urban Low Involvement Varietyseeking Buying Behaviour (Economy Wrist watch) Habitual Buying Behaviour (Pressure Cooker) (Footwear) (Life Insurance Policy) High Involvement Complex Buying Behaviour (Economy Wrist watch) Dissonancereducing Buying Behaviour (Pressure cooker) (Footwear) (Life insurance Policy) Rural Low Involvement Varietyseeking Buying Behavior Habitual Buying Behavior (Cereals and pulses) (Medical Services) Products like pressure cookers, footwear and life insurance policies, are perceived as having low brand differentiation in both rural and urban areas, but less affordable to rural consumers. Therefore the buying behaviour is different; habitual in urban but dissonance reducing in rural. The level of involvement in purchasing some products and services depends on knowledge and experience. Where knowledge and experience of purchasing the product in the past was high, the involvement associated with it was low and vice versa. For example, purchasing cereal and pulses is a high-involvement activity for an urban consumer because of poor knowledge, whereas for a rural consumer, it is a low-involvement activity because he is more knowledgeable. The purchase behaviour is dissonance reducing in urban areas and habitual buying in the rural. Take the example of medical services. In the city there are government hospitals, private hospitals, nursing homes and private clinics. Here there are general physicians, speciality and super speciality doctors and surgeons. To match, fees vary widely. Government hospitals charge nominal fees, whereas 108

43 private hospitals and nursing homes charge more. General physicians charge lower fees than specialty doctors. As several combinations are available to an urban consumer, his involvement is high. Whereas since a villager has limited options, his involvement is low. He goes to a Registered Medical Practitioner who is a general physician without an adequate medical degree, or to the nearby government-aided block-level dispensary. Therefore, the buying behaviour is different; it is dissonance reducing in urban and habitual buying in rural Stages in Buying Process Consumers pass through five stages while making a purchase decision. In low-involvement purchases, rural and urban consumers may skip some of these stages. A woman buying her regular brands of daily-use groceries will identify the need and purchase from the shop, skipping two stages. It is in the purchase of high-involvement products that a rural consumer displays different motives relating to problem recognition, sources of information, evaluation procedures, collective decision, and different postpurchase behaviour. This creates the need to treat each stage of the marketing process differently for rural and urban consumers. Figure-14 Stages in Buying Process Problem recognition Information search Evaluation of alternatives Purchase decision Post-purchase behaviour 109

44 Urban High-involvement product (car)-comfort/ status, drive, consumer s recognition for need. First-hand information from TV, Internet, Newspaper Ads/Consults a fellow owner before dealer visit. Educated/aware understands, analyses technical specifications. (Features like MPFI) 12- valves are signs of superiority. At most looks for test drive. Normally buyer makes final decision. Family influences colour and looks. Drives new car home, with family. Higher satisfaction or dissonance because of greater risk factor. Higher risk taking ability, because of wanting experimentation. After sales service no issue. Buying process Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behaviour Rural High-involvement product (tractor) - productivity drives consumer s recognition for need. First-hand information from a fellow owner and nearby dealer at district town. (Exposure to electronic media low) Lower education/awareness more importance to fellow owner and illustration of dealer. Consults Opinion Leader like progressive farmer, after getting first-hand information. Process repeated several times, back-andforth. Live field demonstration crucial to evaluation. Collective decision by buyer, adult son, mechanic and progressive village farmer at dealer point. Drive tractor home. No say of women in the process. Higher satisfaction, lower dissonance. Because risk-taking is lower and expectation level is low. Low risk-taking ability because: life-attached product; for entire family, lack of technical knowhow, low confidence on aftersales service Role of Rural Women Till a few decades ago, rural women used to remain in purdah or ghungat. They hardly left their homes, except to attend social functions and festivals, always accompanied by male members of the family. Even for taking a sick child to a health centre or during pregnancy, women were accompanied by male members of the family. Hence their mobility was highly restricted. Few girls attended school regularly, as they were dragged into household activities. They were not aware of what was happening in the outside world and did not play any significant role in major family purchase decisions. 110

45 But now the status of rural women is changing. They are more educated and more aware about the health and education needs of the family. The growing presence of media, too, exerts a strong influence on their role and behaviour. They are no longer confined within their homes. They step out for several purposes education, health services, social services, functions and festivals. In short, women are more empowered today. Therefore their involvement in family buying-decision process is also increasing Buying Roles For many products the buying roles are similar in rural and urban. Men choose their personal care products like shaving cream, underwear, etc. Women choose utensils and other things of use in the home. Purchasing a high-involvement product is a collective decision. There are five roles in the buying process. Table-42 Different Buying Roles of Consumer in Rural & Urban area Urban Entity Young man He feels the need of commuting to office or college and initiates the process. Friends, colleagues Evaluates models on TV and print ads; asks friends and colleagues, who influence the decision. The Young man He decides since he pays The Young man He goes to a dealer and buys The Young man Buying role Initiator Influencer Decider Buyer User Rural Entity Son (majority cases), father (in some cases) In majority of cases, son studying in nearby town college expresses the need for a powered vehicle (in few cases father feels the need to commute) and initiates the process. Friends, Urban relatives Asks friends and especially urban relatives to suggest brands, who influence the decision. Father Father decides since he finances. Son, relatives, friends Son along with his friends and relatives go to dealer and buys. Son and father In majority cases son rides, occasionally father too. 111

46 Purchase Behaviour Rural consumers (90 per cent as per an IMRB study) purchase durables from nearby towns / cities, whereas daily-need items are purchased from the village general store or from haats. The place of purchase also varies depending on the purpose of the product. Chappals for daily use are purchased from haats, whereas chappals for special occasions are purchased from nearby towns. Similarly, the mode of payment often decides the place of purchase credit buying from the village general store and cash purchase from haats Place of Purchase Table-43 Place of Purchase of Durables in Urban & Rural Areas Urban Rural Crockery, gas stoves, pressure cookers Household electronic items like transistor, 2-in-1, walkman, CD/DVD player Electrical household items - fans, light fittings Bicycles Mopeds Motorcycles/ Car / MUV Tractors Crockery shops Consumer electronic shops in commercial areas Consumer electrical shops Company specific shops Company authorized dealer in town Company authorized dealer Not used in urban Haats/ melas/nearby town shops Electrical and electronic consumer shops in nearby town Electrical and electronic consumer shops in nearby town Bicycle/spare parts shops in nearby town Company authorized dealer in nearby town Company authorized dealer in nearby town Company authorized dealer in nearby town 112

47 Toiletries, personal care, beverages/snacks Liquor Clothing s Footwear Cereals, pulses and edibles Vegetables Non-Durables Urban General store Liquor shops Suiting, shirting shops Footwear shops Grocery shops Vegetable shops/ haats/ sabzi mandis Rural Chicken/ fish Meat / fish shops Haats LPG Home delivery Urban Other items General store located in the village Desi/IMFLfrom town licensed shops; local brew from village bhatti Ordinary wear - haats/ melas Special wear - nearby town Chappals - haats Shoes near by town Village grocery/ general shop Haats/village shops Collection from nearby town dealer Rural Stationery items Stationery shops General shop in village Gift items Gift shops Nearby town shops Medicines (OTC) Medicines (Prescribed) Medical services Banking services Schools, tuitions Watching movies Pharmacist Pharmacist Services Urban Hospitals, clinics Banks Schools / coaching centres Homes, theatre halls General stores located in the village Nearby town/large village pharmacist Rural Village RMP, block town PHC sub-centre Rural bank located in large village Village schools and private tutors in the village Theatre halls in nearby town Transport services Transport depots Depot in nearby town 113

48 The frequency of purchase too, is at great variance between urban and rural. Thus indicating the relative importance of such products, in their day-today lives. Table-44 Purchase frequency Products Urban Rural Toiletries - soaps, detergents, Monthly Weekly/Monthly toothpastes Personal care - hair oil, nail polish, lipstick Tea & Snacks - packaged tea, biscuits, chocolates Monthly/Occasionally Monthly Occasionally Weekly Soft drinks - coca cola, pepsi Daily/Weekly Occasionally Cigarettes, paan, bidi Daily Daily Liquor Daily / Occasionally Daily Clothings Quarterly/Occasionally Occasionally Footwear Half yearly / yearly Occasionally Cereals, pulses and edibles Weekly/Monthly Daily/Weekly Vegetables Daily/Weekly Daily Chicken/ fish Weekly/Occasionally Occasionally LPG Monthly Monthly Stationary items Occasionally Occasionally Gift items Occasionally Occasionally Medicines Occasionally Occasionally Services Urban Rural Hair cutting Monthly / Occasionally Occasionally Medical services Occasionally Occasionally Banking services Weekly/Monthly Occasionally Schools, tuitions Monthly Monthly Watching movies Daily/Monthly Weekly Postal services Occasionally Occasionally Telephone services Daily Occasionally Transport services Daily Occasionally 114

49 Opinion Leadership A person, whose word, acts and actions, informally influence the action or attitude of others, is an opinion leader. The influence is informal and usually verbal. However, the opinion leadership s influence on opinion seekers could also be non-verbal, based on observation of behaviour. This leadership comes from social status, power or success in public life. In urban India, opinion leadership is largely governed by perception of opinion seekers, about the specialized knowledge of the leader. Therefore there is reliance on a set of leaders, for a set of needs, products and services. In contrast, rural India has traditionally had the gram pradhan or sarpanch, whose opinion leadership is universal, by virtue of their knowledge, gained from exposure/interaction with external world, through mass media and interaction with the government/administrative machinery. Villagers approach them for all matters, social/personal and even purchase of products and services. Post-independence, as education facilities started reaching villages, teachers came to be respected as owners and dispensers of knowledge. But with more and more village children completing high school and pursuing higher education in urban centres, the influence of the schoolteacher is now largely restricted among school-going students. This changing demography has expanded the realms of rural life much beyond the confines of the village. The college-going village lad brings back with him the influences of urban life. He is exposed to new products and brands and is able to discern brand features and brand values and pass value judgements. This young villager becomes an opinion leader in the family and the neighbourhood. Increasing exposure to education, the media, vocational training and awareness of technology has given a new power to youth. This power makes them important influencers and reference points for recommendation and purchase of a vast number of goods and services. In the purchase of several high-involvement products such as televisions and motorcycles, the buyer may remain the head of the household but no decision can be taken without the opinion and consensus of the younger generation. But the purchase of high-involvement products (e.g. tractors) that directly impact traditional 115

50 earning and livelihoods remains the exclusive decision of the male family head. Opinion leaders in the rural context exert a greater influence in products and services that directly impact their occupations and sources of livelihood, or significantly improve their daily living conditions, rather than like those in urban India, who mostly influence consumers for a range of products that rejects their lifestyles, are status symbols, or are items of conspicuous consumption. Table-45 Urban Opinion Leaders Opinion Leaders Film stars Corporate executives Professors and scientists Sports persons Areas of Influence Fashion and style Luxury cars Higher education Sports products Opinion Leaders Sarpanch / Gram Pradhan College-educated youth / villagers working in urban centres Table-46 Rural Opinion Leaders Areas of Influence Village administration, resolving social and family conflicts, introducing new ideas of farming, purchase of technology products of farming or artisan work. Influence in family and neighbourhood, on purchase of durables like refrigerators, TVs, motorcycles Diffusion of Innovation The flow of technology from international boundaries to metros, to cities, to towns, to the kasba (feeder town), to the village, to the rural consumer is a long chain. This long chain ensures that the rural consumer is less exposed to and therefore less aware of, the products and services evolving regularly in the market. Also, the reach of communication achieved here is often through word of mouth, especially in large areas not covered by the mass media. 116

51 While the external environment is restricting, the rural consumer is also limited in his ability or desire to adopt innovations due to low levels of literacy. The theoretical concept of adoption of innovation remaining the same, the role played by different consumers in the different stages varies in the urban and rural segments. Table-47 Comparison of Profile of Consumer in Rural and Urban area Urban profile Young, public-school educated, affluent, in business, fun loving, party goer, credit-card holder Type of Consumer Innovator Rural profile Young progressive farmer (plans crop rotation, new crops), urban exposure (friends, relatives, children in school/college), kisan credit card, additional income (part-time service, agent) Young, educated, affluent, employed in MNC, with exposure to media, credit-card holder Young, educated, married, disposable income, self-employed/in service Middle aged, in service/self-employed, opts for consumer schemes Middle aged, in service, shops in neighbourhood Early Adopter Early Majority Late Majority Laggard Rich farmer, high disposable income, urban exposure (children in school/college), high social status, conscious evaluator, kisan credit card Mediocre farmer, member of cooperative society, ready for kisan credit card, willing to adopt technology products Member of cooperative society, hesitates to take agri-loan, adopts only time-tested technology / product after approval from opinion leader Marginal farmers using traditional forms of cultivation Brand Loyalty The concept of stickiness Brand, brand value, brand image and brand loyalty are terms and concepts long familiar to the urban consumer. But the rural consumer is only now beginning to appreciate the relevance of brands and their relevance to meeting wants and needs. He is now faced with a lot of choice and having to evolve evaluation parameters for making choices, as more brands appear on rural retail shelves (80 per cent of all packaged FMCGs sold in rural markets 117

52 are branded either national or regional.still the number of FMCG brands available in rural markets is less than half of those available in urban shops. Some brands like Ghari, Parle-G, Lux, Fair & Lovely and Colgate were early entrants in rural markets and have gained high acceptance over a period of time. With virtually no competitive brands present in these markets, availability was the prime driver and what urban marketers interpret as brand loyalty is in fact brand stickiness in rural India, a phenomenon where the villager stays with the brand not out of informed choice but because he does not know any better. The phenomenal success of Ghari detergent in the rural Hindi belt is attributed to product performance matching promise, leading to customer satisfaction. The detergent is able to clean the white dhotis / pyjamas at an affordable price, which is what rural consumers expect from the product. Issues such as the life span of clothes and protection of hands from harsh chemicals in detergents are not important criteria for the rural customer. The urban customer on the other hand, having already enjoyed the core benefits of the product, is now increasingly demanding additional benefits. He wants more from his detergent than just cleaning. The rural customer meanwhile, is still discovering the core benefits. In tractor marketing it is not uncommon to find a Mahindra village or an Escorts village, where most tractors in the village are from one company. The low levels of literacy and awareness limit the rural customer s ability to understand technical benefits. He therefore tends to depend on the experience of an existing user, a progressive farmer whom he regards as knowledgeable and well informed. If the progressive farmer is satisfied with his current brand of tractor, he recommends the same to the potential buyer. In this way, the same brand keeps getting recommended and bought in the same village. He is averse to taking risks with something new and so expensive and is ill-equipped to evaluate alternative brands. He feels more comfortable in purchasing a tried-and-tested brand. This is a good example of brand stickiness in the durables category. Marketers have focused on creating awareness and making their brands available in rural markets, but have made little efforts to build relationships with their customers. This is a very important aspect in the rural 118

53 sector because villagers trust people with whom they have strong relationships (family, friends and neighbours). Marketers need to convey a feeling of an extended family with the trade and a sense of caring with consumers to build enduring relationships in the rural sector. For a brand to establish itself in rural India, a marketer needs to educate consumers, develop their interest through interactive communication, trigger their desire to own new products and build confidence in the brand through live demonstrations and post-purchase engagement with consumers. All these measures help build long-term relationships. To succeed in the rural market, brands must understand preferences of different consumer segments rather than attempt a mass, pan-india marketing approach. Regional tea brands like Lamsa in Maharashtra and Kala Ghoda in Rajasthan are examples of successful regional brands that have flavoured their tea with spices to cater to local tastes. This customization convinces local people that these brands care for them and creates a positive feeling towards the brand, the first steps in building strong relationship with customers. The emotional connect adds extra value to the product, resulting in regular purchase preference and creating enduring brand loyalty RURAL V/S URBAN CONSUMERS The large differences in income, expenditure and savings patterns between rural and urban India are a pointer to how things will unfold as urbanization in the country increases. Urban households earn around 85 percent more than rural ones, spend three-fourths more and, as a result saver nearly double that of rural households. Much of this can be explained by differences in profession and levels of education, urban earnings are higher ESTIMATES OF HOUSEHOLDS AND POPULATION A survey conducted by NCAER in 2005 The Great Indian Middle Class defines the middle class as those households with an annual income of between Rs.2-10 lakh at prices. The lowest income quintile account of 22.4 percent of the population and just 6 percent of income. But India is changing rapidly the middle class, which accounted for 2.7 percent 119

54 today. The survey was undertaken concurrent to the NACER s National Survey of Household Income and Expenditure ( ), and attempted to generate reliable data on household income in the country. However, regional disparities are a matter of concern. Two-thirds of the poor reside in the 10 low-income states. Table-48 Estimates of Household Population Rural Urban All India Households (million) Population (million) Household Size No of earners per Household Source: The Max New York NCAER India Financial Protection Survey The findings of the Max New York Life NCAER India Financial Protection Survey released in 2008 reveal there are million households in the country, of which 30 percent (61.4 million) live in urban areas and the rest (144.5 million) in rural areas. Given that urban families are marginally smaller than rural ones, the share of India s urban population is slightly lower at around 28.6 percent. While the average family size in the country is five members, less than one percent of Indian households are single member ones and around 10 percent have more than seven members. Since only 17 percent of women work, the average number of workers per household is 1.4 (1.34 in urban areas and 1.43 in rural ones). And around 28 percent of the country s population is engaged in a financially remunerative job of some sort. Indeed 68.8 percent of household have just a single earning member while 23.7 percent have two earning members and 7.5 percent have more than two earning members. At the all-india level, when households were analysed on the parameter of highest literacy amongst their members, it was found that 19 percent have members who have passed middle school (8 th Class), nearly a fourth (23 percent) of household have at least one member who has completed high school (10 th class), and 18 percent have done higher secondary (12 th class). At the all India level, 17 percent of all households 120

55 have at least one graduation member the figure is 30 percent for urban areas and 11 percent for rural areas INCOME EXPENDITURE PROFILE The average household in India had an annual income of Rs.65,041 in , and an expenditure of Rs.48,902, leaving it with a surplus of Rs.16,139 to save and invest. Urban income levels are around 85 percent more than rural ones (Rs.95,827 per annum versus Rs. 51,922 per annum). Since expenses in urban areas are substantially higher (Rs. 69,065 per annum in urban areas versus Rs.40,309 per annum in rural ones), the difference in the surplus income (of urban and rural areas) that can be saved or invested is not all that huge in absolute terms. The average urban household saves nearly double that of a rural household (Rs.26,762 per annum in urban areas versus Rs.11,613 for rural areas). Table-49 Source: The Max NCEAR India Financial Protection Survey 121

56 3.5.3.DISTRIBUTION OF URBAN AND RURAL HOUSEHOLD BY MAJOR SOURCE OF INCOME Laborers constitute the largest segment of the population, heading a little over 31 percent of the country s households; self-employed agriculturists are the next largest segment (30.3 percent), salaried members account for a little over 18 percent and the non-agricultural self-employed members account for 17.5 percent of the country s households. The figures differ for rural and urban areas while the salaried account for just 10.5 percent of rural households, in urban areas they account for 36.9 percent. Table-50 Source:The Max NCEAR India Financial Protection Survey Income levels very significantly across rural and urban areas, as well as across occupation groups. The self-employed in agriculture comprise the largest group in rural areas, accounting for 41.3 percent of the population and 42.8 percent of income in other words, they are the average rural households. In urban areas, this group accounts for 3.1 percent of the population and 2.6 percent of total urban income- this is despite the fact that urban agricultural households earn nearly two-thirds more than their rural counterparts ( Rs. 91,133 per annum versus Rs. 55,491 per annum). 122

57 Table-51 Share of Population and Income by occupation of chief earner in Urban India Source Of Income % share of population % share of income Regular Salary / wages Self-employment in non agriculture Labour Self employment in agriculture Others Source: The Max NCEAR India Financial Protection Survey Table-52 Share of Population and Income by occupation of chief earner in Rural India Occupation % share of population % share of income Regular salary / wages Self employment in non agriculture Labour Self employment in agriculture Others Source:The Max NCEAR India Financial Protection Survey There is not too much difference in the income levels of the nonagricultural self-employed and those earning regular salaries in urban areas, though the difference is as high as 45 percent in rural areas. Those earning salaries account for around 37 percent of urban households and a little over 45 percent of the total income earned by all urban households. In the case of the self-employed in non-agricultural areas, the second largest group at 32.5 percent of urban households, the share of total income is around 38.1 percent. 123

58 Those households, whose chief earners are laborers, not surprisingly, account for a higher proportion of total households as compared to their share in overall income levels, and this is even truer for urban areas. Households headed by labours accounted for 34.6 percent of rural households and 20.2 percent of rural income; in urban areas, the figure were 22.9 percent and 9.7 percent respectively. While urban labour households their rural counterparts, the lower relative share in income levels in urban areas is a function of much higher incomes for other social groups. At the all-india level, the labour class has the largest difference between the share of such households in the total population (31.2 percent) and the share in total income (15.6 percent). The self-employed in agriculture are the only other group, where the population share (30.3 percent) is higher than the income share (25.1 percent). But the difference here is much lower SHARE OF POPULATION AND INCOME BY AGE IN URBAN AND RURAL INDIA Though India s demographic profile is changing and India is getting younger, it is the older age-group that earns more. Those in year age bracket, for instance, comprise 2.6 percent of the population at the all-india level but 3.1 percent of the total income. Households whose chief earners are in the year age group account for 21.9 percent of the all-india population and 25.2 percent of the all-india income. Average household income, at the all India level, increases from Rs.47,192 per annum in the case of households where the chief earner is below 25 years old, to Rs.55,663 in the year are group, to Rs.85,841 per annum for households where the chief earner is above 66 years old. Since this is as true of rural India as it is of urban India, presumably the earnings are not from professional income alone but from savings and investments and ownership of land. 124

59 Table-53 Share of Population and income by age of chief earner in Urban and Rural Area Age Group % share of population Urban % share of income Rural % share of population % share of income Less than 25 years years years years years years and above Source: The Max NCEAR India Financial Protection Survey In both rural and urban areas, households with chief earners in the year bracket account for the biggest share of both the total population as well as the total income. At the all-india level, 36.5 percent of all households are headed by a person in the year age group these households account for 34.6 percent of the total income at the all-india level. The average household income for this age is Rs.61,787 at the all-india level. In rural areas, such households account for 36.4 percent of the total population and 34.4 percent of income. For urban areas, the figures are 36.9 percent and 34.9 percent respectively DISTRIBUTION OF HOUSEHOLDS BY INCOME AND MAJOR SOURCE OF HOUSEHOLD INCOME Given that agriculturists are the largest group in rural India, it is not surprising that rural income levels are just slightly more than half of those in urban areas. More importantly, at every level of education and occupation, urban income is higher than those in rural areas. In the case of the salaried class (such households comprise 36.9 percent of all urban households and 10.5 percent in rural areas), urban salary levels are around 15 percent higher 125

60 (the household income is Rs.114,545 per annum in urban areas versus Rs.99,243 in rural areas). For labourers (34.6 percent of rural households and 22.9 percent of urban households), urban earnings are 37 percent higher than rural ones; it is 74 percent in the case of the non-agricultural self-employed and 64 percent higher in the case of households headed by agricultural laborers. Table-54 Distribution of Households by Income and major source of Household Income Rural Regular salary / wages Self-employment in non-agriculture Lab our Self-employment in agriculture Oth ers Households Income Urban Regular salary / wages Self-employment in non-agriculture Lab our Self-employment in agriculture Oth ers Households Income Source: The Max NCEAR India Financial Protection Survey 2005 Another way to look at the rural-urban disparity is to compare the population shares with income shares across rural and urban areas. Households headed by salary earners in rural areas earn less than what they do in urban areas. The average salaried household in rural area earns almost double (Rs.99,243 per annum) the average for all rural households (Rs. 51,922 per annum). As a result, while such households account for 10.5 percent of all rural households, they account for 19.5 percent of all rural incomes. 126

61 Similarly, rural households headed by laborers earn a lot less than their counterparts in urban areas yet, the share of such households in total income is a lot less adverse than it is in urban areas. Such households comprise 34.6 percent of rural households and 20.2 percent of total rural income; in urban areas, the figures are 22.9 percent and 9.7 percent respectively PROFILE OF RURAL CONSUMER OF GUJARAT Gujarat is a state with a rich tradition in trading and finance, whose growth is leading the nation's high growth path. All sectors have been performing better than the national trend, except for a few years when droughts, industrial recession and natural calamities affected the performance. However, the state had always picked up after the setbacks, and with its high emphasis on infrastructure growth is a leading destination for industrial investment. While the state had shown excellent results on the economic front, there is much more to be achieved in social development parameters, such as education, health, balanced district growth, etc. One of the leading industrialized states situated on the western coast of India, Gujarat was formed in the year The state having a long coastline of around 1,600 km had an international boundary with a common border with Pakistan. It is bounded by the Arabian Sea in the west, by Rajasthan in the north and northeast, by Madhya Pradesh in the east and by Maharashtra in the south and south-east. Not only is this but the state also performing better in elevation of the poverty. 127

62 Table-55 Source: Planning Commission of India. Table-56 Source: Planning Commission of India. State s efforts in reducing population below poverty line is mentioned above chart which indicates that in the Rural area in time span of 32 years there had been reduction of Population from 46% to 19%. During same time Population below poverty line had been reduced from 56% to 28% on national level. In other words on national level population below poverty line had been 128

63 reduced by 50% in 32 years and in Gujarat at same time it had been reduced by 56%. Thus efforts of Gujarat Government are more effective in predicting poverty in rural area. The position of urban area is far better in that respect. In 32 years Population below poverty line had been reduced from 52.6% to 13% which indicates reduction by 75%. Gujarat had achieved this figure even after high rate of Urbanization in the country. During same time period at national level poverty had been reduced by 50%. Gujarat is leading in the reduction of poverty from sate in both region viz. Rural and Urban as ahead as to effective programme implementation to Country s performance. The said data also states that the Gujarat s per capita income or over all purchasing power had been increased at higher rate as to national level. Being the fifth largest economy in the nation, the state income of Gujarat had been growing at a rate of 9.9 per cent per annum since 2000 much above India's growth rate. The exceeding low growth rates in the three years , and are a result of droughts, industrial recession, and the earthquake which disrupted the economy in January The resilience of the state shows in the renewed high pace of growth thereafter. The state occupies the eighth position in terms of per capita income with the citizen of the state earning Rs 42,411 per annum in The percentage of population below poverty line was 18.9 per cent in much lower than the national average of 27 per cent and much lower than the neighboring states of Maharashtra and Madhya Pradesh with poverty ratios of 37 per cent and 30 per cent, respectively. A sector-wise assessment of the state income reveals that the highest share comes from the tertiary sector contributing to around 41 per cent of the total GSDP. The secondary sector contributes around 38 per cent while the primary sector contributes the remaining 21 per cent. Agriculture is one of the vital sectors of the state's economy with 52.3 per cent of the total workers in the state engaged in the primary sector in It had grown at the rate of 14.1 per cent per annum from 2001 to 2006 which is much above the national average of 2.8 per cent. Food grain yield averaging 1,325 kg per hectare during the period is higher than the neighboring states of Madhya Pradesh and Maharashtra with 1,091 and 129

64 845 kg per hectare, respectively. However the ratio of net irrigated area to net sown area at 34.4 per cent which is lower than 42.4 per cent at the national level needs attention. Cash crops are the dominant feature of the cropping pattern as Gujarat is one of India's leading producers of castor, cotton, tobacco, groundnut, sesame seeds and fennel seeds. Mining contributes around 4 per cent of state income as Gujarat had vast reserves of limestone, bauxite and natural gas. It is the second largest producer of lignite, oil and natural gas and one of the largest producers of soda ash. India's first LNG terminal had been commissioned at the port of Dahej and a gas pipeline grid is operating at 80% capacity which caters the demand of the industrial gas at very cheaper rate. Gujarat is a leading industrial state of the nation with world class production capabilities. GSDP from manufacturing had been growing at a rate of 10.9 per cent per annum from to The major industries of the state include cotton textiles followed by the manufacture of non-metallic mineral products. There are also other industries like chemicals, petrochemicals, fertilizers, engineering, electronics, etc. The state owns the largest petro-chemical complex in the country and accounts for 40 per cent of India's pharmaceutical production. Gujarat Industrial Development Corporation (GIDC) had developed around 257 mega industrial estates such as the ones at Jhagadia, Vagra, Savli, Dahej, Ankleshwar, etc. The state tops in the value of proposed investment through lems where 15.7 per cent of the proposals received are implemented. The state ranks eighth in the country in terms of the number of small-scale industry owned. A large number of smallscale industries are pertaining to metallic work, chemical industries, cotton industry, etc. Gujarat is the first state in the country to have dairy industry with a milk procurement of 35 lakh liters In fact, it is well known for its success in dairy cooperatives as the brand Amul, owned by the Gujarat Cooperative Milk Marketing Federation is a significant player in the national market for dairy goods. The services sector which had the highest contribution to the state income had been growing at the rate of 8.4 per cent per annum from to Within the services sector, trade and hotel services have the highest share. Of late, other services like IT and ITES sector are also being developed in the state. Gujarat had good infrastructure facilities and had made rapid progress in the field of IT. However, a lot more effort needs to 130

65 be put in to realize the true potential of the state in the IT/ITES sector. The IT/ITES policy ( ) of the state government mentions that the state aims at attracting investments in the IT sector in the state to achieve a turnover of Rs 5,000 crore in 5 years. The state also aims at promoting employment opportunities in the IT sector and providing direct employment to 200,000 persons in 5 years. As a first set of action, the state government had identified some urban centers/conglomerates for promotion of IT parks, like Ahmedabad, Vadodara, Rajkot and Surat. Table-57 NET GUJARAT STATE DOMESTIC PRODUCT AT FACTOR COST BY INDUSTRY OF ORIGIN AT PRICES(Rs.lacs) Sector Agriculture Forestry & logging Fishing Agri and Allied Mining & quarrying A Sub Total of Primary Manufacturing Manu-Registered Manu-Unregistered Construction Electricity,gas and Water supply B Sub Total of Secondary Industry Transport,storage& communication Railways Transport by other means Storage Communication Trade,hotels and restaurants Banking & Insurance Real estate,ownership of 11 dwellings and business services

66 12 Public administration Other services c. Services State domestic product (Rs. lacs) Calculated State domestic product (Rs. lacs) 15 Population State Per Capita Income (Rs.) Source: Ministry of Statics and Planning India The State s GDP growth rate is also higher as to the other state as well as to the benchmark country s growth rate. The state is growing higher than the national average. Table-58 Gujarat s economy is growing at the rate of 9.9% in last eight years which is higher the national average of 7.8 as well as higher then prosperous state Maharashtra s GDP growth rate. Not only is this but this repetition in performance as to to period performance. Thus state has more opportunity for development and Growth as to nation which creates comfort for the Industrialist as well as for Habitants also. 132

67 The infrastructure base of the state is strong as a result of the various initiatives taken by the government from time to time. One such effort is the 'Jyotigram Yojana' which aims at providing 3-phade, 24-hour, uninterrupted power supply to all the 18,065 villages and also to the 9,680 suburbs attached to these villages. This had resulted in the increase of generation of electricity thereby further strengthening the infrastructure base. Gujarat is also trying to tap non-conventional energy sources such as wind and tidal power and had also started commercial production of bio-diesel. In terms of asset ownership, Gujarat had 1,084 cars per lakh population as of 2004 which is much higher than the neighbouring states of Madhya Pradesh and Maharashtra with 233 and 926 cars per lakh population, respectively. In India Gujarat is the only state which had 100% electrifying its village areas without interruption at all since last five years. Not only is that Gujarat the only state in the country who generates excess electricity which is provided to neighbouring state. The state located on the west coast of India, had a 1,600-km long coastline, representing a third of the nation's water front. Gujarat's ports handle 20 per cent of India's total cargo and Kandla is India's largest port. The state had 40 minor and intermediate ports geographically dispersed across South Gujarat (13 ports), Saurashtra (23 ports) and Kachchh regions (4 ports). The state is also the first in the country to privatise the construction of ports and to announce a separate Port Policy, integrating industrial development, power generation and infrastructure development. The state is also connected to other major cities in the country through air with 10 domestic airports and one international airport at Ahmedabad. State had achieved a remarkable achievement in terms of energy production. Despite the strong performance on the economic and infrastructure fronts, Gujarat had shown an average performance on social development. The literacy rate of per cent is marginally above the national average of 64 per cent as of In fact, the rise in literacy from 1991 to 2001 had been only of 8 per cent points compared to Maharashtra's progress by 12 per cent points. With a much higher drop out ratio of per cent compared to Maharashtra's 28.99, it is clear that Gujarat lags behind its 133

68 neighbour in the provision of basic educational skills. Yet, around 78 per cent of the children of age 10 years and above have completed primary schooling which is much higher than the all-india state average of 67 per cent. The state also displays an average performance in health sector. The sex ratio of the state is 920 as per the Census 2001, lower than the national average of 933. The death rate had been reduced from 16 per 1,000 in 1971 to 7 per 1,000 in The infant mortality rate (IMR) of the state is 53 per 1,000 live births as of 2005 which are lower than the neighbouring state of Madhya Pradesh with an IMR of 74 per 1,000. This might be due to better medical facilities provided in the state. Around 45 per cent of the percentage of children in the age group of months in the state is fully immunized as of , higher than the national average of 43 per cent. Again, around 65 per cent of births are assisted by trained personnel as of much above the national average of 48 per cent. Gujarat had fared very well on the fiscal front. The Gross Fiscal Deficit to GSDP ratio is 2.5 per cent in compared to 3.2 per cent in and it had achieved the Gross Fiscal Deficit to GSDP ratio target of 3 per cent set by the Twelfth Finance Commission. Gujarat was a revenue surplus state in and had performed well in raising its tax revenues; it had to work at raising its non-tax revenue collections. The share of the developmental expenditure to GSDP ratio is 10.5 per cent which is lower than the all India median of 16.5 per cent. Gujarat experiences wide intra-state disparity within its 25 districts. Districts of Ahmedabad and Surat are more prosperous than others in the state. These two districts occupy the 5th and 7th positions in the country, respectively, in terms of the total market size. Again, these two districts are among the top 20 districts in the state in terms of registered four-wheelers. As per the NASS-COM study, Ahmedabad is well ahead of cities like Mumbai, Pune, Delhi and Mangalore in view of the lowest cost of real estate, lower cost of human resources, uninterrupted power supply and investment friendly state IT policy initiatives. The district of Jamnagar had the world's largest industrial estate and Kandla is Asia's first and India's largest multi-product SEZ. 134

69 Gujarat had been a leading state on growth and most development parameters, a major investment destination. The pace of development, however, had been hampered by the natural calamities from time to time. The state government had been taking various initiatives to make the state distinguish itself among others. For instance, the state had set up singlewindow facilities at the district level to attract investment, kiosks are being set up at various important places to disseminate information regarding regulations governing new investment. The state is also actively looking for private partnerships to improve infrastructure facilities. If these initiatives are undertaken successfully the state will position itself more strongly as an important investment destination not only in the country but throughout the globe. Table-59 Source: The above chart shows absolute clarity regarding the increase of per capita income at increasing rate which ultimately increases the purchasing power of average Guajarati person. More surprisingly the per capita income of the state had been doubled in last five years which is to be treated as an achievement in itself. This is the most important reason behind entry of 135

70 every organized retailer of the country as well as of Middle East part of the world POPULATION: Gujarat population had touches the figure of 6.03 cores which is increasing at the rate of 19.17%. The latest census of 2011 had revealed that the population of rural areas had been reduced and population of urban areas had been raised to 42.6% from 37.4%.More surprisingly the Mega cities like Ahmedabad and Surat had added 22.5 lakhs and 15 lakhs new habitant in ten years while Vadodara is standing third in the same race where nearly five lakh new habitants have been added. Following is the chart showing population of rural and urban Gujarat. Table-60 Source: Census of India 2001 The increase of population has direct impact on the marketing activities of the marketers. As there is constantly increasing urbanization in the state as well as specialty in the cities like Ahmedabad and Surat. As per latest data 136

71 (DNA August, 2011) Ahmedabad is third fastest growing city of the world. Every marketer can t afford to neglect this rich and growing market at all. As per NSSO survey out of total households in the City Ahmedabad nearly 6.5% are belonging to rural area. Not only this but more than 90% of surveyed people feel that the state is better place to live and do not want to move to any other state. This fact is very very important for marketers and which compels the marketers to focus on the Ahmedabad city and nearby area EDUCATION:- Literacy rate till 2011 is 79.31% in Gujarat. In the last decade the growth of literacy rate is 10.7% which is merely very smart figure in compare to While the literacy level of female also had been increased, this is good sign as today the most of females are the purchase decision maker. In compare to males, female s literacy level is lower. However the gap in the literacy level between Males and Female has been reduced to greater extent. Due several efforts of state government the literacy rate had been achieved to the extent of 79%. This is to be treating as the most important key factor from the view point of marketers as it provides smooth launching of new product as well as one can increase brand awareness without any extra ordinary efforts. The literacy level having direct impact on the marketing activities in respective state. Due to higher literacy level amongst the habitants of the state the marketing communication is to be executed carefully as well as practices of Brand Awareness and Brand Preference as Brand Loyalty can be practiced. Not only is this but higher literacy level also an indication of rational decision towards purchase of any product. The most positive aspect is increasing literacy rate constantly in the state which indirectly affects the earning capacity and employment positively. Higher the literacy levels higher the possibility of obtaining job or income generation capacity in the population. Not only this but for several social changes also literacy is necessary and playing very vital role. The char given below clearly indicates that in last 10 years much more work has been done which increases over all literacy rates more than 10%. Especially in the case of women s literacy rate growth has been obtained by 13% which result in the women employment as well as DINK (families with Double Income and No Kids) and working women class. 137

72 Table-61 LITERACY RATE OF GUJARAT Total Males Females Source: Census of India As more rational decisions are taken for the purchasing different products by the consumers markets are required to make change different marketing mix for different products and market also. The other social and economical change is the women empowerment as well as spending by the women in the state. Due to such situation the demand of personal products and educational Institutions has been rose which gives fuel for the market of Stationary and books also and Industry obtain required labour force within the state OCCUPATION; Basically speaking occupation pattern determines two major criteria in case of understanding consumer profile. First is the source of income and second one is consistency of income. Following chart shows different sources of income of population of Gujarat. Table

73 Source: Census of India Over a period of time there had been reduction in the non-workers of the state from 62, 73% to 58.05% indicates that the instability of income had been reduces. The proportion of the main workers is more or less remaining same. Scenario of workers in the state as well as habitants for the income and profession is bit negative. Non-workers are reduced just 5% in span on twenty years which indicates that there is requirement of much more efforts for stable income from other sectors other then Agriculture sector. Over and above the number of main workers are increased very insignificantly in the span of twenty years. The occupation pattern gives clear cut idea about two important aspects viz. 1. Stability of Income 2. Source of Income (Permanency) which helps marketers in predicting total market size of particular product in the state CONSUMER EXPENSES: Consumer expenses show the expenditure pattern of the consumers which provides information about the expenses pattern and pattern. The National Sample survey round 61 had revealed the following fact regarding average expend that average rural consumer is spenidnrs.715 for monthly consumption of various items. At the same time the urban consumer is spending 1091 for the same items. It indicates that the life in urban Gujarat is very costly as compare to rural. Rural consumer is spending 33% less then Urban consumer for the living expenses. The sample had been taken on the monthly basis as well as on yearly basis. The annual expenses are not showing significant difference at all in both areas. In case of Urban areas the regular income holders whose purchasing power is significant is spending highest for lively hood amongst all other category. Markets of consumer durables as well as high end FMCG products can target such consumers and can create new segment for such. 139

74 Table-63 AVERAGE MPCE BY HOUSEHOLD TYPE IN GUJARAT (in Rs.) HOUSEHOLD TYPE Reference Period RURAL 30 days 365 days Self Employed in Non-Agriculture Agriculture Labour Other Labour Self Employed in Agriculture Others All URBAN Self Employed Regular Wage/Salary Employed Casual Labour Others All Source: Household Consumption Expenses NSSO Round 61 The above table also indicates that self Employed persons are spending higher (who are not depending upon the Agriculture). In the rural areas regular income or salary receivers spend highest in the all categories. Same way the other category includes the person who is earning through some odd jobs and having no regular income is spending at second highest level in the urban area which indicates that opportunity is always higher in urban area for earning.but the significant difference couldn t be observed in case of the monthly expenses as well as annual expenses in both categories. The income distribution in the state is also indicating the moderate distribution rather than absolute disparity situation. Gujarat having 58.5% population in the category of Middle class and poor class is just half of this category. In comparison to the other neighbouring state Gujarat has less populations in the poor section as well as state has higher Rich class as to national average. 140

75 Table-64 Income distribution of households, 2006 (in %) Rich Middle Poor Gujarat Rajasthan Madhya Pradesh Maharashtra India Source: Market Skyline, TELEPHONE CONNECTION: Telephone is now becomes necessary of life. Gujarat is ahead in the teledensity in terms of Land line connection as well as in mobile connection as to All India State Average picture. Surprisingly the spread of mobile in all the state is very high as to land line connection. The higher teledensity indicates regular connectivity though phone even in the hinterland area. The problem of accessibility of product can be resolved by through higher telephone connection in the state. Table-65 Source : Indian States at a glance Not only is this but Gujarat contributing 5.59% shred in the fixed wireline connection of the country and similar for the GSM + CDMA lines.in 141

76 case of cellular connections Gujarat is contributing 6.58% to the total Indian cell market. Gujarat had achieved Teledensity of as on 31 st March 2009 which is higher than the entire India s average density of on same day which is depicted n following chart. Table-66 Telephone Connection Information of Gujarat and India Telephone Connection Units Gujarat India % Share of State Wireless (Fixed ) Phone ' Wireless (GSM+CDMA) Phones Total Telephone No of Cellular Connections ' Teledensity per 00 population % Source: Ministry of Communication and IT Due to higher percapita income of the population penetration of Telephone is very high which indicates very positive sign of developed infrastructure facilities. Communication is the basic and most important requirement in the 21 st century. The above table shows that there is very high teledensity in Gujarat. More than half of population is with Telephone. Indirectly, speaking out of every two person in Gujarat one have a telephone access TELEVISION PENETRATION: Television is now days to be tread as most important and effective tool of indoor advertisement in the country. Television penetration in the rural areas is the key factor for success or failure any brand. It is to be treated as fastest and most influensive media for advertisement and covering mass of the country at a time. Television penetration in Gujarat has been increased to 32% extent in case of Cable TELEVISION inside the individual house. Not only this but in case of Television Penetration through community center and 142

77 other way are also high. Television is the most preferred tool of entertainment in the country. In the Urban area the television penetration is very high. Majority of rural consumer come to know about particular brand or product s features or availability of product though television, Not only this but social life of the rural and Semi Urban areas has been changed to greater extent by television. In a city like Ahmedabad the Television penetration is 74.7% almost two third of population. All the multinational companies are now booking entire time slot for advertisement on the particular channel or programme. Such strategy is very successful in many ways. Sony has raised its market share significantly due to repetitive advertisement during world cup in India in Not only has this but due to such situation the brand awareness of the rural consumer for several brands like Aiwa, Sansui as well as Videocon been denting tremendously. Table-67 Penetration of electricity, television and telephone in households, 2006 (in %) Penetration of Ahmedabad Households having electricity 97.4 Households owning TV 74.7 Households owning telephone 27.8 Source: Market Sky Line 2006 Table-68 Source: gujaratstatstic.com 143

78 INFRASTRUCTURE: Making product available to the consumer is the most important function of the marketing. But in a country like India distribution is the biggest challenge for the marketers. Marketing infrastructure is necessary for the deep penetration of any product. Infrastructure in the form of Road connectivity, Railway network and Electricity are considered as key factors. The position of Gujarat in such cases can be concluded from following Roads: The total length of roads (except Non-plan, Community, Urban and Project roads) in the State had increased to kms. at the end of from kms. at the end of Out of the total road length of Kms., The length of surfaced roads was Kms. (96.49 percent), where as unsurfaced roads was 2605 Kms., (3.51 percent) by the end of Out of the total road length of kms at the end of the year , the length of National Highways, State Highways, Major District Roads, Other District Roads and Village Roads was 3244 kms., kms., kms., kms. and kms. respectively. Following data sheet will show the position of the Roads in the Ahmedabad city under Municipality limit. The data indicates that there is strong infrastructure in the city for making product available in the city area. Table-69 Road Lengths under Municipality in Ahmedabad ( ) (In Kms.) Surfaced Un-Surfaced Total Water Bound Black Cement Total Motorable Non- Total Length Macadam Top Concrete Motor able Source : Amdavad Jila Samajik Roop Rekha Motor Vehicles The number of registered motor vehicles had increased from lakh at the end of to lakh at the end of August-2010, showing an increase growth of 3.32 percent. About percent of the total 144

79 registered vehicles are motor-cycle class vehicles (two wheelers). During the year (April-August-2010), the number of registered motor cycles/scooters/mopeds increased to lakh from lakh registered at the end of March-2010, showing a rise of 3.21 percent. The number of auto rickshaws, motor cars (four wheelers including jeeps), goods vehicles (including tempos), trailers and tractors registered an increase of 15839, 56478, 18589, 6238 and respectively during the year (April- August-2010) Railways: Gujarat is also ahead in terms on rail route per 1000 sq. Km. as compare to neighbouring state as well as to All India Average. From the following table we can conclude that railway network density per 1000 Sq. Km of lad is just 1.5 times as to national average. Table-70 Railways in Gujarat and other states Length of railway lines (km) Rail route per 1,000 sq.km Gujarat Rajasthan Madhya Pradesh Maharashtra India 19 Source: According to latest information provided by the railway ministry Gujarat circle the total length of railway lines in the State as on 31st March-2009 was 5328 route kms. Comprising of 3193 kms. of Broad Guage, 1364 kms. of Meter Guage and 771 kms. of Narrow Guage lines Electricity Availability: Gujarat is the only electricity self-sufficient state of the country. In Gujarat cent percent electricity is being made available to every villages and town of the state. Not only is this but the excess electricity being supplied to 145

80 neighbouring state. Thus the Gujarat s consumers are to be treated as most potential for consumer durables and house hold appliances as the electricity availability is high. As per following table we can conclude that in 2007 Gujarat s 87% (see chart below) which is highest amongst all neighbouring state as well as national average. Electricity is to be treated as life force in the present days. As Gujarat is self-sufficient in electricity farmers get enough power supply for irrigation which ultimately gives positive symptom for increase in the income of Urban and Rural are specifically in the agriculture sector and in other service sector allied to Agriculture. Table-71 Source: Market Skyline, 2006; Planning Commission; Central Electricity Authority Water Availability: Even after six decades of the independence in India water is also to b treated as scared resource for life. Potable water to the habitants of the state is the most challenging task in the developing country like India and very average state in terms of rain. But due to efforts of state for the availability of water pays dividend now to the residents of the state. Due to successful 146

81 implementation of NarmadaYojana by state the residents of 91% household s urban Gujarat can be covered with piped water. Same way in the Rural Gujarat nearly half of the households are getting water though pipeline. Gujarat s coverage for piped water in Rural India is just double as to the all India average. It ultimately gives very comfortable situation for usage of personal care products as well as FMCG products. Table-72 Source : Indian States at a Glance Two and four Wheelers: Prosperity of the state can be measured in terms of ownership of consumer durables as well as ownership of vehicles most state population. Surat is the city having highest density of two wheeler in entire Asia as per Times of India, June Not only this but in case of four wheelers also the density is heights amongst the neighbouring state as well as higher by India s average also. 147

82 Table-73 Source : Indian States at a Glance The sectorial growth repost of Gujarat government reveals that Length of Roads in Gujarat and No of Registered vehicles in Gujarat is showing tremendous growth. Increase in total no of public and private Transportation vehicles shows higher connectivity in the state. Gujarat is pioneer in the transportation system by implementing a new concept of Express Highway between Ahmadabad and Vadodara and four lane high ways between Ahmadabad and Mumbai. This indirectly indicates that there is easy connectivity with towns and villages with major cities of state. Accessibility of the consumers to the malls in the nearby towns easily established. 148

83 Table-74 Source : Indian States at a Glance PROFILE OF AHMEDABAD DISTRICT: Ahmedabad district is located in the central Gujarat. The district headquarters, Ahmedabad is the largest city in Gujarat and seventh largest urban agglomeration in India Ahmedabad is spread across ten taluka - Barwala, Daskroi, Dholka, Dhandhuka, Detroj, Sanand, Bavla, Ranpur, Mandal and Viramgam. The location of Ahmedabad is the very strategic as well as advantageous from the view point of availability of raw material as well as labor force which is necessary for the growth of Industry. Previously Ahmedabad is an industrial hub for textiles and is popularly known as the Manchester of India. But now Ahmedabad is known for the Malls. This is a sign of the consumerism in Gujarat. Organised retailing is reaching its highest pick in last three years. Not only this but many international organised retailers have started their operations in the city as well as state. The connectivity of Ahmedabad with rest of the world and other parts of the country is playing key role in the development of the state as well as district. Due to the presence of several educational institutions of the State, Ahmedabad Gandhinagar corridor has emerged as an innovative technological and R&D hub Ahmedabad is developing excellent urban 149

84 infrastructure for services economy which is largely an urban phenomenon. Key raw materials such as castor, cotton, cumin, fennel, isabgul, potato, are abundantly available. Ahmedabad district is enjoying high growth rate of gross domestic products which is reflected in the life style of consumers of city and district. From industrial growth view point following industries are focused in the district which are contributing significantly in the growth. Textiles and Apparel cluster including chemicals & dyes Drugs and Pharmaceuticals Agro and Food Processing Automobiles, Engineering, and Electronics Biotechnology Information Technology Tourism Ahmedabad is now becoming international recognised hub for automobiles as more than half a dozen international auto manufacturers have started their production unit in Ahmedabad district with the help of government initiatives. Chief Minister of Gujarat is treating Ahmedabad as growth engine of the State ECONOMY AND INDUSTRY PROFILE Ahmedabad is an industrial base for sectors such as chemicals, textiles, drugs and pharmaceuticals and agro and food processing industries Textile and Chemicals have been the major sectors of investment and employment in the district, since 1980 Ahmedabad district accounts for 21.5% of factories and employs 18% of workers in the state. Over 14% of the total investments in all stock exchanges in India and 60% of the total industrial productivity is contributed by the district Several business conglomerates such as Adani Group, Reliance Industries, Nirma Group of Industries, Arvind Mills, Claris Life Sciences, Cadilla Pharmaceuticals, Shell, Vadilal Industries Ltd., Rasna, Bosch 150

85 Rexroth (Germany),Stork and Rollepaal (Netherland) are present in the district. Presence of Ahmedabad Textile Industry s Research Association (ATIRA), the largest association for textile research and allied industries in India, has helped the district in becoming a thriving textile centre Most of the medium and large scale industries are concentrated in talukas such as Ahmedabad city, Sanand, Viramgam, Daskroi and Dholka In , Ahmedabad had the highest production of cucurbits in the district amounting to 31,996 Metric Tonnes (MT) Total production of cotton in Ahmedabad was 2,21,100 Bales (in ), which is almost 33% of the State s total production The district has over 23,734 small scale industries generating over 95,591 jobs with total investment of INR 89,356.5 lakhs (US$ 21,794 million) Engineering, textiles, chemical, and paper and paper products are the major small scale industry sectors present in the district, with an investment to the tune of INR 68,220 lakhs (US$ 16,639 million) Ahmedabad is playing significant role in the bringing foreign direct Investment in the State. Due to special steps taken by state government various Special Economic Zones are developes in the Ahmeadabad district. Not only this but industry specific Economic Zones are also developed like Apparel Park, Print City as well as Pharma Park etc.following the list of various Special Economic Zones located in the district. Industrial Locations / Infrastructure Jindal worldwide Ltd. Dishman Engi SEZ Dishman Pharma SEZ Dholera SEZ 3rd Eye Voice SEZ Adani Township & Real Estates Co. Pvt. Ltd. City Gold Realties Pvt. Ltd. Phaez Million Minds SEZ 151

86 Pharmez Ahmedabad Apparel Park Due to easy accessibility of the state s most developed city many consumers of the district prefer to purchase many products including daily requirement items form Ahmedabad. Consumers of the rural areas of the Ahmedabad district are highly attracted by the Mall culture of the city which increases the foot falls in the malls in the week end as well as during festive season. But rural consumers are taking to account the cost of transportation and incontinence for replacement or demonstration of the product in the rural area. Not only this but due to development of the city many residents of the small towns or villages are preferred to do job or business in the city where opportunity of earning is higher than the local place. Migration rate to the city as well as district from other district of the state is very high as well as from other state also is very high. Although the rural visitors get more variety of products in the city market as to the rural market DEMOGRAPHIC AND OTHER ASPECTS OF AHMEDABAD DISTRICT AND CITY: The demographic profile of Ahmedabad District is very rich and attractive from the view point of marketer. Ahmedabad District is highly educated with high income level as well as with high integrated transportation and communication facilities. Marketers prefer to launch product on testmarketing basis in Ahmedabad city before launching it to other tier 2 cities of the country. Not only this, but the district profile integrates that there is moderate growth in terms of literacy in rural as well as urban area which indirectly influence purchasing power and other economic activities in the district. With specific reference to consumer durable products. Consumers of Ahmedabad district specifically in the rural area are highly adoptive which enhances penetration level of Television, Refrigerator, Washing Machine, tc. But the key factors is the availability of water and electricity in the district almost in a quantity to the consumer. The District Profile reveals that consumer is well aware and well rich to various consumer durable outlets. 152

87 Marketers are very sensitive in making alterations in their marketing mix pattern in Ahmedabad district. Strong distribution network, deep media reach and accessibility to the wide variety of products makes district more lucrative and competitive POPULATION AND GROWTH RATE OF POPULATION The first and fundamental understanding towards the consumers knows it size and demographic profile. Ahmedabad is the most promising market from the view point of marketers of Fast Moving consumer Goods and Personal Care products as well as for Consumer Durables also. Same way the district is potential for the Banking, Communicational Transportation services. The district is growing at 22.31% in ten years. Indirectly speaking every year more than 2% population is added in the population of the district. The district having high growth rate which attracts the industry as well as habitants of the other state for migration to the district. Not only has this but the state just an equal growth of population amongst Male and Female. But thetable given below we can conclude that there is constant decline in the population growth rate which is impact of the high literacy level and social changes. Table-75 Ranking of Districts by Population Size, 2001 and 2011 Rank in 2011 District Population 2011 % to total population of the State 2011 Population 2001 % to total population of the State 2001 Rank in Ahmadabad Surat Vadodara Rajkot Source: Census of India

88 YEAR Table-76 POPULATION OF AHMEDABAD DISTRICT POPULATION GROWTH RATE TOTAL MALE FEMALE MALE FEMALE POPULATION GROWTH RATE Source : Ahmedabad District Economical and Social Review and Registrar of Population Census Gujarat Ahmedabad district area highest population in the state followed by Surat Literacy Rate: Vadodara and Rajkot. The Ahmedabad district having population of 12% of state which is highest amongst other s=district of the state. Marketers always take into account this fact before launching any product or going for the trail of new product also. In the state after Ahmedabad Surat is growing faster and in coming years it may happen that it may over take Ahmedabad as Surat has higher density of population as to Ahmedabad also. Table-77 Ranking of Districts by Population Density, 2001 and 2011 Rank in 2011 District Population Density Rank in Surat Ahmedabad Anand Gandhinagar

89 Ahmedabad is higher in terms of growth of population in the district about the density of the population is second highest after Gujarat. In last ten years the density level is Ahmedabad has been raised by 163 which are very significant. It indirectly shows that the city and district attract more habitants as there more facilities into the district as well as ample opportunity of the employment. The growth rate of population in the district is diminishing slowly and gradually. In the span of forty years the population growth has been reduced from 33% to 22% due to increase in the education level and awareness as well as due to government efforts of population control and of course high cost of living. The detail analysis of the data show that the population growth rate is reducing higher in case of males as to female which is also a good sign of maintaining equal ratio of male female in the district. Reduction in the growth rate of population increases the possibility of growth of the district of state LITERACY LEVEL: Literacy level is to be treated as most important factor for the development of the state or district. Higher the literacy rates higher the possibility of the growth. The literacy rate of Ahmedabad district is higher than state average as well as higher than the national average also. Literacy level has direct relationship with the employability of the citizen as well as earning capacity. The social infrastructure and other policy matters of state government have shown positive impact in the district and enjoying more than 86% literacy level. The most significant matter is the higher literacy rate in the females. The state having female literacy level of 70% but the district has 155

90 achieved 80% which is very high as compare to National average of 65%. In the male section district is near too cent percent literacy level with 92%. Table-78 Source: (Basic Statistics of Gujarat and India). Amdavad Jilla Ankardiy Mahiti 2007 Table-79 Ranking of Districts by Literacy Rate and Sex: 2011 Ran k District Persons Males Females Literacy Rate District 01 Ahmadabad Gandhinag ar Literacy Rate District Literacy Rate Surat Surat Kheda Ahmadaba d Anand Anand Navsari Gandhinag ar Source: Census of India Ahmadabad Anand

91 As per latest data presented by the census of India 2011 Ahmedabad district is enjoying first place in the literacy level which indirectly indicates theta the district is capable in providing skill and professional workforce for industry to greater extent. Though Surat is first place in density of the population but in literacy it is second in the state, Not only this but it indicates that the taluka so of the Ahmedabad district is also contributing towards the overall literacy rate. However the literacy rate in the male is highest in Gandhinagar as well in the Female category it is highest in the Surat. In both category Ahmedabad district is placed fourth and second respective. The most important and key factor in this analysis is the higher literacy level amongst female which is to be treated as most important and key factor in the social and economical changes in the family as well as district and state. Women s participation level in the business as well as in politics increases due to such factor. This is basically a good sign for women empowerment in the district OCCUPATION: The occupational pattern determines the income generating capacity of the state as well as it shows the pattern of income of the residents. Ahmedabad is industry dominant district and majority of the habitats are obtains the employment through industry. Several workers are getting employment in the city who is residents of nearby areas. The following table shows the no of factories in the Ahmedabad city in Ahmedabad district contains just more than one fourth of total factories in the state. Indirectly speaking more than one fourth of total production of state is produced in the Ahmedabad district only. Same way Ahmedabad district s more than 23% employments are generated in by various factories. It reveals that dependence on the agriculture is less in the state, 157

92 Table-80 DETAILS OF FACTORIES IN GUJARAT STATE AND AHMEDABAD DISTRICT AS ON %of Type of Factory District State State Running Factory Closed Factory Total Factory Employment Generation Source: Statistical Outline Ahmedabad district As per census of India out of total workers of the district just 3.77% of the workers are main workers in the rural areas as well as in the urban areas it is 14.22%. But looking to the unemployment in the workers rural areas just 6.45 workers could not get work but in the same situation in the urban area is representing five times higher figure of 31.67%. Table-81 EMPLOYMENT OF WORKERS AS PER POPULATION CENSUS OF 2001 IN AHMEDABAD DISTRICT TYPE AND NATURE OF RURAL URBAN TOTAL WORKERS MAIN WORKERS MARGINAL WORKERS WORKERS WITHOUT WORK Source: Census

93 District is witnessing that the employment generation category has been shifted from manufacturing unit to service units or allied sectors. The table below shows that the contribution of manufacturing and Agriculture in providing employment has been reduced gradually in last four years. Employment by new sectors like retailing, financial services, Transportation has been raised to greater extent. By the end of 2006 the employment generated by the different service providing sector is 55%. Table-82 EMPLOYMENT IN PUBLIC AND PRIVATE SECTOR BY INDUSTRY CLASSIFICATION IN AHMEDABAD CITY % OF WORKERS INDUSTRYWISE INDUSTRIAL CLASSIFICATION AGRICULTURE, HUNTING FORESTRY AND FISHING MINING & QUARRYING MANUFACTURING ELECTRIC GAS WATER SUPPLY CONSTRUCTION WHOLE SALE & RETAIL TRADE AND RESTAURANTS TRANSPORT, STORAGE & COMMUNICATION FINANCING, INSURANCE, REAL ESTATE & BUSINESS SERVICES COMMUNITY SERVICES (S0CIAL /PERSONAL) TOTAL Source: Outline by Ahmedabad Municipal Corporation 159

94 ROADS : The connectivity of the city or state with other region can be easily measured with the help of length of road. Ahmedabad district is enriched in terms of roads or connectivity. The district is contributing 4.74% to the total national Highways for the state. With specific reference to south part of district and in connectivity the state capital Gandhinagar a special road call or corridor or belt has been built called SG -Sarkhej Gandhinagar Road. The average no of vehicles on the highway is 1500 (based on personal observation) on the peak hours. Not only had this but the state had developed first of its kind Express highways between Ahmedabad and Vadodara. This is to be treated as most important and remarkable achievement. In the Ahmedabad district all the villages and town are connected with the Road and accessible through State transport facility. District is contributing 5.75% in the state highway and 3.81% in case of village roads. Following table clears the picture of integration of the District. From the marketers view point this is very important and key information. The distribution of products in villages becomes very easy in the district due high distance covered by roads. District highways are covering 1276 kms. in the district which indicates that marketers can make product available to every village. Table-83 DETAILS OF ROADS IN GUJARAT STATE AND AHMEDABAD DISTRICT AS ON (IN K.M.) Type of Road Distance State %of State NATIONAL HIGHWAYS STATE HIGHWAYS DISTRICT HIGHWAYS VILLAGE ROADS OTHER ROADS TOTAL Source: Statistical Outline Ahmedabad district

95 ELECTRICITY: In the present days electricity is to be treated as life line of business as well for human facilities. Gujarat is the only state in the country has excess electricity that provides electricity to other states as well as makes electricity available to the various industries as well as to the residents 24x7. In the Ahmedabad district electricity is available to the farmers in adequate quantity which gives highest production of agro products as well as it supports high production of industry. Talukawise availability of electricity can be easily seen in the following table. The availability of electricity to various taluka is 100%. It results into the irrigation facility to the extent of cent percent to three talukas and more than 90% to three talukas. Table-84 DETAILS OF INFRASTRUCTURE AND OTHER ASPECTS OF AHMEDABAD DISTRICT NAME OF TALUKA % OF VILLAGES HAVING POST OFFICES % OF VILLAGES HAVING BUS FACILITIES % OF VILLAGES HAVING ENTRANCE WITH PUCCA ROAD % OF VILLAGES HAVING ELECTRICITY FACILITY % OF VILLAGES HAVING IRRIGATION FACILITY MANDAL DETROJ VIRAMGAM SANAND AHMEDABAD CITY DASKROI DHOLKA BAWALA RANPUR BARWALA DHNADHUKA Source: Statistical Outline Ahmedabad district

96 WATER AVAILABILITY: The status of water availability in the district is quite satisfactory in major taluka. The availability of water is to be treated as key factor for the penetration of various personal care products as well as several FMCG products. Ahmedabad district is obtaining water though piped sources in more the eighty percentage places. As well as the state is electrifying water is also available through private bore well. Water is the prime requirement of human. Ahmedabad Jilla Panchyat is taking proper care of residents in terms of making water available can be seen in the following table. The villages like Viramgam Bavala and other villages get water though [piped connection which reduces the hardship for the residents. Table-85 WATER AVAILABILITY AND WATER CONNECTION IN AHMEDABAD DISTRICT AVERAGE DAILY SUPPLY (LAKH LITER) TOTAL NO OF WATER CONNECTIONS AHMEDABAD CITY VIRAM GAM DHOLKA N.A. N.A. SANAND BAVLA DHANHUKA BARVALA BAREJA 3 N.A. Source: Static's of Towns and Municipalities POST OFFICES : Communication network of any district can be measured by the Telephone connections, and no of Post offices. District is integrated with the postal network. The penetration of post office is above 85% in average basis. The table below provides information about no of post offices in the talukas of Ahmedabad District. Every taluka of the district is the connected with the branch of the post office as well as every village or town is connected with the adequate no of post boxes. The following table clearly shows me that the no of telegraph offices are just abolished as no of mobile users are increased at more than 35% annually in Gujarat. 162

97 Table-86 DETAILS OF POSTAL NETWORK IN THE AHMEDABAD DISTRICT NAME OF TALUKA POST OFFICES MAIN POST OFFICES SUB POST OFFICES BRANCHES POST AND TELEGRAM OFFICES MAIN POST OFFICES SUB POST OFFICES BRANCHES AD HOC POST OFFICES TELEGRAPH AND LOCAL OFFICES POST BOXES NO OF POST MEN VILLAGES WITH OUT POST OFFICES AHMEDABAD CITY MANDAL DETROJ VIRAMGAM SANAND AHMEDABAD CITY (Rural) DASKROI DHOLKA BAWALA RANPUR BARWALA DHNADHUKA TOTAL Source: Statistical Outline Ahmedabad district Table-87 TALUKA WISE % OF POST OFFICE CONNECTED VILLAGES IN AHMEDABAD DISTRICT TALUAKA % MANDAL 86.5 DETROJ 74.5 VIRAMGAM 82.1 SANAND 78.8 DASKROI 77.7 DHOLKA 68.4 BAVALA 61 RANPUR 55.9 BARVALA 61.3 DHANDHUKA 65.5 AVERAGE Source: Annual Report of Ahmedabad Jila

98 BANKING: The penetration of banking services in the district is the key factor for the financial health of the district. The Ahmedabad district has total 838 branches of banks out of which 773 branches of Public sector banks as well as 57 branches are of Ahmedabad district co-operative Bank. Every taluka of the district is covered by PSU banks as well as by Ahmedabad District Bank. Financial services to the residents of Ahmedabad district. From the view point of industrial growth and personal financial service to retail customers this is very important key factor. Due to integrated network of banking sector in the district the industry and agricultural sector is also benefited to greater extent. The marketers are directly benefited by this particularly Consumer Durables marketers. Consumer finance and agricultural fiancé is available very easily in the district. Table-88 NO OF BRANCHES IN A DIFFERENT TALUKAS OF AHMEDABAD DISTRICT NAME OF TALUKA PSU BANKS CO-OPERATIVE AND RURAL DEVELOPMENT BANKS AHMEDABAD DISTRICT CO- OPERATIVE BANK TOTAL MANDAL DETROJ VIRAMGAM SANAND AHMEDABAD CITY DASKROI DHOLKA BAWALA RANPUR BARWALA DHNADHUKA TOTAL Source: Statistical Outline Ahmedabad district

99 NEWS PAPERS: Marketing communication in the rural area is the most important and most critical factor in a country like India. The marketing communication the country like India is widely depend upon television and radio as literacy level is very low. But in case of Ahmedabad district situation is just reverse as the literacy level is high as well as availability of electricity is 100% Television, Radio, Cinema, News Paper as well as since last five years FM Radio are playing very important role in marketing communication amongst the habitants of the district. The readership of local language newspaper viz. Guajarati News Paper is highest as district has more than 30 dailies. Not only is this but the no of weekly magazines very high. Monthly magazines from the district are more than 173. Most surprising fact is that the newspapers of other language are also published from the district. Total no of daily and magazines of Hindi and English in the state are 14 and 9 respectively. Marketing communication in the print media is very deep in the district and very effective, fast and influensive also. Table-89 LIST OF VARIOUS WEEKLY AND DAILY NEWS PAPERS AND MAGAZINES PUBLISHED FROM AHMEDABAD DISTRICT TYPE OF PERIODICAL ENGLISH GUJARATI HINDI OTHERS TOTAL DAILY WEEKLY BI MONTHLY MONTHLY OTHERS TOTAL SOURCE: Office of Information Directorate Gandhinagar 165

100 OTHER ASPECTS. Savings and Life Insurance Policy: The old perception about the resident of the Ahmedabad is miser but in last ten years it has been changes but the basic instinct of the population still remains same. The saving habit for securing financial protection is reflected in the savings in small savings sachem by the residents of district. The table shows that the residents have preferred Small saving scheme as most preferred option for the investment as it provides security and moderate return. Not only is this but the scheme operated through post offices which move the fund of rural people of the district. But the scheme has shown reduction in the preference as the target achievement is less the predicted from onwards. The saving can be done if one has sufficient amount of fund. Indirectly speaking the excess fund of the income can be reflected in savings. Table-90 INVESTMENT IN SMALL SAVING SECURITIES IN AHMEDABAD CITY (Rs. In lakhs) YEAR TARGET GROSS DEPOSIT NET DEPOSITS ACHIEVEMENT IN % Source: Statistical Outline Ahmedabad district The working of Life insurance Corporation of India can be observed from the following table. Due to cut throat competition in the market the additional agents appointed by the Life Insurance Company is aggressive in appointing new agents which brings business tremendously. The savings or extra income f the population can be trace out by the investment in the life 166

101 insurance. The life insurance investment is slightly different as to other investment option. In case of life insurance case one has to invest for long period of time or life time. In a span of four years the life insurance has doubled their insurance premium income as well as the amount of sum insured had been doubled. Table-91 DETAILS OF INSURANCE POLICIES AND PREMIUM PAID IN THE DISTRICT YEAR NEW POLICIES ISSUED DURING THE YEAR TOTAL AMOUNT OF SUM INSURES (Rs. In Lakhs) PREMIUM PAID DURING THE YEAR (Rs. In Lakhs) NO OF AGENTS Source: Statistical Outline Ahmedabad district PROBLEMS OF RURAL MARKETING RURAL MARKETING IS CHALLENGING TASK : Carlo Donati, Chairman and Managing Director, Nestle India, observed that generalizing the rural market can be dangerous. It is true that in today s congested and difficult markets, both local and global, all FMCG as well as other companies or corporations look and search for new opportunities, consumers and markets. Going rural is a question any marketing person must have reflected on many times, he said. Drawing attention to the 700 million potential consumers in rural India, Donati pointed out that the rural market presents both an opportunity and a problem, given that this market has been plagued by unbalanced growth and infrastructure problems. Time and again it has been emphasized that the extreme challenges for the rural marketer is to reach out to the remotest rural destinations and increase rural incomes. 167

102 Around 750 million Indians reside in about six lakh villages and even the powerful marketers like HLL and ITC have directly been able to cover only about lakh villages while about lakh villages have been connected through Project Shakti and echoupal initiatives. A lot needs to be done for expanding distribution coverage and the daunting task ahead is to over-come the following challenges. To expand the market by tapping the countryside, more and more MNCs are foraying into India's rural markets. Among those that have made some headway are Hindustan Lever, Coca-Cola, LG Electronics, Britannia, Standard Life, Philips, Colgate Palmolive and the foreign-invested telecom companies OPPORTUNITY The Indian rural market with its vast size and demand base offers a huge opportunity that MNCs cannot afford to ignore. With 128 million households, the rural population is nearly three times the urban. As a result of the growing affluence, fuelled by good monsoons and the increase in agricultural output to 200 million tonnes from 176 million tonnes in 1991, rural India has a large consuming class with 41 per cent of India's middle-class and 58 per cent of the total disposable income. The importance of the rural market for some FMCG and durable marketers is underlined by the fact that the rural market accounts for close to 70 per cent of toilet-soap users and 38 per cent of all two-wheeler purchased. The rural market accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soap, blades, tea, salt and toothpowder, What is more, the rural market for FMCG products is growing much faster than the urban counterpart THE 4A APPROACH The rural market may be alluring but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special 168

103 occasions; poor roads; power problems; and inaccessibility to conventional advertising media. However, the rural consumer is not unlike his urban counterpart in many ways. The more daring MNCs are meeting the consequent challenges of availability, affordability, acceptabilityand awareness (the so-called 4 As). 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. Marketers must trade off the distribution cost with incremental market penetration. Over the years, India's largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong distribution system which helps its brands reach the interiors of the rural market. To service remote village, stockiest use auto rickshaws, bullock-carts and even boats in the backwaters of Kerala. Coca- Cola, which considers rural India as a future growth driver, has evolved a hub and spoke distribution model to reach the villages. To ensure full loads, the company depot supplies, twice a week, large distributors which who act as hubs. These distributors appoint and supply, once a week, smaller distributors in adjoining areas. LG Electronics defines all cities and towns other than the seven metros cities as rural and semi-urban market. To tap these unexplored country markets, LG has set up 45 area offices and 59 rural/ remote area offices. 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 consumer, most of whom are on daily wages. Some companies have addressed the affordability problem by introducing small unit packs. Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar and 169

104 Uttar Pradesh the so-called 'Bimaru' States. Hindustan Lever, among the first MNCs to realise the potential of India's rural market, has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm. The move is mainly targeted at the rural market. Coca-Cola has addressed the affordability issue by introducing the returnable 200-ml glass bottle priced at Rs 5. The initiative has paid off: Eighty percent of new drinkers now come from the rural markets. Coca-Cola has also introduced Sunfill, a powdered soft-drink concentrate. The instant and ready-to-mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and mutiserve sachet of 200 gm priced at Rs 15. 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. One company which has reaped rich dividends by doing so is LG Electronics. In 1998, it developed a customised TV for the rural market and christened it Sampoorna. It was a runway hit selling 100,000 sets in the very first year. Because of the lack of electricity and refrigerators in the rural areas, Coca- Cola provides low-cost ice boxes a tin box for new outlets and thermocol box for seasonal outlets. The insurance companies that have tailor-made products for the rural market have performed well. HDFC Standard Life topped private insurers by selling policies worth Rs 3.5 crore in total premium. The company tied up with non-governmental organisations and offered reasonably-priced policies in the nature of group insurance covers. With large parts of rural India inaccessible to conventional advertising media only 41 per cent rural households have access to TV building awareness is another challenge. Fortunately, however, the rural consumer has the same likes as the urban consumer movies and music and for both the urban and rural consumer, the family is the key unit of identity. However, the rural consumer expressions differ from his urban counterpart. Outing for the former is confined to local fairs and festivals and TV viewing is confined to the state-owned Doordarshan. Consumption of branded products is treated as a special treat or indulgence. Hindustan Lever relies heavily on its own company-organised media. These are promotional events organised by stockiest. Godrej Consumer 170

105 Products, which is trying to push its soap brands into the interior areas, uses radio to reach the local people in their language. Coca-Cola uses a combination of TV, cinema and radio to reach 53.6 per cent of rural households. It doubled its spend on advertising on Doordarshan, which alone reached 41 per cent of rural households. It has also used banners, posters and tapped all the local forms of entertainment. Since price is a key issue in the rural areas, Coca-Cola advertising stressed its 'magical' price point of Rs 5 per bottle in all media. LG Electronics uses vans and road shows to reach rural customers. The company uses local language advertising. Philips India uses wall writing and radio advertising to drive its growth in rural areas Poor Infrastructure Infrastructural facilities like ware-housing, transportation, pucca roads and financial facilities are inadequate in rural areas. Although on paper 90% of the villages appear electrified, in reality, only one-third of the rural households have electricity connection. Only 1.2% of villages have railway stations and only 33% are connected by pucca roads. Planning physical distribution, managing logistics and controlling marketing communication are major impediments for entering rural markets Non-availability of Shops Around 30% of the villages have no regular shops; leave alone a proper distribution set-up. According to Indian Market Research Bureau, 60,000 of approximately 0.6 million villages do not have a retail outlet. Even the outlet density is low in rural India compared to urban India. To make matters worse approaching villages is also not easy because of harsh terrain. The widely spread Indian railway network also connects only the towns, from where the sales personnel have to travel by buses or bullock-carts which some-times take two days to reach in case of remotely connected villages. Moreover, the terrain is often unfriendly and unhygienic. 171

106 Poor Literacy Rate According to Census 2001, rural literacy rate stood at 59.4% as against urban literacy rate of 80.3%). Low education level leads to lack of awareness and herd mentality because of which villagers are unable to differentiate between good and bad quality brands. It is because of this that so many spurious brands are flourishing in the rural market with somewhat similar names and similar packaging like the well-established brands. For example, there are around 500 fake Lifebuoys with names like, Lifeboy, Lifeby, etc. There are brands like Pepc competing with Pepsi. It is virtually impossible for any marketer to track all these spurious brands and initiate any legal procedure against people behind duplication. The only way to fight this menace is by educating the rural folks and highlighting the benefits of established brands Erratic Power Supply For many an industry continuous supply of power is a prerequisite. For instance, for preserving milk, vegetables, soft-drinks, ice-creams, proper power supply is required. One of the major impediments in rural marketing is the lack of proper power supply. Erratic power supply along with voltage fluctuations makes things difficult for the rural marketing Poor Media Penetration Only 57% of the total rural house-holds have access to mass media of any kind. Of these, 23% have access to print media and 36% to TV With about two lakh haats in India the greatest challenge before a marketer is the cost per contact. The cost of reaching rural consumers through unconventional media is extremely high. There is also limitation in establishing an effective link between the point of exposure and point of purchase in rural market Rigid Social Customs Some villages are plagued by rigid customs and extreme fundamentalism. In most of the villages the women folk are not allowed to go 172

107 to the shop, in backward areas they are expected to cover their faces with traditional veil making it difficult for the marketer to target the beauty or cosmetic products to the right audience. There have also been occasions where the village community has not accepted basic healthcare schemes like inoculations and vaccinations due to some superstitious belief. The cultural practices definitely have a major impact on the purchase behavior of rural customers Regional Politics Local politics is also becoming powerful these days with local leaders not only controlling votes but also the purses of the village folks. They take decisions regarding brands to be sold and not to be sold in the rural market while most of these decisions are guided by their vested interests depending on the share they draw from sales of each item. This results in reduction in the margins for companies which, otherwise are also working on low margins for rural products Skeptical Customers Rural customers have an appetite for low risk. Unlike their urban counter-parts, a lot more persuasion is required to convince them to use new brands. Opinion leaders enjoy more faith than any proven statistics or facts. While designing marketing mix strategies compared to urban consumers different calculations work to lure the rural masses. Generally speaking due to low level of education of the rural people rural consumers treat new product is risky. Not even this but changing the brand of offerings is also to be treated as risky to certain extent CONSUMER DURABLE INDUSTRY Indian Television Market The Indian CRT CTV market, stands at 18 million sets in 2010, registering a decline of 4.6 percent over last year. This is inclusive of 5 million sets supplied to Electronics Corporation of Tamil Nadu (ELCOT) for free distribution by the Tamil Nadu government. 173

108 LG, Videocon Group brands and Samsung together account for 50 percent of the volumes market. ELCOT procurement accounted for 28 percent of the CRT market. Onida, at sales of 1.4 million sets, accounted for 7.8 percent. The balance 13.9 percent of the market comprises some national brands, some regional brands, and some wholesale markets like Lajpat Rai in New Delhi and Lamington Road in Mumbai. Panasonic, Haier, Weston, Philips and Salora each in the 2 million sets vicinity, and Sharp. T-Series, Beltek, TCL, Oscar, Flutee, and Moser Baer are at sales level of 60, ,000 sets each. Other brands with presence are Crown, Genus, LB. Daenyx, Jolly. Philips. Toshiba and Akai have recently relaunched their products, and 2011 will be the year to watch these brands closely. Hitachi TV did not have appreciable sales as its products comparatively not available. Intex has launched its CTV models in October Size-wise sales indicate that 14 inch TVs remained a popular choice commanding percent of the market. The ELCOT procurement is wholly in 14-inch screen size. The mid-size segment had a 46.7-percent share. With increasing popularity of LCD televisions, the large screen CRT sets have been reduced to a minuscule 1,8 percent market share. Slim and ultra slim TVs have emerged as growth areas in the CRT segment. The major growth for this segment is likely to come from the tier-il and tier-lit cities and rural markets, which are growing significantly, LCD televisions The LCD television market in India in 2010 is estimated at 3 million sets. It doubled it self from 1.5 million sets in The three brands. Samsung, LG and Sony continue; to dominate the segment: with a combined market share of 72.5 percent. They are each in the sales vicinity of million sets. The balance million sets are accounted by Videocon. Onida and Haier among others. With LCD TV sales in India gaining momentum, 2010 will perhaps be the last year that cathode ray tubes can lay claim as the leading television display type in the country on a revenue basis. LCD TV revenues are 174

109 expected to rise to Rs.12,000 crore in 2011, up by a stunning 60%from Rs.7540 crore in Having said this, 2010 did not meet the expectations of Indian LCD TV marketers. The consumer, they assert, seemed to be confused between LCD and LED choices. Conversions and upgrades from CRT televisions to LCDs comparatively slow. The year 2011 will find a spurt in sales for two events, the Cricket World Cup and the Diwali festive season. The LED contribution is expected to increase in 2011, with makers rationalizing the prices of this category. In terms of LCD TV sizes, 32-inch models have been the most popular, with a 41-percent unit share. 24-inch or smaller sets accounted for a 36- percent market share. Currently, 21-inch and smaller screen CRTs are the most common televisions in India. For this reason, it is expected that 22-inch and 24-inch LCD TVs will be an important product in the Indian market Performance of various Brands: 1. LG dominates the CRT segment with a 20.5-percent market share; Its emphasis is the premium segment has been on full LED LCD television sets. The marketing strategy was woven around the sure-shot combination of Bollywood and cricket. 2. Videocon s core strategy in 2011 is to improve the brand image and increase market share. The group has chalked out a bipolar strategy; wherein premium image will be built through aesthetically and technologically superior products and volumes driven through a frugally innovative range to cater to the mass market. The trade network is being expanded as also more number of exclusive retail outlets, NEXT and Digiworld being added. The company is setting up another new manufacturing facility at Manamadurai. 3. Samsung is looking at growing its TV sales based on new product and technology introduction; strengthening its product display at multi-brand counters and enhancing penetration in the semi-urban markets. 175

110 4. The Onida Group includes the brands Onida and Igo. On the occasion of having completed 30 years, the company launched a range of innovative products across various categories. The mantra is to cover every dealer with every product at every time. 5. Panasonic follows a dual strategy for tapping different types of consumer groups. Its product portfolio has a set of products for high-end and also for high-volume segments. Its plasma range is popular. Localization is the route the company follows and 2010 saw new product launches developed for the Indian consumer. With a mission to upgrade the lifestyle of the Indian consumer, the company lays emphasis on eco ideas and ecofriendly products. 6. This year Haier adopted an aggressive marketing strategy as a step to strengthen and combine the brand image in India. You inspire us and John Abraham did wonders for the company image. Haier has expanded its presence in the country with the opening of 85 Experience Centres, and 500-plus planned in TCL is slowly building a world-class brand by focusing more into its marketing activities. The company is now becoming aggressive in marketing and selling products under its own brand, around the world to completely transit from Made in China to Create in China and promote Chinese brands on global basis. The company has launched LED, 3D and Internet LCD for the premium consumer and also made significant in roads in the rural markets, with 70 percent of its contribution from tier II and tier III cities, and rural sector. 8. Philips TVs are fast becoming popular amongst premium consumers. Its flagship model Cinema 21:9 TV, 15 models of LED, eight models of LCD and five models of ultra slim TVs are positioning the company as a high-quality premium brand. A unique five years warranty, a free LCD TV and DTH connection clubbed with some premium products are getting attention. 176

111 9. Toshiba with its three-dimension strategy for the Indian market, Range, Value and Speed has seven new series with more than 20 models planned for launch in early Sharp is geared up for robust expansion plan in India in a phased manner. Its Quattron range of televisions is a differentiator and offers Company s-color TVs, based on proprietary UV2A technology. 11. Akai has an entire range of LCD and LED models for the tier I and tier II cities and competitively priced CRT CTVs for tier II and tier III cities, which Akai markets through its distributors Initiatives by various marketers : 1. Videocon Group On marketing strategies Videocon Group is one of the most popular Indian companies, which is catering to the Indian market since the last 2-3 decades with a wide range of innovative and value added product range under various business verticals. In 2011, Company s core strategy will be to improve the brand image and increase the market share. To achieve this, as a group company will follow a bipolar strategy; wherein premium image will be built through aesthetically and technologically superior products and volumes will be.driven through frugally innovative range to cater to the mass market. With Company s extensive R&D and Product Planning team, Company is launching new range of technically superior products including new premium 3D LED TVs with 3D active shutter technology to target premium class of consumers. Many more product ranges with attractive brush and metallic finish and innovative features would be launched this year. As a part of World Cup campaign, company is also launching limited edition LED series. Putting Company s selves in the consumer s shoes service is one of the most important Key Buying Parameter of the consumers. To establish a foothold on the same, company will increase the number of service outlets across the country and free service camps will be planned across the year. 177

112 Distribution strategies India is a huge market with a wide area and population with diverse cultures. Sixty percent of the population lies in rural India which is a big untapped market. Extensive distribution strategy with wide network is very essential for all players to expand their presence all over India. Videocon Group has a strong network with around 1,800 distributors, 25,000 sub-dealers, and 3,000- plus direct dealers to cater to the Indian consumers effectively. Company is expanding Company s network with the help of 130 Next, 530-plus Digi-world retail outlets to cater to all consumers with their ever increasing demands. Company is strengthening Company s exclusive retail outlets by understanding the concerns of trade partners with continuous planning and improvements. Company is increasing Company s presence in the Indian market with huge network expansion with the help of distributors, dealers and channel partners to avail Company s products everywhere in India. Advertising and promotional strategies Advertisements and promotions are very important in this industry to improve the brand image and value by targeting a huge audience at a time. These add value to the company which exponentially increases sales. Company is concentrating on many major events with innovative advertisements and promotions by differentiating Company s products from other competitors. Videocon Group has initiated many campaigns across all the media, i.e., print, electronic and radio and BTL activities, marketing collaterals, visual merchandising to catch consumer s attention and interest at billing points too. Technology trends Consumer electronics market is majorly influenced by technology which is changing day by day with many innovations and continuous R&D. Consumer preferences, life-style, comfort are the major factors which lead to new innovations in technology to provide more comfort to the users by developing user-friendly yet technically sound products. Technology up-gradation is happening in a short span of time with many new innovations like LED TVs, 3D TVs, wireless connectivity, net connected TVs, border less designs, and home automation systems. 178

113 In this changing world, Videocon is launching many new technologies like LED TVs, 3D TVs, d2h LED TVs, net connected TVs with many attractive designs and aesthetics to delight Indian consumers with wide range of products. Company has also introduced many unique selling propositions like models with brush and metal finish, slim TVs. Health TVs is another platform which has been introduced in Videocon LCDs, LED TV models to take care of consumer s health perspective. 2. SAMSUNG ELECTRONICS INDIA PVT. LTD. Distribution Strategies Company is looking at growing Company s CTV sales based on new product/technology introduction; strengthening Company s product display at multi-brand counters and enhancing Company s penetration in the semi-urban markets; enhancing Company s awareness in the semi-urban markets through initiatives like Dream Home Road Shows, and mobile vans. Advertising and promotional strategies Samsung has launched exciting consumer offers on its flat panel televisions for the ongoing cricket season. The consumer offers include very attractive zero percent finance offers as well as a Dish TV set top box free with every flat panel TV to make the experience come alive this cricket season, which are valid till March 15, As part of the promotional offer a customer buying a Samsung flat panel TV needs to pay only Rs. 1,999 at the time of purchase. The balance amount could be paid in 17 equal, interest free instalments with no processing fee being charged. Samsung is partnering with Dish TV to provide an HD DTH free along with 45 days platinum pack subscription and HD pack with every Samsung television in the screen size 32-inch and above across its LCD and LED television range. Consumers buying a Samsung 26-inch or below flat panel TV will receive a Dish TV SD set top box along with 45 days subscription of platinum pack. The Dish TV HD DTH offer and the attractive finance offer are also being made available by the company on its 3D TV range. 179

114 3. LG ELECTRONICS INDIA LTD On marketing strategies Last year, the industry witnessed a lot of action around LED LCD TVs and 3D TVs. LG was the first to market and advertise its range of full LED LCD TVs. Woven around cricket and Bollywood (brand ambassador), LG s marketing strategy worked in creating a ripple in the market place. Distribution strategies CRT TVs happen to be the main stay as far as distribution is considered. LG having highest sales and distribution net work and having deep penetration in the rural area also as LG is catering rural area of the country with specific models like Samporna portable color Television. Not only this at the district head quarter as well as at the Taluka level in some states established service center with tool free number also. 4. ONIDA Onida has completed 30 glorious years. On this occasion, Company has launched a range of innovative products across various categories. All Company s products are a result of Company s strong customer understanding - their needs, aspirations and desires. For holistic consumer understanding, company observes people in their natural environments, using the products the way they would normally use in daily lives. This leads us to develop company full insights that form the cornerstone of all Company s product innovations. In today s fast paced lifestyle, most high-end consumers are constantly engaged with one or the other screen, i.e., mobile, computer, gaming or TV, leading to fatigue and soreness in their eyes. This insight has led to the launch of the world s first LED TV with i-care technology that protects eyes from harmful UV rays. It is reflection and glare-proof and is also 10 times tougher than normal LCD TVs. It also ensures full HD picture quality, crystal clear sound, full connectivity options and fantastic aesthetic design. 180

115 Distribution strategies Company s distribution strategy is a mix of increasing Company s penetration by developing new billing points in urban, semi-urban and rural markets; ensuring addressability by focusing on key models in each category and increasing the extraction of the focused models per dealer across the country. The mantra is to ensure company cover every dealer (in Company s ever increasing network) with every product at every time. For secondary sales, company support Company s network through participation in exhibitions and in-shop displays. Besides, company keep Company s network partners engaged with regular and attractive trade schemes. Company has also developed a strong pan-india on-ground activation team to facilitate tertiary sales to ensure proper product placement and implementation of point of sale material. Company s in-shop demonstrators are company trained to handle all on-ground customer enquiries and convert them into sales. Company s daily sales tracking of each counter across Company s network ensures a strong target oriented achievement. For the CTV category, Company has been constantly working toward Company s reach in rural markets to be online with the potential for CRTs. Company has increased Company s indirect network to expand Company s reach to even smaller towns which had less than 50,000 population during Along with it company also increased Company s direct dealer network to consolidate Company s markets. Company has an active participation in modern trade in order to have visibility of Company s brand. Company will increase sales of CRTs though as a network they are not too much focused on CRTs. Advertising and promotional strategies Company s brand strategy is a reflection of the needs of today s consumers. As India has a huge growing youth population, addressing their ever changing needs and aspirations is Company s constant endeavor across all Company s communication. To that effect, while Company s products deliver superior functionality and design, company provide thoughtful features that are relevant to Company s consumers. 181

116 All Company s campaigns are a result of a rigorous insight generation exercise that leads to a relevant and persuasive communication. In terms of execution, company clearly stands out for Company s edgier, clutter-breaking yet simple to comprehend communication. This ensures longevity and a high brand recall for most of Company s campaigns. All Company s key product launches are promoted through an extensive 360 degree marketing campaigns including traditional, online, mobile and innovative POS mediums. Similarly, company has exciting offers lined up on Company s CTV category. On purchase of any CTV model, a customer will get a free 4 years warranty on color picture tube. Also, available is zero percent finance and exchange offers on selected Onida CTV models. The offer is available across all markets (except in the state of Kerala and Assam) starting from February 8, 2011 to March 31, Besides, a customer can get a free Reliance Digital TV DTH connection worth Rs.1,211 on purchase of any Onida Movie TV, woofer and ultra slim models. The offer is available across all markets starting from Feb 8, 2011 to March 31, Refrigerator Industry : The home appliances makers are trying their best to get the maximum share of the Rs.6700 crore refrigerator market. The Indian consumer has never had it better before. He is being wooed by brands, international and Indian, large and regional, like never before. World class products, rating high on convenience, aesthetics, efficiency, technology, innovation are available at competitive prices. Market Dynamics The Indian refrigerator market saw a 23.7 percent growth with estimated sales at 7.3 million units in With low penetration level in the country and the increase in demand from the rural and semi urban areas, this segment is looking upward. This is supported by hot extended summers. The market continues to be dominated by five brands, LG, Samsung, Whirlpool, Videocon Group and Godrej, which together command about 95 percent of the market. 182

117 1. LG, with sales of 1.85 million units, valued at Rs.1720 crore, commanded a 25 percent market share. LG also held the top position in direct cool and frost free segments with 12.5 lakh and 6 lakh units respectively. The company catered mainly to the price sensitive segment. 2. Samsung and Whirlpool shared the second position, each commanding a market sharp of 18.5 percent. The next slot was shared by Videocon Group and Godrej with a market share of 16.5 percent each. 3. The direct cool segment, which accounted for 69.8 percent of the market continued to be the volume driver. LG, Videocon, Godrej, Samsung and Whirlpool all hovered in the vicinity of sales at lakh units each. 4. In the frost free segment, LG was the leader, with sales of 6 lakh refrigerators. Samsung and Whirlpool were neck-to-neck, in the vicinity of sales at 5 lakh units each. Godrej commanded a share of percent. The Videocon Group contributed to 5 percent of this segment. 5. Other aggressive players include BPL, Haier, Hitachi, Panasonic, Siemens, Sharp, and Toshiba. Market Trends The lifestyles of Indian consumers has changed over the past few years, and they are increasingly looking for products that provide them healthier lifestyles and better quality of life. Contemporary products with elegant designs and spectacular features which perfectly suit their lifestyle and raise their standard of living is the requirement. Innovation and new technology introduction is expected to fuel growth this year. Star rated, energy efficient models with superior features are expected to lead consumer demand. While the refrigerator segment is expected to sustain the percent growth levels, the frost free category projected growth is 30 percent. The unexpected high growth in direct cool segment from rural areas is unique as far as India is concerned. With a huge gap in demand and supply of electricity and 63 percent of the rural area still 183

118 without electrification, there is also a huge potential in the first time buyer and second refrigerator demand from urban India. Pricing The industry is sensitive to fluctuation in commodity prices, and change in the excise policy. Most brands try to hold back price increases, and when they do have to pass them on to the consumer, ensure that the trade partners are protected by either introducing new cash discounts, or the new prices with the launch of their new product range. Marketing strategies 1. Samsung India is focusing on its new Frrrunch campaign on TV and print, which hits been especially designed for Indian vegetarians. The company is looking at growing their sales based on new products and technology introduction; strengthening product display at multi-brand counters and enhancing penetration in the semi urban markets through effective marketing; comprising a judicious mix of mass media, such as TV and the regional press, and below-the-line activities, The communication campaign across print, radio and TV in currently ongoing. 2. LG Electronics urges the customer to make a fashion statement. With its linear compressor, ten year warranty, Ice beam door cooling, miracle zone, Bio shield, and eight digital sensors, the emphasis is on the products being a perfect expression of exquisite art and futuristic technology. 3. Videocon has adopted a feature based marketing strategy being communicated to the end consumers through advertising, channel marketing, internet marketing, promotion and public relations. The company is also promoting attractive finance options on their products. Its R&D team is consistently working toward giving new and innovative USPs and features. Videocon s marketing initiatives include hi-voltage promotional campaigns across all the media i.e. print, electronic and radio plus various BTL and on ground activities, marketing collaterals, visual 184

119 merchandising etc. to generate consumer interest. Push and pull strategy: This is Videocon s main focus area to keep the right balance between sell in and sell out. This would make sure that trade stocks do not go very high and not block the trade inventories. The cash flow would be smooth, which is the basic back bone of any business. The company has worked internally and made their after sales service team strong so that, after sales product service can be improved and Videocon can meet the demand of the market on real time basis. The Group has a large dealer network, present in around 46 locations and strong dealer network of 2500-plus. DigiWorld, its exclusive chain of brand shops give the company the opportunity to showcase the combined power of Videocon Group products under one roof. It plans to add 350 more Digiworld stores this year. The company is focussing on numeric and weighted distribution. Both of these are very important, as one gives penetration and other gives addressability and with both the levers at their best, the company is able to get best extractions from the counters, thus increasing overall market share. 4. Godrej s focus is on the up country markets where it has perceived higher growth in the last couple of years. The manufacturer will be as aggressive as in the past two years. The company will continue to invest in their new positioning of Designed by curiosity which is all about providing relevant technology to consumers to simplify their lives. Godrej has launched a new campaign on i-fresh refrigerators which is reflecting this new positioning. The company was very active during the IPL season and also on other entertainment and news channels. The momentum will continue throughout the year with innovative tie-ups in both media and ground activation to provide 360 degree presence to the brand and garner preference of the consumers. 5. As a part of its ATL (above-the-line) strategy, Panasonic India is focusing more on print media. This year a lot of BTL (below-the-line) activities are being conducted that will increase the display at malls, road shows enhancing its presence at shop front. The company has 185

120 also appointed Katrina Kaif, the film actress, as the brand ambassador for refrigerators. 6. Haier is planning to strengthen and combine the brand image in India and has unveiled a new brand campaign titled, You Inspire Us. It has expanded its presence in the country with the opening of its experience centres. Presently, there are 10 experience centers across the country and 75 more to come this year. Haier has various on-ground activities planned such as mall and society activations. It is also partnering with premium clubs and gyms for customer interactions during leisure time. 7. Toshiba India is increasing its advertising in print media and the major focus is on POS activities. 8. BPL is back in the reckoning with its new look, new sense of happiness. The company s new range of frost free and direct cool refrigerators are being marketed by Reach Distributors India. 9. Hitachi Home & Life Solutions are highlighting their big French refrigerators. These four-door, minus-zero cooling, forefront freezing gadgets, with water dispensers are designed to fit your lifestyle, and so much more. Challenges 1. In a country as vast as India servicing continues to be challenge. The leaders have their servicing infrastructure in place and that gives them a major edge on the other brands. On the same note, inadequate infrastructure remains an issue to reach out to the upcountry markets. 2. The low penetration of refrigerators, 15 percent overall and approximately 5 percent in rural markets, throws a tremendous opportunity to the brands. Too many brands and tight competition have to be tackled. 186

121 Air Conditioner Market The Indian air-conditioning industry is on a high growth trajectory with an overall volume growth rate of percent per annum. In 2010, air conditioner sales companies 7,200 cores at 3 million units, up from 2.8 million units in Thin growth rate is expected to be maintained in 2011 too. In fact, LG Electronics is targeting India as its largest air-conditioner market by next year, ahead of the current leader US. In 2010, India contributed 18 percent to the company s global air conditioner revenues in 2010, while the US contribution was over 30 percent. The consumer is certainly not being short changed; he is at par with his global counterpart. The new range of ACs are spread across window, split, multi-split, inverter ACs, floor standing, cassette, and split segment dominates with 70 percent market share. Star rated, energy efficient models with superior features continue to rate high on consumer demand. Gaining from ongoing technological advances they have been transformed into products that can provide health benefits. Korean models, Chinese imports and aggressive stance of Japanese players have maintained competitive pricing. This is set to be rationalized with an increase of 8-10 percent. Stiffening of commodity pricing like copper, aluminum, and steel coupled with high crude oil prices have increased logistics expenses. Growing affluent middle class population, robust economic growth coupled with the booming retail sector will ensure that the expectation of a percent, growth in 2011 is a reality for this segment. Indian air conditioning market is growing at 25% which is very lucrative and promising market from marketer s view point. All most all the international marketers can t ignore Indian market on this ground as well as the purchasing power and brand awareness towards air-conditioning are adding positive aspects. The following graphs clearly indicate the purchasing market share of Indian air conditioner market. 187

122 Table-92 LG is market leader with market share 45% followed by Samsung and Voltas. Basically speaking Voltas is parts provider for Air conditioner industry as well as significant market shareholder for split AC and window ACs alongwith industrial offerings. Initiatives from various companies : LG LG is enjoying market leadership in Air conditioner market in last one year. In 2010, the overall market size stood at 3.5 million. Company is expecting the market to touch 4.5 million units this calendar year, a growth of - 30 percent, with split air conditioners constituting 70 percent of sales. With increased awareness of star rating, purified and healthy air, the air-conditioner market is moving toward split ACs. Q-II accounts for almost 50 percent of annual sales. Inverter technology is increasingly becoming popular. Prices are on the rise with stiffening of commodity pricing like copper, aluminum, and steel. Product range The new range of ACs are spread across window, split, multi-split, inverter ACs, floor standing, cassette, and to company ACs. The hottest innovation in the lineup is 5 star rating in all split air conditioners and for the first time in a 1-ton window AC. Inverter ACs equipped with variable speed DC compressor technology will be another focus area for The range promises to offer an ultimate experience to its user owing to the inimitable features like auto clean, jet cool, In-tell eye, 4 way swing, triple 188