EMPIRICAL EVIDENCE OF RURAL CONSUMER PURCHASING BEHAVIOUR OF GROCERY ITEMS IN AGRICULTURAL FAMILIES OF ADILABAD DISTRICT

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1 GJBM ISSN: Vol. 4 No. 2, December 2010 Empirical Evidence of Rural Consumer Purchasing Behaviour EMPIRICAL EVIDENCE OF RURAL CONSUMER PURCHASING BEHAVIOUR OF GROCERY ITEMS IN AGRICULTURAL FAMILIES OF ADILABAD DISTRICT Nainar. Reddy. P.* and Dr. D. Raghunatha Reddy** ABSTRACT Customers make purchases in order to satisfy their needs. Firms can satisfy those needs only to the extent when they understand their customers. The wealth of products and services produced in a country make our economy strong. The behaviour of human beings during the purchase may be termed as purchasing behaviour. The article discusses consumer behaviour, decision process (pre and post), motives, and with respect to grocery items. Key Words: Grocery Items, Pre-decisions, Post-decisions, Consumer Behaviour, Villages. INTRODUCTION Stores are the places where buyers buy products whether it s planned or unplanned. These stores sell hundreds and thousands of products daily and consumers are consuming these products at the cost of their income. It only depends on the income of the person, that how much and how many times he or she visit, the shopping stores to buy products.tackling the buying resistance problem begins with understanding how consumers or companies make buying decisions. Buyers will typically go through various stages to make the decision to purchase. These stages occur in varying degrees depending on the complexity of the purchase and the buyer s behaviour. Consumers generally follow a five-stage process before they make buying decisions: i) Need/Want/Desire is recognized, ii) search for necessary information, iii) evaluate options iv) purchase, v) after-purchase evaluation. Consumer buying situations can take any of these four forms: a) Minor new purchase, b) minor re-purchase, c) major new purchase, and d) major Re-purchase. Most marketing efforts aim to influence consumer behaviour. Consumer behaviour is affected by many uncontrollable factors. Just think, what influences you before you buy a product or * Research Scholar, School of Management Studies, Jawaharlal Nehru Technological University Hyderabad, Kukatpally, Hyderabad, Andhra Pradesh. nainar81@gmail.com ** Professor, School of Management Studies, Jawaharlal Nehru Technological University Hyderabad, Kukatpally, Hyderabad, Andhra Pradesh. drreddy5@yahoo.com.

2 48 Nainar Reddy P. and Dr. D. Raghunatha Reddy service? Your friends, your upbringing, your culture, the media, a role model or influences from certain groups? Consumer behaviour essentially refers to how and why people make purchase decisions. Marketers strive to understand this behaviour so that they can better formulate appropriate marketing stimuli that will result in increased sales and brand loyalty. There are a vast number of goods available for purchase, but consumers tend to attribute this volume to the industrial world s massive production capacity. Rather, the giant known as the marketing profession is responsible for the variety of goods on the market. To understand consumer behaviour, experts examine purchase decision processes, especially that triggers that compel consumers to buy a certain product. For example, one study revealed that the average shopper took less than 21 minutes to purchase groceries and covered only 23 per cent of the store, giving marketers a very limited amount of time to influence consumers. And 59 per cent of all supermarket purchases were unplanned. Marketers spend a great deal of time and money discovering what compels consumers to make such on-the-spot purchases. Market researchers obtain some of the best information through in-store research, and will often launch new products only in select small venues where they expect a reasonable test of the product s success. In this manner, they can determine whether a product s success is likely before investing excessive company resources to introduce that product nationally or even internationally. Exogenous variables Culture Reference groups Needs & motives Endogenous variables Learning Individual Attitudes Selfconcept Personality Social status Family Vol. 4, No. 2, December 2010 Figure 1: Endogenous and Exogenous Factors Source: FAO Organization The behaviour of buyers is the product of two broad categories of influence; these are endogenous factors (i.e., those internal to the individual) and exogenous factors (i.e., those external to the individual). The more important of these two categories of factors are depicted in the figure 1.

3 Empirical Evidence of Rural Consumer Purchasing Behaviour Review of Literature A study conducted by Susan Powell Mantel focused on analyzing the roles of attributebased processing and attitude-based processing when analyzing consumer preference. Dominic F. Wilson (2000) studied and distinguished fundamentally between organizations and individuals in terms of their buying behaviour. Cobb and Hoyer studied on impulsive buying behaviour. According to them shopping life-style and the impulsive buying behaviour are closely related in the case of impulse buyers. Babin (2001) found that in stores consumer s purchasing intentions and spending can largely be influenced by emotions. Grover and Srinivasan (1992) determined the multiple effects of retail promotions on brand loyalty and brand switching segments. Foxman (1989) stated that the recent changes in demographic and household structure have increased consumer impact on their decision and their general involvement in family decision making. Moschis (1989) dealt with an important type of inter-personal communication. Orbany (1989) suggested that buyers searching for information prior to purchase is to reduce their uncertainty. Brown (1990) revealed the subtle difference between the awareness and the recognition. Shergill and Kaur (1993) found that the socio-economic and cultural background of consumers influences their buying behaviour. REASEARCH AND ANALYSIS Research Questions The key research questions for the study are: are rural customer brand conscious? how much a rural customer spends on grocery items? what are the purchasing factors does a rural customer see before buying a particular product? where do they prefer to shop? who decides in a rural family to buy products? Objectives To understand purchasing patterns of rural customers on grocery items. To know what is the amount spent on grocery items purchases. To understand the annual turnover of rural agriculture families. To know the purchasing factors of rural customer. To understand whether a rural customer is brand conscious. Methodology The data were collected from 70 agricultural families of Adilabad district of the state Andhra Pradesh through questionnaire constituting the sample frame. Direct personal interview method was adopted considering on an average of 250 households in a village. It was in this context that a research study was carried out to study the rural consumer purchasing behaviour of grocery items in the families of Adilabad district. Analysis of Results 1) What is the annual income?

4 50 Nainar Reddy P. and Dr. D. Raghunatha Reddy Vol. 4, No. 2, December 2010 Table 1: test statistics Annual Income a a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is Inference: The obtained chi-square value is at 3 degrees of freedom, the significance value is less than 0.05 and suggests that there is significant importance for annual income of agricultural families on consumer purchasing behaviour of grocery items in the agricultural families of Adilabad district. 2) How much money you spent on grocery items in a year? Table 2: test statistics Money Spent a a.0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is Inference: The obtained chi-square value is at 3 degrees of freedom; the significance value is less than 0.05, suggests that there is significant importance for money spent on consumer purchasing behaviour of grocessory items in agricultural families of Adilabad district. 3) How many times you buy grocery items in a year? Table 3: Chi Square Test Statistics No. of times a Asymp. Sig..033 a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is Inference: The obtained chi-square value is at 3 degrees of freedom, the significance value is less than 0.05 and suggests that there is significant importance for number of times on consumer purchasing behaviour of grocery items in agricultural families of Adilabad district. 4) Where do you buy your grocery items? Table 4: Chi square test statistics Location a a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 17.5.

5 Empirical Evidence of Rural Consumer Purchasing Behaviour Inference: The obtained chi-square value is at 3 degrees of freedom, the significance value is less than 0.05 suggests that there is significant importance for where do you buy on consumer purchasing behaviour of grocery items in agricultural families of Adilabad district. 5) What is the deciding factor when you are buying grocery products? Table 5: Chi square test statistics Purchasing factors a a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is Inference: The obtained chi-square value is at 3 degrees of freedom, the significance value is less than 0.05 suggests that there is significant importance for what do you see on consumer purchasing behaviour of grocery items in agricultural families of Adilabad district. 6) Who is the decider when you are buying grocery items? Table 6: test statistics Decider a a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is Inference: The obtained chi-square value is at 3 degrees of freedom, the significance value is less than 0.05 suggests that there is significant importance for who decide on consumer purchasing behaviour of grocery items in agricultural families of Adilabad district. 7) Are you brand conscious? Table 7: test statistics Brand Preference a df 1 a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is Inference: The obtained chi-square value is at 1 degrees of freedom, the significance value is less than 0.05 suggests that there is significant importance for whether they ask for brands on consumer purchasing behaviour of grocery items in agricultural families of Adilabad district. 8) Do you find any difference between rural kirana and urban kirana while purchasing grocery items?

6 52 Nainar Reddy P. and Dr. D. Raghunatha Reddy Table 8: test statistics Difference a df 1 a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is Inference The obtained chi-square value is at 1 degrees of freedom, the significance value is less than 0.05 and suggests that there is significant importance for do u find any difference of goods in village kiranas and urban shops on consumer purchasing behaviour of grocery items in agricultural families of Adilabad district. Factors Relationships and Dependency for Consumer Purchasing Behaviour Table 9: Correlations Annual No. of times Money spent Location income Annual Income Pearson Correlation **.965 **.873 ** No. of times Pearson Correlation.818 ** **.807 ** Money spent Pearson Correlation.965 **.819 ** ** Location Pearson Correlation.873 **.807 **.844 ** 1 Purchasing Factors Pearson Correlation.923 **.835 **.910 **.860 **.000 Decider Pearson Correlation.913 **.802 **.891 **.849 **.000 Brand preference Pearson Correlation.711 **.429 **.663 **.734 **.000 **. Correlation is significant at the 0.01 level (2-tailed). Vol. 4, No. 2, December 2010

7 Empirical Evidence of Rural Consumer Purchasing Behaviour Table 10: Correlations Purchasing Decider Brand Factors Preference Annual Income Pearson Correlation.923 **.913 **.711 ** No. of times Pearson Correlation.835 **.802 **.429 ** Money Spent Pearson Correlation.910 **.891 **.663 ** Location Pearson Correlation.860 **.849 **.734 ** Purchasing Factors Pearson Correlation **.673 ** Sig. (2-tailed) Decider Pearson Correlation.847 ** ** Sig. (2-tailed) Brand Preference Pearson Correlation.673 **.753 ** 1 Sig. (2-tailed) **. Correlation is significant at the 0.01 level (2-tailed). Inference: First let us check the correlation of all variables with each other. The above correlation table is indicating the value from 0 to 1 (+ve). By observing all columns the analysis should be like this annual income and money spent highly positively correlated, money spent, location, purchasing factors, decider, brand preference and annual income highly positively correlated to each other. Regression Analysis Table 11: Model Summary Model R R Square Adjusted R Std. Error of Square the Estimate a a. Predictors: (Constant), brand preference, no of times, money spent, location, purchasing factors, decider.

8 54 Nainar Reddy P. and Dr. D. Raghunatha Reddy Table 12: ANOVA b Model Sum of Squares df Mean Square F Sig. 1 Regression a Residual Total a. Predictors: (Constant), brand preference, no of times, money spent, location, purchasing factors, decider. b. Dependent Variable: annual income. Before we use the equation we need to look at the statistical significance of the model and R 2 value is.955 which is statistically highly significant. We also note that then t-test for significance of individual independent variable indicates that the significance level is.000. Table 13: Coefficients a Model Unstandardized Coefficients Standardized t Sig. Coefficients B Std. Error Beta 1 (Constant) no of times money spent location Preference factors decider Brand preference a. Dependent Variable: annual income Only annual income and other tested variables are statistically significant in this model. However, for the time being we shall use the model as it is and try to apply it for decision making. The real use of the regression model would be to try and predict whether consumer purchasing behaviour of grocery items influence equation would be like. Annual income = (no of times)+.633(money spent)+.088(location)+.165 (purchasing factors)+.201(decider)+.062( brand preference). The above equation reveals that the annual income of agriculture families is negatively attracted by number of times do a customer buy a grocery items in a year and annual income is positively attracted by money spent, location, purchasing factors, decider, brands preference. At the same time the t value coefficients of variables also has strong positive influence of money spent, location, purchasing factors, decider. Vol. 4, No. 2, December 2010

9 Empirical Evidence of Rural Consumer Purchasing Behaviour Factor Analysis Table 14: KMO and Bartlett s Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy..714 Bartlett s Test of Sphericity Approx. Chi-Square df 15 Sig..003 Before applying Factor analysis the KMO-Bartlett s test was conducted to check sample adequacy and test of Sphercity where both are more significant with KMO value is.714 more than.05 and Barltlet value is highly significant with.003. Table 15: Total Variance Explained Component Initial Eigen values Extraction Sums of Squared Loadings Total % of Cumulative Total % of Cumulative Variance Variance % dimension Extraction Method: Principal Component Analysis Table 16: Component Matrix a Component 1 2 Annual turnover no. of times money spent location Purchasing factors decider brand preference Extraction Method: Principal Component Analysis. a. 2 components extracted.

10 56 Nainar Reddy P. and Dr. D. Raghunatha Reddy The Extraction Sums of Squared Loadings are at 73 per cent which indicate 27per cent data were extracted. After conducting this test we approached for factor analysis where the first most influencing factor are number of times and annual turnover also called as high income families and 2 nd influencing factor is highly influenced on consumer purchasing behaviour of grocery items of agriculture families. Vol. 4, No. 2, December 2010 CONCLUSION Many companies are not successful in understanding rural customers. Understanding the rural consumer s needs and buying process is the foundation of any successful rural marketing for any company. Marketers can get many clues to meet buyer needs by understanding their decision-making process and the major factors that influences their purchasing behaviour,. The key factors that influence consumer behaviour are motivation, culture, age and gender, social class, life-style, life cycle, and reference groups. It has been suggested that there are three levels of buying commitment, which are dependent on the nature of the purchase: extended problem solving, limited problem solving and habitual problem solving. It is also proposed that there are five buying roles: initiator, influencer, decider, buyer and user. A consumer moves through a number of stages leading up to purchase: awareness, information gathering, and formation of an attitude, evaluation, purchase and post-purchase. A marketer will also need to understand the buying phases for organizations. The conference market, for example, follows a pattern of group decision-making, and the buy phase has been described as follows: problem recognition, general need description, product specification, supplier search, proposal solution, supplier selection, order routine specification and performance review. REFERENCES Babin, B.J. and Babin, L.(2001). Seeking Something Different? A Model of Schema Typically, Consumer Affect. Purchasing Intentions and Perceived Shopping Value. Journal of Bussiness Research, 54(2), Berelson, B. and Steiner, G.A. (1964). Human Behavior: An Inventory of Scientific Findings, Harcourt Brace Javanovich, New York. Bijoor, Harish (n.d.). Marketing Trends, Vikas Publishing House (P.)Ltd. Cobb, C.J and Hoyer, W.D. (1986). Planned verses Impulsive Buying Behaviour. Journal of Retailing, 62(4), Du Pont, D.N and company (1965). Consumer Buying Habits Studies, DE Du Pont De Nemorus and company. Engel, J.F., Blackwell, R.D. and Kollat, D.T. (1973). Consumer Behavior, Holt, Rinehart and Winston, New York. Greaff, T.R. (1997). Consumption Situations and the Effects of Brand Image on Consumers Brand Evaluations. Psychology and Marketing, Haire, M. (1950). Projective Techniques In Marketing Research. Journal of Marketing, Hawkins, Delbert, Best, Roger, Coney, Kenneth (2003). Consumer Behavior: Building Marketing Strategy. New York: McGraw-Hill/Irwin 9th Edition. Levy, Michael and Weitz, Barton A. (2007). Retail Management, Tata Mcgraw Hill.

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