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CHAPTER-5

CONSUMER BEHAVIOR IN RURAL MARKET

INTRODUCTION

CULTURAL FACTORS

GEOGRAPHIC INFLUENCE

ECONOMY, EMPLOYMENT AND LIVELIHOODS

PROMOTION OF SHGs GROUPS

CONCLUSION

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CHAPTER-5

CONSUMER BEHAVIOR IN RURAL MARKET

South Rajasthan is consisting of the 5 most tribal districts of the state and

being inhibited dominantly by the local tribal families, who have been

deprived of their access to main stream of development and their means of

living is mainly dependent on rain fed agriculture, labor, migration, small

dependence on forest and also on few locality based small enterprises. The

experience of agricultural input industry can act as a guideline for the

marketing efforts of consumer durable and non-durable companies. The low

rate finance availability has also increased the affordability of purchasing the

costly products by the rural people. Marketer should understand the price

sensitivity of a consumer in a rural area. The urban metro products and

marketing products can be implemented in rural markets with some or no

change. The rural marketing required the separate skills and techniques from

its urban counterpart. The Marketers have following facilities to make them

believe in accepting the truth that rural markets are different in so many

terms.

(i) The rural market has the opportunity for.

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(ii) Low priced products can be more successful in rural markets because

the low purchasing, purchasing powers in rural markets.

(iii) Rural consumers have mostly homogeneous group with similar needs,

economic conditions and problems.

(iv) The rural markets can be worked with the different media

environment as opposed to press, film, radio and other urban centric media

exposure.

A free market economy provides freedom to the consumers to buy and

consumer goods of their choice. The buying preferences of consumers send

signals to producers to produce various commodities in required quantities.

Producers, therefore, produces only those commodities which are desired by

the consumers. The buying behavior of the rural consumers is influenced by

several factors, such as socio-economic conditions, cultural environment,

literacy level, occupation, geographical location, efforts on the part of

sellers, exposure to the media, etc.

1. Cultural factors influencing consumer behavior

Cultural factors exert the broadest and deepest influence on consumer

behavior. The marketer needs to understand the role played by the buyer‘s

culture. Culture is the most basic element that shapes a person‘s wants and

behavior. In India, there are so many different cultures, which only goes on

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to make the marketer‘s job tougher. Some of the few cultural factors that

influence buyer behavior is: Product (color, size, design, and shape): There

are many examples that support this point. Urban India looks at technology

with the viewpoint of ‗the smaller the better‘. However, in rural India, the

viewpoint is totally opposite. That is the main reason for the large

acceptance of big audio systems. There are so many different cultures, and

each culture exhibits different social practices. For example, in a few

villages they have common bath areas. Villagers used to buy one Lifebuoy

cake and cut it into smaller bars. This helped lifebuoy to introduce smaller

75-gram soap bars, which could be used individually. The male in Indian

culture has always been given the designation of key decision maker. For

example, the Mukhiya‘s opinion (Head of the village), in most cases, is

shared with the rest of the village. Even in a house the male head is the final

decision maker. This trend is very prominent in rural areas. 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 occasions;

poor roads; power problems; and inaccessibility to conventional advertising

media. However, the rural consumer is not unlike his urban counterpart in

many ways.

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2. Geographic Influences:

The district is predominantly inhabited by tribal‘s mainly Bhils, Bhil

Meenas, Damor, etc. The main occupation of the people, especially of

tribal‘s, is agriculture. The tribal‘s live in small one-room houses, known as

"tapra", which lie scattered all over the area. The other major castes are

Patels, Rajputs, Brahmans, Mahajans, and Muslims. Literacy percentage is

67.06 (2011) but women literacy, though doubled as per 2011 census, is only

52.66%. Rajasthan is home to many tribes who have very interesting history

of origin, customs and social practices. At that time the Bhil and Mina tribes

roamed and ruled the land. They were respected by the Sakas, Kusanas,

Abhiras, Hunas and others. Today, they may be considered a backward

people but that does not, in anyway, call for any pejorative interpretations of

their primitivism.

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3. Education

School Education

Schools Total No. 2010-11 124048

Pre-primary ‖ ‖ 49853

Upper primary

‖ ‖ 51955

Secondary & Sr. Sec. ‖ ‖ 22240

Enrolment total ” ”

(Boys)

‖ ‖ 85.93

(Girls)

‖ ‖ 66.57

Pre Primary

(Boys)

‖ ‖ 4625562

(Girls)

‖ ‖ 4024141

Upper Primary

(Boys)

‖ ‖ 2033845

(Girls)

‖ ‖ 1513386

Secondary & Sr.sec.

(Boys)

In lakh Sep 2010 19.35

(Girls)

‖ ‖ 11.20

Literacy rate

(Population aged 7 yrs &

above)

% 2011 67.06

4. Economy, employment and livelihoods

The State economy has demonstrated reasonable progress in recent years.

The State Gross Domestic Product (SGDP), at 2004-05 constant prices, has

grown with a cumulative average real growth rate of 5% p.a. over last 4 yrs

and 9.69% during 2010-11.The per capita income at current prices is Rs.

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39,967. The share of tertiary sector has grown gradually over the years,

while share of primary sector has reduced gradually over the years.

Share of sectors in SGDP Till 2010-11 at constant (2004-05) prices

The increase in share of agriculture sector in 2010-11 from 19% to 21.6%

has been majorly due to 27% increase in agriculture contribution to total

SGDP during last year, owing to robust monsoon.

5. Primary Sector

5.1 Agriculture

The role of agriculture sector in the state economy is quite significant, not

only for its contribution of 21.6% to the total SGDP ( 2010-11) but also for

its contribution to employment, as it employs 62% of state's workforce.

Agriculture in Rajasthan is mostly dependent on rainfall that remains

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scantly, low and irregular. Primarily rain fed, the State has major part of the

irrigation area under tube wells and wells. Only about 30% of the cropped

area is irrigated. Since major part of the state is 'rain fed', the rain fed

integrated agriculture system holds the key for agriculture development.

Majority of small and marginal farmers do agriculture at subsistence level

(they grow food and fodder for household consumption). Even if they have

small surpluses, they sell it off locally to buy other needs of the household.

Though the average land holding of farmers in Rajasthan is relatively better

than the holdings of farmers in rest of the country, the inequality in land

holding is an important issue. Small and marginal farmers constitute about

50% of the total farmers with only about 11% of the total land area. The

large land owners account for 9.1% of the number of landholders and

account for about 43% of the land area. Per capita value of agricultural

output in Rajasthan indicates that Rajsamand, Dungarpur, Barmer, Sirohi

and Udaipur lie at the bottom of per capita agricultural output index.

Irrigation facilities are poor in these districts. On other hand, Kota and Baran

have highest per capita agricultural output.

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Per capita agricultural output in Raj. (in Rs. P.a.)(2003-05)

High Moderate Low Very Low Extremely low

District Value District Value District Value District Value District Value

Kota 4370 Ganga

Nagar

3857 Bundi 2732 Sawai

Madho

Pur

1904 Jodh

Pur

1120

Baran 3962 Hanuman

Gargh

2874 Bharat

Pur

2373 Dhol

Pur

1901 Jaial

Mer

1088

Jhalawar 2847 Chittor

Gargh

2168 Karauli 1753 Bhil

Wara

1025

Tonk 2125 Jaipur 1656 Churu 977

Alwar 2017 Jhunjhunu 1631 Bans

Wara

880

Dausa 1606 Pali 753

Bikaner 1476 Ajmer 743

Nagaur 1412 Udaipur 595

Sikar 1278 Sirohi 582

Jalor 1246 Barmer 522

Dungar

Pur

503

Rajsa

Mand

353

5.2 Horticulture

The major horticultural crops in the state are orange, kinnow, lime, aonla,

chillies, garlic, Coriander, cumin, fenugreek, isabgol, mehandi etc. The

major initiative for promotion of horticulture in the state is National

Horticulture Mission. Under National Horticulture mission, an amount of

Rs. 29.31 cr has been incurred during 2010-11 to increase the area,

production and productivity of different horticulture crops like fruits, spices,

flower and medicinal crops in 24 districts. With Rajasthan being primarily

rainfed, horticulture holds the key for development in Rajasthan as there is

large scope for horticulture activities, esp. vegetable production. It has

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potential to provide additional employment opportunities to the rural people

while diversifying the rural economy to agro processing and other ancillary

activities. However, presently, the farmers, who are the most important and

critical actors in the agro- horticulture esp. vegetable value chain, have no

control over the value chain. Ownership, price fixation, value addition and

marketing of vegetable produce remain key issues and the farmers have

hardly any role in determining these, thus, subjecting them entirely to the

mercy of external factors without any bargaining power. One of the major

challenges is also the asymmetry of knowledge and information. This calls

for dedicated efforts by government to address imperfections in vegetable

value chain at various levels-capacity building, business development, value

addition, marketing and viability gap funding - keeping the interests of the

poor farmers at the highest priority. There is scope for creating a complete

eco-system (wherein capacity building, viability gap funding, business

development services and extension services can be provided) by

government, which gives incentive to private sector to invest, thereby,

giving much needed boost to the sector's growth. The intervention should

envisage strengthening the vegetable value chain on end-to-end basis and

creating strategic public-private partnerships for the benefit of all

stakeholders. Building community institutions of vegetable producers and

creating social capital for organizing the procurement thereby augmenting

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the livelihoods of producers; increase the downstream bargaining power etc.,

Building public private community partnership models around each

vegetable by laying well defined standards for procurement, storage,

processing and marketing Breaking technology barriers by effectively

transferring to the producers context-specific technology,

innovation/promotion of drudgery reduction tools, value-addition technology

etc Removing information asymmetry by supplying/publishing real-time

market Information to all stakeholders Facilitating critical investments for

creating appropriate infrastructure facilities- storage, processing; logistics,

working capital management etc. Enabling policy for eliminating barriers in

movement of vegetables and other issues.

5.3 Animal Husbandry

Traditionally animal husbandry has been an important source of

supplementary income to farmers in Rajasthan. As agriculture is at the

mercy of monsoon (which is scarce and erratic), farmers do animal rearing

along with agriculture. The farmers, who have productive land and irrigation

facility, rear cattle, while the small and marginal farmers rear goat and

sheep. With introduction of irrigation systems through Indira Gandhi Nahar

Pariyojna (IGNP) in western Rajasthan and other irrigation projects in rest of

the state, farmers have started replacing local breeds of cows with cross bred

cows and buffalos. The state is the main producer of wool in the country (40

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%), though the quality of wool is poor and mainly used for making carpets

and blankets. About 30 lakh sheep are sold in the mutton market but the

return to sheep owners is very low due to a lack of an organized

marketplace. The dependence on livestock has decreased over the years due

to fodder scarcity and low productivity of livestock. Though the production

of milk accounts for 10 % of the total national production, the milk

productivity of cattle (cows and buffaloes) is lowest in the state due to poor

breeds and nutritional practices. There is huge potential for growth.

Moreover, milk collection many a times becomes unviable because of large

distances, with low density of milk producers (and therefore, low volume of

milk). Due to scattered habitations (especially in western parts and tribal

areas in southern districts) the milk collection carries risk of milk getting

spoilt. Milk collection entails opportunity costs like fuel cost, labor cost,

storage cost etc and large distances, with low volume, many a times, renders

milk collection unprofitable. In Rajasthan, focus also needs to be given to

Stall fed goat rearing, which can be an ideal Occupation for the small,

marginal, and landless agricultural laborers. Goats relish the stalks and

residues of most of the nutritious cereals, and they do well particularly when

mixed with green fodder such as grasses and tree pods.

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6. Secondary and Tertiary Sector

The secondary sector in Rajasthan contributes to 29.8% of SGDP, while the

tertiary sector has assumed greater importance in the state as it contributes to

over 48.6% of SGDP at current prices. Indices of Industrial Production The

secondary sector includes manufacturing activity, mining & quarrying,

electricity, gas & water supply and all other construction related activities.

The indices of industrial production (manufacturing index, mining index,

general index etc) indicate a drop in growth of secondary sector in Rajasthan

during last year. Manufacturing growth fell to 1% during the year compared

to 14% growth the previous year. This can be partially attributed to overall

economic slowdown. Mining growth also fell to 1% during the year

compared to 7% growth the previous year.

% growth in indices of Industrial Production in Raj. 2010

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6.1 Employment

Unemployment is a serious threat to the State's economy. During the period

of January to December, 2010 the number of unemployed persons registered

in various Employment Exchanges were 2,00,752, out of which 28,994 were

women, 32,389 were scheduled However, in spite of these initiatives,

investment friendly environment still seems a distant reality.

6.2 Small Scale Industry

Small scale industry forms the backbone of industrial activity and

employment generation in Rajasthan. In fact, the small scale industry

generates more employment than its large a medium counterparts. Over 70

per cent of Rajasthan's industrial output comes from foregions dominated by

small scale industries: Jaipur, Bhilwara, Udaipur and Ganganag account for

39%, 18%, 9% and 4% of the State's industrial output, respectively. The key

districts driving industrial growth are Ajmer, Alwar, Barmer, Bharatpur,

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Bhilwara, Bikaner,Bundi, Chittorgarh, Jaipur, Jodhpur, Kota and Udaipur.

The informal sector contribution significantly to employment in Rajasthan;

there are an estimated 18.4 lakh enterprises the informal sector in the State,

generating employment for 29 lakh workers. Also, over 70 of the enterprises

in the informal sector are currently involved in activities related

manufacturing, trade, and repair activities.

6.3 Mining and Quarrying

Mineral wealth is an important natural resource in Rajasthan. The State

enjoys a near monopoly in the country in some of the non-ferrous minerals

such as lead, zinc and copper State produces large quantity of building

stones, marble, granite, and Kota stone, which exported to other states.

Rajasthan is the second largest mineral producing state and the largest

producer of cement.

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Workforce distribution in Rajasthan

Primary Sector Agriculture, Forestry 53%

Seconadary Sector Mining And Quarrying 1%

Manufacturing 6%

Tertiary Sector Construction 19%

Whole sale and retail trade;

repair of motor vehicles,

motorcycles, personals and

household goods

8%

Hotels and restaurants 1%

Transport, Storage and

communications

4%

Real estate, ranking and

business activities

1%

Public administration and

defence;

Compulsory social security

1%

Education 3%

Other Community, social and

personal service activities

2%

The primary sector in Rajasthan employs 62% of the workforce and

contributes to 21.6% State GDP. The tertiary sector employs 38% of

workforce and contributes to 48.6% of State GDP. The secondary sector

employs only 7% of workforce and contributes to 29.8% of SGDP.

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Rural Poor

Rural poor depend on moneylenders and friends/ relatives for credit. Due to

numerous reasons, they have low access to formal sources of credit. The

credit from informal sources comes at very high cost i.e. at 24% to 60%

annual interest. The immediate propensity of poor is to pay off costly loan

from moneylenders and then to use it for meeting their consumption needs,

health expenditures and after some time, start making small investments to

augment their livelihood sources e.g. seeds and other inputs, fodder for

animals etc. Once these needs are fulfilled, poor start making investments on

assets (capital investments) like deepening of wells, pipes for irrigation,

purchase of animals and so on. On an average a poor family needs about Rs.

20000/- credit (in multiple doses) every year to meet their consumption and

small working capital needs. If sustainable livelihood is to be ensured and

people have to be brought out of poverty, then a family would need at least

Rs.60,000/-credit (cumulative) over a period of 2-3 years (see box below).

This translates into total annual credit demand of Rs. 11000 crores. If the

demand is to be seen within the overall framework of 'livelihood finance'

then the micro credit market can be estimated to be around Rs. 33,000 crores

in next 2-3 yrs.

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Reasons for decline in time spent on Agriculture Raj. In Last 5 Yrs

Eastern Raj Over 37% households have decreased time on

agriculture because of scarcity of water (84%) and

shortage of finance (37%)

Southern Raj Over 71% of households have decreased time on

agriculture because of scarcity of water (55%) and

shortage of finance (30%)

Central Raj Over 53% households have decreased time on

agriculture because of scarcity of water (93%),

unfertile land (46%) and shortage of finance (46%)

Northern Raj Over 50% households have decreased time on

agriculture because of scarcity of water (43%) and

shortage of finance (25%)

Western Raj Over 66% households have decreased time on

agriculture because of scarcity of water (58%) and

finance (31%)

Reasons for decline in time spent on animal husbandry in Rajasthan 'No

access to finance' has been found to be one of major reasons for decrease in

dependence on livestock. Had there been access to credit for animal

husbandry, livelihood income could have been increased.

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Reasons for decline in time spent on animal husbandry in Raj in last 5

yrs

Eastern Raj Over 33% households have decreased time on livestock

because of shortage of feed (86%) and shortage of finance

(66%)

Southern Raj Over 55% of households have decreased time on livestock

because of shortage of feed (78%), shortage of finance

(47%) and lack of veterinary doctor (33%)

Central Raj Over 42% households have decreased time on livestock

because of shortage of feed (86%) and shortage of finance

(70%)

Northern Raj Over 33% households have decreased time on livestock

because of shortage of feed (41%) and shortage of finance

(33%)

Western Raj Over (50%) households have decreased time on livestock

because of shortage of feed (45%), lack of access of

veterinary doctor support and shortage of finance (29%)

As can be inferred from observations in box above, a negligible proportion

of poor are financially included for ‗livelihood credit‘ in rural Raj. There is

huge unmet demand for livelihood credit in rural Raj.

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Promotion of self help groups

There is no comprehensive database of self-help groups in the state. It is

difficult to compile the data of all SHGs in the state because of various

reasons like double reporting (more than one agency reporting the same

group) and groups going defunct etc. Many SHPIs are hesitant to share the

information on their groups. The only reference point for counting of SHGs

is the data on bank accounts of SHGs. As on March 2011, total 2, 33,793 to

2, 51,990 SHGs have been reported as having bank account. But there is

problem in taking this as reference as well, as there are good numbers of

groups that are not having bank accounts. Moreover, the data received from

NABARD and SGSY is way different from another and confusing. Many

SHGs become defunct after some time due to various reasons like a) the

promoting organization is not able to regularly visit the group, b) there is

conflict among group members, c) SHG fails to link with bank and d)

members distribute their savings among themselves and stop meeting and so

on. More reasons for loan defaults will be discussed in later section. But

such groups are seldom removed from the list of SHGs reported by the

SHPIs.

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Saturation index of SHG movement in Raj as of march 2011

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District-wise credit disbursal (SHG credit disbursal Index of Rajasthan)

Taking the SHGs promoted by SGSY and DWCD as representative sample

(combined reported SHGs promoted by SGSY and DWCD account for 77%

of total groups in Rajasthan) a ―district-wise credit disbursal index‖ has been

calculated. The index provides ranking of districts as per credit disbursed per

SHG during the year. Districts like Jalore, Dungarpur, Bikaner, Banswara

and Barmer have relatively lower amount of credit disbursal per group.

Districts like Hanumangarh, Jaisalmer, Dausa, Ajmer, Baran, Alwar and

Tonk have relatively higher amount of credit disbursal per group. The

Department of Women and Child Development (DWCD) has promoted

largest number of the groups in Rajasthan (214502 till March, 2011). The

department has a cadre of women workers (Aanganwadi Workers and

Sathins at village level) who organise women Self Help Groups. Total

saving of the groups has been Rs. 142.53 crores. Compared to savings, only

Rs. 94.64 crores has been disbursed by banks as credit during 2010-11. That

credit too is estimated to be distributed only among 10.26% of SHGs.

Further analysis of data provided by DWCD indicates that only 50% SHGs

are engaged in internal lending. Department of Rural Development,

Government of Rajasthan is promoting Self Help Groups through its three

main programmes - Swarnjayanti Gram Swarojgar Yojana (SGSY, now

NRLM), District Poverty Initiative Project (DPIP, now RRLP) and Mpower.

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Recently, the government of Rajasthan constituted a society named

Rajasthan Grameen Aajeevika Vikash Parishad (RGAVP), registered under

The Society Registration Act of Rajasthan of 1958, as an umbrella

implementation agency, for implementing its key schemes. The Chief

Minister is the President of the society, whereas the Chief Secretary of the

Government of Rajasthan is the Chairperson of the Empowered Committee.

A full-time CEO (an IAS officer) has been appointed as the state mission

director of 'livelihoods and SHG programs' of the society. He has also been

made the project director of the World Bank funded Rajasthan Rural

Livelihoods Project (RRLP). The Government of Rajasthan has initiated

pilots in the district of Bhilwara and Rajasamand with the support of Society

for Elimination of Poverty (SERP), Andhra Pradesh. Both the district

administrations have signed an MOU with the SERP to implement the CRP

strategies and take support of project resource professionals for promotion of

SHGs and their capacity building. Further, preparation for expanding this

pilot initiative to two more districts i.e. Banswara and Dungarpur is under

way. An analysis of support provided to SHPIs by NABARD during 2010-

11 indicates that the progress has not been encouraging. Out of Rs. 3.49

crores sanctioned to SHPIs, only Rs. 0.73 crores has been released. Out of

target of 10300 SHGs, only 3575 (35%) groups were actually promoted and

only 1464 (14%) were credit linked. Poor performance of credit linkage and

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group formation might be attributable to low financial support to SHPIs in

absolute terms. Even though NABARD's objective has been to supplement

SHPIs finances through its financial support, it seems that SHPIs are

promoting SHGs from NABARD's financial support only. Figures indicate

that only Rs. 0.73 crores has been released to promote 3575 SHGs in 124

Rajasthan. This translates to Rs. 2047 per group for promotion and credit

linkage. Actual 125 cost of promotion of one SHG is estimated to be around

Rs. 15,000 over a period of 3 years. Therefore, SHPIs find it difficult to

remain financially sustainable and usually quit before completion of the

projects.

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Achievements of SSV partners

Achievements of

few SSV

partners

Current Status Mar 11

No. of

SHGs

Savings

mobilized

mar11

No. of

SHGs

bank

linked

Loan

outstanding

Credit

mobilized

from external

PEDO 1786 77,522,042 1248 138,143,729 185,478,710

Ibtada 660 22,157,000 470 36,969,800 198,800,000

PRADHAN 720 13,323,231 134 22,147,980 14,044,000

SRIJAN 439 4,826,859 90 4,488,979 11,085,500

GDS 260 4,233,745 105 11,792,010 17,170,000

Access dev.

Services

67 581,929 12 0 99,450

GSVS 100 2,700,980 62 7,595,039 8,145,000

GMVS 310 1,34,45,755 220 5,48,15,810 3,98,80,500

Navachar Sansthan 86 1,614,950 50 1120,031 1,006,500

Saheli samiti 215 3,148,000 30 5,199,357 4,789,000

Cmf (urban pilot) 86 1,293,190 0 1,297,384 0

Cmf (Rural pilot) 173 2,557,826 45 481,265 1,847,000

Total 4,902 14,74,05,507 2,466 28,40,51,384 48,23,45,660

About 4902 SHGs have been promoted by SSV partners and Rs. 14.74 cr

saving has been mobilized (equivalent to Rs. 30,070 per SHG). The SHGs

have loan outstanding of Rs. 28.4 cr equivalent to Rs. 57,946 per SHG.

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Conclusion

The cash inflow of a household in Rajasthan is broadly generated from labor

wage Employment, agricultural wage employment, agriculture, livestock,

micro-enterprises and remittances from family members who have migrated.

The cash outflow is primarily on expenditure incurred on food, clothes,

education of children, household expenses, cattle feed, local conveyance,

health etc. In addition, there is substantial expenditure on life events like

marriage, birth, death; on health related events and construction of house;

and investments like deepening of wells/ new wells, pump sets, tractors etc.

Given this context, savings, credit and insurance have been found to be the

three prime financial services those poor needs. Before we elaborate on them

further, it's important to understand the economic profile of poor in

Rajasthan. Though the sector is growing at a fast pace, it is still not

attracting enough skilled human resources. There is a need of an institutional

mechanism for overcoming the demand and supply gap of staff at various

levels for livelihood interventions within the state. The capacity building of

project staff at state, district, block, and cluster and village level can be done

through partnering with academic institutions/NGOs like Center for

Microfinance. There are multiple examples of successful courses and

training programmers for capacity building on microfinance and livelihoods.