GROUP: 04

BUYING BEHAVIOUR OF RURAL

PEOPLE IN FMCG PRODUCTS

SUBMITTED TO: SUBMITTED BY:

Sushant Mittal Sir Mani Gupta

Respected faculty, Shobhna Choudhary

IPM-Meerut. Swati Choudhary

Rashmi Singhal

ACKNOWLEDGEMENT

With immense pleasure, we would like to present this report on

“buying behaviour of rural people in FMCG products”. It has been an

enriching experience for us, which would not have been possible

without the goodwill and support of the people around. As a student of

INSTITUTE OF PRODUCTIVITY AND MANAGEMENT we would like to

express our sincere thanks to Sushant Mittal sir who helped us during

the report.

As we know assignment needs hard work, keen insight and long

patience with scholarly vision based on content operation hence it

becomes a humble duty to express our sincere gratitude to Sushant

Mittal sir.

Last but not the least, I must thank to all the respondents of the

village who gave me their precious time and information necessary

without which completion of this project might have remained a

dream.

However, we accept the sole responsibility for any possible error of

omission and would be extremely grateful to the readers of this project

report if they bring such mistakes to our notice.

Contents

Chapter

no.

Title Page no.

1 General Introduction 1

2 Theoretical Background of the Study

3 Design of the Study

4 Analysis & Interpretation

5 Findings, Suggestions & Conclusions

Annexure:

a) Bibliography

b) Questionnaire

SCOPE OF THE STUDY

As learning is a human activity and is as natural, as breathing. Despite

of the fact that learning is all pervasive in our lives, psychologists do

not agree on how learning takes place. How individuals learn is a

matter of interest to marketers. They want to teach consumers in their

roles as their roles as consumers. They want consumers to learn about

their products, product attributes, potential consumers benefit, how to

use, maintain or even dispose of the product and new ways of

behaving that will satisfy not only the consumer’s needs, but the

marketer’s objectives also.

The scope of our study restricts itself to the analysis of rural people

preferences, perception about FMCG products. The scope of our study

is also restricts itself to village only.

OBJECTIVES

The subject matter for this research Project is to study

The buying behaviour of rural people in FMCG product in . This project

consists of different objectives. They are as follows:

To know the buying behaviour of rural people towards FMCG

products on demographic basis.

To find out relative customer perception.

Role of advertisements on the buying decision of rural

people.

RESEARCH METHODOLOGY

The systematic approach is essential in a good research. The

methodology adopted in this report was based on the primary as well

as secondary data source of information. The major emphasis is on

discovery of ideas and insights. It is a comprehensive analysis of the

facts and figures about the buying behaviour of rural people.

Research design:

Descriptive studies are well structured, they tend to be rigid and its

approach can not be changed every now and then. Descriptive study

can be divided in two categories:

(A) Cross sectional

(B) Longitudinal

Descriptive study is undertaken in many circumstances:

1. When the researcher is interested in knowing the characteristics

of certain groups such as age, profession.

2. When the researcher is interested in knowing the proportion of

people in given population who have behaved in a particular

manner, making projection of certain things.

The objective of this kind of study is to answer the why, who, what,

when and how of the subject under consideration.

The study, essentially descriptive in nature, is based on a field survey

having close and open ended questions The study is actually is

qualitative and quantitative survey and is understanding of the rural

customers behaviour/psychology for FMCG products. 

 

Sample design:

Complex random sample design has been taken for this study because

the data were collected at a single point of time and under this,

systematic sampling has been chosen.

Sample Size:

A sample of 100 people was taken.

Research Period:

Research work is only carried for weeks.

Research Instrument:

This work is carried out through questionnaire. The questions included

were open ended, dichotomous and offered multiple choices. As the

questionnaire is self administrated one, the survey is kept simple and

user-friendly. Words used in questionnaire are readily understandable

to all respondent. Also technical jargons are avoided to ensure that

there is no confusion for respondents.

Hypothesis:

We are also citizen of rural area .we used our experiences and

perceptions as hypothesis towards to make this project.

Data Collection:

The data, which is collected for the purpose of study, is divided into 2

bases:

Primary Source: The primary data comprises those which are freshly

collected. We used the following method of collection of the primary

data-

A. Interview method.

B. Questionnaire method.

Secondary Source: The secondary data was collected from internet

and references from library.

 After the collection of the data, from the various sources we analyzed

the data. We met 100 persons in the village to get the required answer

regarding their buying behaviour.

Data Analysis:

The data is analyzed on the basis of suitable tables by using

mathematical techniques. The technique that we have used is pie

charts.

INTRODUCTION

About 70% of India's population lives in rural areas. There are more

than 600,000 villages in the country as against about 300 cities and

4600 towns. Consumers in this huge segment have displayed vast

differences in their purchase decisions and the product use. Villagers

react differently to different products, colours, sizes, etc. in different

parts of India. Thus utmost care in terms of understanding consumer

psyche needs to be taken while marketing products to rural India.

Rural Consumers majorly look into the value that the product offers.

They associate value with the Benefits that the product offers, its

Availability, and its Cost. When talking of Benefits, they look at the

features of the product as well as the Packaging and attractiveness,

Availability, whether or not the products are available at Retail Shops

and Haats, Cost, whether or not the product is reasonably priced.

Thus, it is important to study the thought process that goes into

making a purchase decision, so that marketers can reach this huge

untapped segment.

Factors influencing buying behaviour:

The various factors that effect buying behaviour of in rural India are:

1. Environmental of the consumer - The environment or the

surroundings, within which the consumer lives, has a very strong

influence on the buyer behaviour.

2. Geographic influences - The geographic location in which the

rural consumer is located also speaks about the thought process of

the consumer. For instance, villages in South India accept

technology quicker than in other parts of India. Thus, HMT sells

more winding watches in the north while they sell more quartz

watches down south.

3. Influence of occupation – The land owners and service clan

buy more than agricultural laborers/farmers.

4. Place of purchase (60% prefer HAATS due to better quality,

variety & price) Companies need to assess the influence of retailers

on both consumers at village shops and at haats.

5. Creative use of product ex- Godrej hair dye being used as a

paint to colour horns of oxen, Washing machine being used for

churning lassie. The study of product end provides indicators to the

company on the need for education and also for new product ideas.

6. Brand preference and loyalty (80% of sale is branded items in

16 product categories)

Cultural factors influencing consumer behaviour:

Cultural factors exert the broadest and deepest influence on consumer

behaviour. 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 behaviour.

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

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

influence buyer behaviour are:

1. Product (colour, size, design and shape): There are many

examples that support this point.

For example,

2. Social practices : 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.

3. Decision-making by male head : The male in Indian culture

has always been given the designation of key decision maker.

For example, in a house the male head is the final decision

maker. In rural areas, this trend is very prominent.

4. Changes in saving and investment patterns From gold,

land, to tractors, VCR’s, LCV’s.

FMCG SECTOR

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods which have a quick turnover, and relatively low cost ). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as

well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars.

A subset of FMCGs are Fast Moving Consumer Electronics which include innovative electronic products such as mobile phones, MP3 players, digital cameras, GPS Systems and Laptops. These are replaced more frequently than other electronic products.

White goods in FMCG refer to household electronic items such as Refrigerators, T.Vs, Music Systems, etc.

Items in this category include all consumables (other than

groceries/pulses) people buy at regular intervals. A major portion of

the monthly budget of each household is reserved for FMCG

products. The volume of money circulated in the economy against

FMCG products is very high, as the number of products the consumer

use is very high. Competition in the FMCG sector is very high resulting

in high pressure on margins.

TOP TEN FMCG COMPANIES-

S. NO. Companies

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestlé India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8 Britannia Industries

9. Procter & Gamble Hygiene and

Health Care

10. Marico Industries

FMCG companies:

FMCG Companies spend a large portion of their budget on maintaining

distribution networks. New entrants who wish to bring their products in

the national level need to invest huge sums of money on promoting

brands. Manufacturing can be outsourced. A recent phenomenon in the

sector was entry of multinationals and cheaper imports. Also the

market is more pressurized with presence of local players in rural

areas and state brands. The Indian FMCG sector with a market size of

US$13.1 billion is the fourth largest sector in the economy. A well-

established distribution network, intense competition between the

organized and unorganized segments characterize the sector. FMCG

Sector is expected to grow by over 60% by 2010. That will translate

into an annual growth of 10% over a 5-year period. It has been

estimated that FMCG sector will rise from around Rs 56,500 crores in

2005 to Rs 92,100 crores in 2010. Hair care, household care, male

grooming, female hygiene, and the chocolates and confectionery

categories are estimated to be the fastest growing segments, says an

HSBC report. Though the sector witnessed a slower growth in 2002-

2004, it has been able to make a fine recovery since then.

For example, Hindustan Levers Limited (HLL) has shown a healthy

growth in the last quarter. An estimated double-digit growth over the

next few years shows that the good times are likely to continue.

Rural Consumers:

As socio-economic changes sweep across India, the country is

witnessing the creation of many new markets and a further expansion

of the existing ones. According to Pradeep Kashyap, chief executive

officer of MART Rural Solutions, speaking at the Calcutta Management

Association Rural Marketing Meet, over 300 million people would move

up from the category of rural poor to rural lower middle class between

2005 and 2025 and rural consumption levels are expected to rise to

current urban levels by 2017.

Mega retail chains are looking to build a high-quality supply chain—

retailers such as Bharti-Wal-Mart, Carrefour and Reliance are working

to strengthen their supply chain formula by roping in farmers as

stakeholders. Despite being the biggest names in the trade, these

retailers are ploughing rural areas to teach innovative farming

methods and find the best suppliers among them.

Growth Prospects in Rural India for FMCG Products:

With the presence of 12.2% of the world population in the villages of

India, the Indian rural FMCG market is something no one can overlook.

Increased focus on farm sector will boost rural incomes, hence

providing better growth prospects to the FMCG companies. Better

infrastructure facilities will improve their supply chain. FMCG sector is

also likely to benefit from growing demand in the market. Because of

the low per capita consumption for almost all the products in the

country, FMCG companies have immense possibilities for growth. And

if the companies are able to change the mindset of the consumers, i.e.

if they are able to take the consumers to branded products and offer

new generation products, they would be able to generate higher

growth in the near future. It is expected that the rural income will rise

in 2007, boosting purchasing power in the countryside. However, the

demand in urban areas would be the key growth driver over the long

term. Also, increase in the urban population, along with increase in

income levels and the availability of new categories, would help the

urban areas maintain their position in terms of consumption. At

present, urban India accounts for 66% of total FMCG consumption, with

rural India accounting for the remaining 34%. However, rural India

accounts for more than 40% consumption in major FMCG categories

such as personal care, fabric care, and hot beverages. In urban areas,

home and personal care category, including skin care, household care

and feminine hygiene, will keep growing at relatively attractive rates.

Within the foods segment, it is estimated that processed foods, bakery,

and dairy are long-term growth categories in both rural and urban

areas.

Indian Competitiveness and Comparison with the World

Markets:

The following factors make India a competitive player in FMCG sector:

Availability of raw materials

Because of the diverse agro-climatic conditions in India, there is a

large raw material base suitable for food processing industries. India is

the largest producer of livestock, milk, sugarcane, coconut, spices and

cashew and is the second largest producer of rice, wheat and fruits

&vegetables. India also produces caustic soda and soda ash, which are

required for the production of soaps and detergents. The availability of

these raw materials gives India the location advantage.

Labor cost comparison

Low cost labor gives India a competitive advantage. India's labor cost

is amongst the lowest in the world, after China & Indonesia. Low labor

costs give the advantage of low cost of production. Many MNC's have

established their plants in India to outsource for domestic and export

markets.

Presence across value chain

Indian companies have their presence across the value chain of FMCG

sector, right from the supply of raw materials to packaged goods in the

food-processing sector. This brings India a more cost competitive

advantage. For example, Amul supplies milk as well as dairy products

like cheese, butter, etc.

 DATA ANALYSIS AND

INTERPRETATION

After the data collection, it was compiled, classified and tabulated

manually and with help of computer. Then the task of drawing

inferences was accomplished with the help of percentage and graphic

method. Different suggestions given by me to the Company after

analyzing the views of every respondent are also given in the report.

Keeping in mind the objectives of the study, the survey was

being done and following interpretation was being drawn.

DEMOGARPHIC FEATURES OF REPONDENTS

1. Sex ratio of the respondents

S.NO. PARTICULARS NUMBER %AGE

A MALE

B FEMALE

                     INTERPRETATION: The graphical representation of the table shows that out of 100 respondents were male and were female.

2 AGE GROUP OF RESPONDENTS

S.NO. PARTICULARS NUMBER %AGE

A 15-25 %

B 25-35 %

C 35-45 %

D 45 above %

INTERPRETATION: The graphical representation of the table shows that out of total respondents % were of age 15-25, % 25-35, % 35-45, and rest were above 45.

3. LITERACY RATE AMONG THE RESPONDENTS

S.NO. PARTICULARS NUMBER %AGE

A BELOW MATRICULATE 8 16

B MATRICULATE 18 34

C INTERMEDIATE 19 38

D GRADUATION 6 12

INTERPRETATION: The graphical representation of the table shows that out of total respondents were below matriculate, were intermediate,graduateand rest .

             

 QUESTIONNAIRE

FMCG PRODUCTS-(Fast moving consumer goods): The most

common in the list are toilet soaps, detergents, shampoos, toothpaste,

shaving products, shoe polish, packaged foodstuff, household

accessories and extends to certain electronic goods. These items are

meant for daily of frequent consumption and have a high return.

        Dear Sir/Madam

  We are the student of MBA-II Semester at IPM, MODIPURAM doing a project

“BUYING BEHAVIUOR OF RURAL PEOPLE IN FMCG PRODUCTS” Please co-

operate to fill this questionnaire.

1. Name _________________________________________

2. Sex: (a) Male (b) Female

3. Age: (a) 15-25 (b) 25-35

(c) 35-45 (d) Above 45

4. Education: (a) Matriculate (b) Intermediate

(C) Graduation (d) Postgraduate

Q1) How much importance do you give to a brand name when asking

for FMCG products?

a) Very much         b) moderate        c) low

Q2) Which of the following influences you most when asking the

product?

a) TV. Commercial                                  b) press advertisement

c) in-store promotion                             d) gift scheme

 Q3) If you don’t get your favourite brand what will you do?

a) Take what the seller gives

b) Ask your next preference

c) Leave the shop

Q4) Let’s say the price of your brand goes up while the price of the

other brand remain same what will you do?

A) Change the brand                       b) remain the customer of brand

c) Go for economic one 

 

Q5) Distribute 10 points among the following 6 attributes based on the

importance they have in your purchasing decision? 

Attribute                                                                                           

Points

1-Price

2-packging

3-promotion schemes

4-advetrtising

5-availibility

6-quality 

Q6) Who suggests you to buy the brand you used?

a) Family member         b) friends            c)

neighbours            d) retailer/dealers 

7) For how long you are using the brand ?

a) Less than 6 months.

b) 6 to 12 months.

c) Above 12 months.

8) Would you like to switch over to a new product, if it will provide extra benefits?

a) Yes b) No

9) Do you advised by the retailer about any product for the use of a specific brand ?

a) Yes b) No

10) Do you think that you need information and awareness about any product of your use ?

a) YES b) NO

LIMITATIONS 

 

 

 

Although every effort is made to make this report as accurate and

appropriate but yet it has got some limitations. The limitations of our

study are---------- 

 

 

1. The study may be infested by the exaggeration of some

respondents.

 

2. It is possible that some potential source might have remained

untapped.

 

3. This study is limited to time.

 

4. we visited person to person to collect the opinion and their

perception and this may vary because of their replies.

 

5. Sometimes the person to whom we visited was busy in some

other work so they could not able to give proper time for

interview and filling the questionnaire hence some of the

answers may not be exact.

 

6. Some time due to lack of time the respondent were not really

able to give us proper time.

 

7. It is human behaviour to boast about them so it is possible that

they have exaggerated the facts.

 

QUESTIONNAIRE

FMCG PRODUCTS-(Fast moving consumer goods): The most

common in the list are toilet soaps, detergents, shampoos, toothpaste,

shaving products, shoe polish, packaged foodstuff, household

accessories and extends to certain electronic goods. These items are

meant for daily of frequent consumption and have a high return.

        Dear Sir/Madam

  We are the student of MBA-II Semester at IPM, MODIPURAM doing a project

“BUYING BEHAVIUOR OF RURAL PEOPLE IN FMCG PRODUCTS” Please co-

operate to fill this questionnaire.

1. Name _________________________________________

2. Sex: (a) Male (b) Female

3. Age: (a) 15-25 (b) 25-35

(c) 35-45 (d) Above 45

4. Education: (a) Matriculate (b) Intermediate

(C) Graduation (d) Postgraduate

Q1) How much importance do you give to a brand name when asking

for FMCG products?

a) Very much         b) moderate        c) low

Interpretations:From the above chart we can determine that more importance is given to the brand by rural consumers.

Q2) Which of the following influences you most when asking the

product?

a) TV. Commercial                                  b) press advertisement

c) in-store promotion                             d) gift scheme

Interpretations:T.V. commercials are the most influencing source of attracting the rural consumers toward a brand.

 Q3) If you don’t get your favourite brand what will you do?

a) Take what the seller gives

b) Ask your next preference

c) Leave the shop

Interpretations:

From above diagram we can analyse that very rural customers are less

brand loyal. So they prefer next alternative available if their desired

brand is not available.

Q4) Let’s say the price of your brand goes up while the price of the

other brand remain same what will you do?

A) Change the brand                       b) remain the customer of brand

c) Go for economic one 

Interpretations:

From the above chart we can analyze as very few customers are brand

loyal, so most of them would like to switch over to another product.

 Q5) Distribute 10 points among the following 6 attributes based on the

importance they have in your purchasing decision? 

Attribute                                                                                           

Points

1-Price

2-packging

3-promotion schemes

4-advetrtising

5-availibility

6-quality 

Q6) Who suggests you to buy the brand you used?

a) Family member         b) friends            c)

neighbours            d) retailer/dealers 

Interpretations:

More of the decision to choose a particular brand in rural areas are

taken influenced by friends

7) For how long you are using the brand ?

d) Less than 6 months.

e) 6 to 12 months.

f) Above 12 months.

Interpretations:

Rural consumers would like to use the product for a longer period of

time.

8) would you like to swich to new product if it will provide extra

benefit?

a) Yes b) No

Interpretations:

So we can say that rural customers would like to shift to new products

if it gives extra benefits.

9) Do you think you need information and awareness about any

product of your use?

a) Yes b) No

Interpretations:

From the chart plotted we can asnalyse that rural consumers are less

interested in getting information about the product.

10) Are you advised by retailer about any product for the use of

specific brand?

a) Yes b) No

Interpretations:

From the chart we can say that the rural consumers take advice of

retailer in choosing their brand.