Rural Consumer Behavior & Distribution Strategies - Chapter 3.ppt

Rural Consumer Behavior & Distribution Strategies

1. Rural Consumer Behavior &
Distribution Strategies
Chapter 3

2. Model of Consumer Behavior
What stimulates a consumer to look for products or
services?
How does the consumer know about products and
services that can fulfill his needs?
How do the marketing and environmental factors,
along with his personal characteristics, influence the
consumer’s thinking and his decision- making
process.
How does the buyer take decisions? How does he
buy? Where, when and what does he buy?
How does he consume or use the product or
service? What may be his feelings and reactions?

3. Model of Consumer Behavior
Marketing Offer
Product, Place,
Price, Promotion
Environment
Socio-cultural
Technological,
Economical,
Political
Stimuli
Internal
External
Organism
Buyer
Characteristics
Behavior
Decision
Making
Action
Consequences
Satisfaction
Cognitive
Dissonance

4. Buying Decision Process
Need Recognition
Information Search
Evaluation of
Alternatives
Purchase Decision
Post-purchase Behavior

5. Sources of Information
Personal – family, friends, neighbors
Commercial – advertisements, publicity,
sales people, displays
Public – TV, radio, internet, print media
Experiential – handling, examining, using the
product

6. Evaluation of alternatives
Evaluation Modals
1.Expectancy value model
Identifies the attributes necessary.
Discusses with others to find the relative
importance of each.
Arrives at an overall impression of each brand and
compares them for choosing the one that scores
relatively high among the options.
Ex – Motorbike – Considered attributes, style, resale
value, fuel economy, pick up, load carrying
capacity & fewer maintenance cost

7. Evaluation of alternatives
Evaluation Modals
2. Lexicographic Model
Attributes are arranged in an order of priority.
If the first attribute is satisfied, selection is made.
If not, the second attribute forms the basis for
evaluation.
Ex – Motorbike – priority is load carrying capacity, low
maintenance cost, fuel economy. If one is
satisfied, he will choose.

8. Evaluation of alternatives
Evaluation Modals
2. Conjunctive Model
A consumer selects a product that satisfies
few attributes that he considers important.
Ex – Motorbike – if he has decided that the
price of the product should not exceed
55000 and fuel consumption should not be
less than 50 km/ltr.

9. Evaluation of alternatives
Evaluation Modals
2. Disjunctive Model
A brand that has satisfying levels of a
chosen attribute will be selected
Ex – Motorbike – if one is interested in buying a
motorcycle with high fuel economy, his
obvious choice is Hero Honda

10. Purchase Decision
Perceived Risk Factors
Personal factors – Lack of self-confidence, lack of
information
Product factors – Highly complex, high- tech product
Information availability & certainty – Less informed,
less certain, material is not very informative
Financial factors – High price, investment &
operational costs are considerable
Situational factors – Emergency in purchase

11. Environmental Factors influencing
Decision Making Process
Socio-cultural factors
1 Culture – collective processes, values,
customs & tradition, social norms, caste
2 Social class
3 Group – Associated groups, reference
groups, opinion leaders
4 Family – family size, family as a buying unit

12. Environmental Factors influencing
Decision Making Process
Technological factors
1 Biotechnology developments
2 Digital & satellite technologies
3 Information & communication technology
revolution

13. Environmental Factors influencing
Decision Making Process
Economic factors
1 Impact of globalization
2 Influence of competition
3 Influence of recession
4 Impact of inflation
5 Availability of micro-credit

14. Environmental Factors influencing
Decision Making Process
Political factors
1 Government announces various schemes in
rural sector

15. Buyer Characteristics
Age & lifecycle stage
Occupation
Economic situation
Lifestyle
Personality & Self- concept
Psychological factors

16. Buying Behavior Patterns
A)Degree of involvement
Degree of buyer involvement (high & low)
Degree of differences among brands
(significant & not)
B) Amount of Time spent

Planned
Emergency
Impulse

17. Distribution in Rural Market
Problems of distribution in rural markets –
Long distances between villages
Lack of pucca roads connecting villages to
nearest townships
Lack of adequate transport facilities

Lack of proper retail outlets
Lack of mass media infrastructure

18. Strategies for Rural Distribution
Coverage of villages based on the population strata
Use of co-operative societies
Utilization of public distribution system (Ration
shops)
Utilization of multi-purpose distribution centers by
petroleum / oil companies
Distribution up to feeder markets / mandi towns
Shandies/Haats/jatras/melas

Agricultural input dealers

19. Distribution Trends
Emergence of new customer group
High media exposure
IT revolution
Consumer as sellers (network marketing of
HUL by engagement of women as channel
participants)

20. Distribution Participants
Rural logistics – means of transport like animals,
boats, cycles, motor vehicles, tractors, mini lorries,
vans etc.
People involved – sales persons, social workers,
village heads, part-time business people.

Retail outlets – retailers, cooperatives, mandis,
haats, melas, fair-price shops (malls), NGO, post
offices, anganwadis, corporate rural malls.

IT-based initiatives – e-choupal, i-shakti

21. Hub- and-spoke-distribution Model
It is like a wheel in which all traffic moves
along spokes connected to the hub at the
centre.

A spoke is one of a number of rods radiating
from the centre of a wheel connecting the
hub.
Here Hub is distributor or dealer of the
company and spokes are the touch points or
retailers, small vendors.

22. Hub- and-spoke-distribution Model
Merits
Transport economies
Simplified operations
Easy to expand
Customer satisfaction
Demerits
Inflexibility
Long journey
Unexpected delays

23. Hub- and-spoke-distribution Model
Example
Coca-Cola’s Distribution model
Godrej’s distribution model
Tata Nano
HUL

24. Rural Coverage Decision
Which villages are similar and are in close
proximity?
What are the distances between villages?
What kind of terrain it is (Plain land, island or
hilly area)?
What are the modes of transport available?
What types of transportation means are
available – mechanized vehicles / human
driven/humans or animal

25. WHY CHANNELS OF DISTRIBUTION

Geographical Spread

Dealers are few – hence required to bank on a number of resources

Financial Viability

Inadequate Bank and Credit Facilities
TO ADDRESS THE ABOVE CHALLENGES

Rely on Private Village Shops

Supply Chain Stores

Rural Super Market

Small companies tie up with large companies – Leverage/Syndicate
Distribution network of Marico to sell Tide by P&G

Satellite Distribution

26. Rural Distribution Challenges
Large number of small markets
Dispersed population and trade
Poor connectivity
Low availability of suitable dealers
Inadequate banking/ credit facilities
Poor product display and visibility
Poor communication of offers and schemes

27. Channel Behavior

The channel will be most effective when:

each member is assigned tasks it can do best.

all members cooperate to attain overall channel goals.
If this does not happen, conflict occurs:

Horizontal Conflict occurs among firms at the same
level of the channel (e.g., retailer to retailer).

Vertical Conflict occurs between different levels of the
same channel (e.g., wholesaler to retailer).
Some conflict can be healthy competition.

28. Traditional Channel Members
Wholesalers
Retailers

29. New Channel Members
Co-operative societies
Petrol bunks
Public distribution system
Agricultural input dealers
NGOs
Freelance traders
Mobile traders
Barefoot salesmen
Post offices

30. Levels of Distribution
LevelLevel Partner Partner Location Location
1
Company Depot/ C &
FA
National/ State level
2
Distributor/ Van
Operator/ Super
Stockist/ Rural
Distributor
District level
3
Sub Distributor/ retail
Stockist/ sub
stockist/star seller
Tehsil HQ, towns and
large villages
4
Wholesaler Feeder towns, large
villages, haats
5
Retailer Villages, haats