Purchasing pattern in rural retail markets

Muhammed Rizard, Management and Commerce, Faculty South Eastern University and Mohamed Irshad, Senior Lecturer, Management and Commerce, Faculty South Eastern University.

Implementing marketing strategies and reaping the benefits of it in the rural markets are crucial endeavours for the companies. Marketing to rural customers becomes for eternity a challenging practice for even big multinationals and conglomerates.

Understanding their culture has been the most difficult process for companies.

Colossal amounts of money are pumped into society in turn to understand the complexity of culture of consumers.

Still, the adoption process of customers towards new brands is mysterious and companies, which introduce new products to this class of markets, see the customers as late majority and laggards.

Some companies' brands such as personal care brands referred as shampoo brands, toothpaste brands, confectionery brands are in the growth stage in its product life cycle in rural markets, whereas some brands of even of multinationals which are in the growth and mature stage in product life cycle in urban markets lack will to exploit its potentials in rural markets.

We could denote some brands as examples in this scenario such as health- care brands of big hospitals (Nawaloka, Asiri and Lanka Hospital), fashion brands, leisure brands referred as Excel World and theme parks, (See Table 01).

The reasons, which were found to have this sort of perception among customers towards brands, have been the customers' culture and the adoption level for brands.

The customers' culture is a unique for a society, a group of people, and an individual.

It has been built through a long lasting behavioural change of the customers' mindset, and it is like always Ice-berg syndrome, where we can see small part of the iceberg in the superficial manner, but the hidden area of that ice-berg would be a huge part under the sea, normally we can not see that.

However, one or two thirty-second commercial advertisements on TV or PR activities would never change the mindset and the culture of them immediately.

Indeed, as they are depicted to an antiquated culture, their purchasing pattern also becomes rapidly a crucial factor for multinationals, big conglomerates and small and medium companies whose brands mostly in Sri Lanka are marketed to rural customers.

Thus, they are considered as late majority and laggard segments in the adoption process or curve introduced by Everett N Rogers.

Changing purchasing pattern of customers in rural markets

Comparatively, the mindsets of customers in rural areas were changed fairly, because according to the concerns of writers, two factors played a key role in changing the perception of mindsets and fine tuned their cultural beliefs.

Continuous innovation in technology and education level enormously transformed gradually the customers' state of mind, their culture and purchasing pattern from the landscape of antiquated culture.

In the 1990's, the customers were old archaic, and there were a very few of the boutiques and small Kades where the customers regularly purchased the goods and services in each village of rural areas.

Japanese brands were dominating the markets in almost all categories of brands. Customers' perceptions were also towards durability of brands. They wanted brands that can be used for many years.

However, after 2000, technology was certainly a breakthrough in every business, such as telecommunications, information and communications technology fields, use of credit cards for banks and use of ATM in banking transactions and sophisticated mobile phones. These all changed and brought a new paradigm shift in the culture and consumer behaviour. As a result of it in rural markets, the consumers were aware of new brands, modern lifestyle of the other customers in local as well as international markets, and their purchasing styles and behaviours.

Consequently, the continuous innovation in using different technologies on the products created a new demand for them. The living style and their spirit of culture also were somewhat changed.

Although, this type of customer segments out of total segmentations of companies' brands have been very narrow which we can call early adopters and early majority in the rural markets, it is just a difficult for the companies still to get the rest of the segments to use their brands in the adoption process.

A plenty of activities have to be induced at this moment on which companies should instigate strategic planning in terms of changing the strongly-bonded perceptions of customers.

Another important factor which changed extensively the cultural elements of customers in rural markets is the level of education. Comparatively, the educational level of students, and IT literacy rate of people in particular after 2006 were drastically augmented.

Most of the people in rural areas migrated to foreign countries for managing their livelihood incomes and some of them shifted for higher studies.

In the case of such people, their families live a greater extent of life with higher exposure to modern shopping style. Bulk purchases, purchasing under one roof, use of highly sophisticated devices and gadgets, whether it be mobile phones, laptops, iPad, iPod, iPhone, engaging to adventurous and fun trips are the utmost characteristics of those families. The families whose children are in foreign countries mostly prefer to purchase in supermarkets than other families whose proprietors are middle income earners and government job holders. The arrival of Cargills Food City to liberated rural areas made a significant change in the customers' mindsets and the purchasing pattern of customers also radically is improved in rural markets. Before Cargills, some of the boutiques and small shops tried with the imitations of Cargills' name boards and same slogan of Cargills "On your way home" to offer one stop shopping experience to customers under one roof.

This retailing initiative of such organizations caused to bring change into the consumers' mindset and thought a little bit of supermarket experience even though that practice was treated as illegal and unfair.

Thus, with that sort of awareness programs, Cargills simply entered to these rural markets and dominates customers with innovation because Cargills has been known as a pioneer brand in the retailing markets among customers in the rural market too.

However, still retailing organizations like Cargills should think how they will have to induce strategic planning to transform the mindsets of customer segments such as Late Majority and Laggards in rural areas.

Here are some strategies that could be adopted along with the marketing planning for those retailers who would like to prepare their strategic planning for the transformation of customers' mindsets and consumer behaviour into modern purchasing style.

Marketers' reactions for transformation of customer's mindsets.

Along with the marketing strategies of retailers, they should prepare their strategic planning for the customer segments in rural markets. The following strategies should be adopted in their planning process.

Social Marketing: Comparatively to urban customers, the rural customers are highly concerned about social responsible programs of companies. Enhancement of education and poverty reduction are the most successful programs that will bring high impact to the brands and companies in rural markets.

Based on the financial capability of organization, they may think even small level of programs that are matched to the marketing objectives and strengths of organizations. Further, this would be the fundamental of creating a strong word of mouth campaign among customers.

Experiential marketing initiatives: In-store events or programs that induce the interest of customers with experiencing, tasting, understanding the value of products, its promises and entire phenomenal brand attributes, would be most successful strategies that reduces the gaps between companies' brands and customers.

Revisit the pricing: What the price that the retailing organizations charge to their customers in developed markets or urban markets will not be applicable for rural customers. An affordable price for the products or else reduced price will be useful for retailers because unlike the customers in urban markets, rural people do not purchase the products and brands for prestige or its image but they look only price, quality and durability of products.

Targeting the reference group: For rural customers, certainly there is at least one educated family representative in each family.

The other family members always listen to the words of that representative on what he or she talks about. So the message designers in the communication part should consider the reference group in order to recommend your brands. A comprehensive and demonstrative message will be an effective core element in the communication part for their customers and it should talk about your product attributes, brand promises, customer value and retailing experience.

If you understand and satisfy level of expectation of reference group members, and deliver those branding elements and identity, that will definitely become as top of the mind brand.

Creating word of mouth campaign: Along peer groups and educated groups, creating word of mouth is important because it works well in rural markets, and makes those groups to recommend the brands to others.

A specific message time to time should reach customers and the organization should keep the momentum with customers at regular intervals.

There are many strategies that could be pursued by companies in this scenario, but to change the customers' mindsets in rural areas the specific emotional strategies like what we have touched will help to transform their mindsets.

However, all we have argued in this article is for the platform to make the changes happen but in a long term perspective, the innovation in selling the products, maintaining category management, in-store merchandising options, in-store favourable customer experience and delivering the brand promises will help organizations sustain customers with them.