MS 611 IGNOU MBA Solved Assignment - Explain the factors that influence buyer behaviour in the rural context, specially highlighting the impact of social class and reference groups. Use appropriate examples to illustrate your answer.

Explain the factors that influence buyer behaviour  in the rural context, specially highlighting the impact of social class and reference groups. Use appropriate examples to illustrate your answer. 

Ans :

Types of consumer buying behavior are determined by:

y

Level of Involvement in purchase decision

. Importance and intensity of interest in aproduct in a particular situation.

y

Buyer¶s level of involvement

determines why he/she is motivated to seek informationabout a certain products and brands but virtually ignores others.High involvement purchases--Honda Motorbike, high priced goods, products visible toothers, and the higher the risk the higher the involvement.Types of risk:

y

Personal risk 

y

Social risk 

y

Economic risk The four type of consumer buying behavior are:

y

Routine Response/Programmed Behavior

--buying low involvement frequentlypurchased low cost items; need very little search and decision effort; purchased almostautomatically. Examples include soft drinks, snack foods, milk etc.

y

Limited Decision Making

--buying product occasionally. When you need to obtaininformation about unfamiliar brand in a familiar product category, perhaps. It requires a

moderate amount of time for information gathering. Examples include Clothes--knowproduct class but not the brand.

y

Extensive Decision Making/Complex high involvement

- unfamiliar, expensive and/or infrequently bought products. High degree of economic/performance/psychological risk.Examples include cars, homes, computers, education. Spend a lot of time seekinginformation and deciding.Information from the companies MM; friends and relatives, store personnel etc. Gothrough all six stages of the buying process.

y

Impulse buying, no conscious planning.

The purchase of the same product does not always elicit the same buying behavior. Product canshift from one category to the next.For exampleGoing out for dinner for one person may be extensive decision making (for someone that doesnot go out often at all), but limited decision making for someone else. The reason for the dinner,whether it is an anniversary celebration, or a meal with a couple of friends will also determinethe extent of the decision making.

Role of people in buying decisionInitiator

± The person who first suggests the idea of buying the product or service. For example,a in a family the youngest child who goes to school suggests the buying of a cell phone.

Influencer ± 

The people whose views or advise influence the decision. For instance the father of the child talks to his relative who lives in a nearby city. This relative suggests the farmer that aNokia or Dolphin cell phone would be good since he is well versed with the various models.Thus he has influenced his father.

a

Decider ± 

The person who decides on any component of the buying decision, whether to buy,what to buy, how to buy or where to buy. The elder son of the farmer when asked, tells him thatNokia cell phone suggest that buying it would be a better option as it is more trusted. He hasdecided what cell phone to buy for the father.

Buyer ± 

He is the person who makes the actual purchase. Here the father has made a decisionand buys a Nokia cell phone from a dealer known to him. The father has paid the money and heis the buyer.

User

± The person who consumes or uses the product or service. For example this new Nokiacell phone is actually used buy their sister who teaches in the school.

The Indian consumer spending has increased from US$ 133.60 in 1992-93 to US$ 350.74 in2002-03, a compound annual growth of 10.13 per cent at current prices. The way Indianconsumers are spending their money on various items has changed in recent years. The sharebeing spent on the basis (food and beverages) has fallen from 54.07 per cent in 1992-93 to 44.8per cent in 2002-03. Other items have increased in importance, for example, medical andhealthcare spending has increased from 3.5 per cent to 8.5 per cent of total expenditure over thesame period, a compound growth rate of 19.71 per cent. Similarly spending on transport andcommunication has grown at 13.2 per cent.While the Compound Annual Growth Rate (CAGR) in total consumer spending has been around12 per cent a year over the past decade, there have been sharp ups and downs. Consumer expenditure has been in tandem with the annual GDP growth.For rural India, per capita 30 days' consumer expenditure of US$ 12.34 was split up into US$6.78, on an average, for food, and US$ 5.56 for non-food. Food expenditure included US$ 2.25for cereals and cereal substitutes, and US$ 2.37 for milk, milk products, vegetables, edible oiland US$ 2.16 on others. Non-food expenditure included US$ 1.11 for fuel and light, and another US$1.00 for clothing, footwear and US$3.45 on other non-food expenditure.For the urban sector, average Monthly Per Capita Consumer Expenditure (MPCE) of US$ 23.53was split up into US$ 10.00 for food and US$ 13.53 for non-food. Of food expenditure, US$2.37 went towards cereals and cereal substitutes while US$ 3.67 was spent on milk, milk products, vegetables and edible oil and US$3.96 on other food items. US$ 2.11 was spent per person per month on fuel and light, and US$ 1.65 on clothing and footwear and US$9.77 onother non-food items.Urban expenditure levels per capita exceeded rural levels for all the product groups, except oncereals and cereal substitutes. The average monthly per capita expenditures on cereals and cerealsubstitutes for rural and urban areas are very close to each other.

The gap between rural and urban averages of MPCE was of the order of US$ 11.16. The item-groups viz. milk and milk products, beverages etc, fuel and light, education, miscellaneousconsumer goods & services, conveyance and rent contributed to the gap significantly.Non-food expenditure per person in the urban sector was more than double of that for the ruralsector, where it was about US$ 5.55.In India, the higher income group (>US$2,465) spends more amount of their income on luxurygoods and trendy products than fact moving consumer products.The middle income group (US$1,162 ± US$1,190) spends more on consumer expendables thanthe rich.Combined the middle and the lower income group provide 60 per cent of the value of the Indianmarket.