Consumer Behavior towards Packaged Food in Rural Areas: An Empirical Study in Ahmedabad District, Gujarat

By Bhatt, Shahir; Bhatt, Amola | IUP Journal of Marketing Management, February 2015 | Go to article overview

Consumer Behavior towards Packaged Food in Rural Areas: An Empirical Study in Ahmedabad District, Gujarat


Bhatt, Shahir, Bhatt, Amola, IUP Journal of Marketing Management


Introduction

The Fast Moving Consumer Goods (FMCG) sector is an important driver of the Indian economy. Inclusive growth means ensuring that India's economic development lifts all boats, which is a critical national priority. One key focus has been on the role of Indian companies in enabling inclusive growth. FMCG companies can be used to tackle the issues of sustainability in remote rural regions. FMCGs are the products that are sold quickly at a relatively low cost. Though the absolute profit made by them is relatively very small, they sell in large quantities, so the cumulative profit on such products can be large.

FMCG satisfies the elemental and day-to-day household needs other than grocery, ranging from packaged foodstuff, dairy products, cooking oil, bread, butter, cereals, beverages like tea and coffee, pharmaceuticals, confectionery, biscuits, glassware, stationery items, watches, toiletries, detergents, shampoos, skin care products, cosmetics, toothpaste, dish washing liquid, shaving cream, razor, batteries, shoe polish, energy drinks, softdrinks, clothing, furniture and household accessories to electronic goods like cell phones, laptops, computers, digital cameras, etc. that are usually categorized as Fast Moving Consumer Electronics or FMCEs.

India's packaged food retail sales grew at an average of 11.5% annually during the past five years, with a Compound Annual Growth Rate (CAGR) of 12.93% between 2004 and 2009. With the arrival of international packaged fast food outlets in India, the food industry has experienced steady growth. It contributes 9% to India's GDP; however, India's share is just 1.7% in world trade. It is difficult for most regional packaged food companies in India to expand nationally due to the country's underdeveloped infrastructure. Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF) was the leader in the packaged food market, with an 8% share in 2009.

The last decade has not only been a period of phenomenal growth but also a period of optimism about the bottom of pyramid. Census of India defines rural as any habitation with a population density of less than 400 per sq km., where at least 75% of the male working population is engaged in agriculture and where there exists no municipality or board, and the same definition is accepted for this paper as well. The Government of India statistics reveals that even with the increasing urbanization and migration, 63% of India's population would still be living in rural areas in 2025. Thus, rural market was, is, and will continue to be vitally important to the Indian economy. The Indian packaged food industry is expected to touch $30 bn by the year 2015 on the back of growing awareness, busier lifestyles, and a booming economic environment. According to the report by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), the industry would grow at a rate of 15% to 20% annually from the current level of $15 bn to 2015.

Rural India has become a target for marketers because of the huge potential it offers for all kinds of products and services. Also packaged food items included in this study comprised biscuits, juices, ice creams and chips. Very few studies have been done on packaged food items in rural areas of Ahmedabad and so the researchers have made an attempt to analyze that.

Literature Review

The current times have seen a lot of changes in the lifestyle of rural people in India due to the advent of several employment generation schemes, emphasis on education and greater proliferation of mobiles and other electronic devices. The above factors in turn have also affected the attitude of rural people towards branded products, especially food items.

Preferences Towards Certain Brands and Products

Puri and Sangera (1989) conducted a survey to know the consumption pattern of processed products in Chandigarh. Jam was found to be most popular irrespective of income. Orange squash consumption was maximum in high and middle-income families. …

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