capstron project intro
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INTRODUCTION
Rural Markets are defined as those segments of overall market of any economy, which are
distinct from the other types of markets like stock market, commodity markets or Labour
economics.
Rural economy and its healthy growth are the significant pre-requisites for progress and
development of India. The rural market is emerging stronger with a gradual increase in
disposable income of the rural folk. The structure of the Indian economy indicates that a
significant portion of the total income is derived from agriculture income. In addition, better
procurement prices fixed for various crops and better yields due to benefits of many research
programmes have also contributed to the financial reinforcement of the rural markets. Thus it is
beyond argument that the potential rural market has been intensifying and is set to grow withfaster agricultural and rural development bearing more prosperity. The reasons for heading into
the rural areas are fairly clear. The rural population is nearly three times the urban, probably
because of the growing affluence and the increased agricultural output. Undoubtedly, Indian
rural markets offer immense opportunities and great attraction to the marketers.
Rural markets are increasing in both size and volume and any marketing
manager will be missing a great opportunity if he doesn't penetrate rural. Further, Urban markets
have become congested with too many competitors and have reached a near saturation point.
Global automakers and other electronic firms are banking on India's huge rural population to
hone their marketing skills, seeing an increasing demand for their goods in places that were once
behind the technology curve and too meagre to afford televisions and cars. The Wall Street
Journal, in an article published, showcases companies like Hyundai and Philips Electronics doing
demos in villages to men dressed in turbans and kurta pyjamas, enticing village headmen to lead
the way towards selling their goods. The Journal credits the steady 5 percent GDP growth in
India for years for building pockets of wealth in the rural areas. A host of companies are pitching
even-more sophisticated goods to tap some of this rising consumer demand. Sales are up from
products like insurance to home electronics, it notes. Based on economic studies that show
middle and high-income households in rural India will grow to 111 million in the next five years
from 80 million last year.
Hence the present need is to focus on the rural markets. This is of paramount importance in the
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Indian marketing environment as rural and urban markets in our country are so diverse in nature
that urban marketing programme just cannot be successfully replicated and extended to the rural
markets. Manchandani (2003) opines that the buying behaviour demonstrated by the rural Indian
differs conspicuously when compared to typical urban Indian. Moreover, values, aspirations and
needs of the rural people vastly differ from that of urban population. Basic cultural values in
rural India have not faded yet. Buying decisions are still made by the eldest male member in
rural family where as even children influence buying decisions in urban areas. Further, buying
decisions are highly influenced by social customs, traditions and beliefs in the rural markets.
Many rural purchases require collective social sanction or consensus, unheard of in urban areas.
Therefore, marketing strategies earlier adopted for targeting urban consumers cannot be applied
as such in rural markets, specifically when the buying behaviour influence continuum varies
greatly.
An understanding of consumer behaviour is essential in formulating the marketing strategies.
However, information about rural consumers is limited and hazy due to lack of right competence,
partial approach and limited knowledge and bias of the corporate managers.
Significance
In recent years, rural markets have acquired significance in countries like China and India, as the
overall growth of the economy has resulted into substantial increase in the purchasing power of
the rural communities. On account of the green revolution in India, the rural areas are consuming
a large quantity of industrial and urban manufactured products. In this context, a special
marketing strategy, namely, rural marketing has taken shape. Sometimes, rural marketing is
confused with agricultural marketing the later denotes marketing of produce of the rural areas
to the urban consumers or industrial consumers, whereas rural marketing involves delivering
manufactured or processed inputs or services to rural producers or consumers. Also, when we
consider the scenario of India and China, there is a picture that comes out, huge market for the
developed products as well as the labour support. This has led to the change in the mindset of the
marketers to move to these parts of the world.
Also rural market is getting an importance because of the saturation of the urban market. As due
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to the competition in the urban market, the market is more or so saturated as most of the capacity
of the purchasers have been targeted by the marketers. So the marketers are looking for
extending their product categories to an unexplored market i.e. the rural market. This has also led
to the CSR activities being done by the corporate to help the poor people attain some wealth to
spend on their product categories. Here we can think of HLL (now, HUL) initiatives in the rural
India. One of such project is the Project Shakti, which is not only helping their company attain
some revenue but also helping the poor women of the village to attain some money which is
surely going to increase their purchasing power. Also this will increase their brand loyalty as
well as recognition in that area. Similarly we can think of the ITC E-Chaupal, which is helping
the poor farmers get all the information about the weather as well as the market price of the food
grains they are producing. In other view these activities are also helping the companies increase
their brand value. So as it is given above the significance of the rural market has increased due to
the saturation of the urban market as well as in such conditions the company which will lead the
way will be benefited as shown by the success of HUL and ITC initiatives.
Importance of Rural Market
The main reason why the companies are focusing on rural market and developing effective
strategies to tap the market potential can be identified as:
Large population: Approximately 70% of Indias population resides in around 6,38,365
villages of India spread over 32 lakh square kilometer.41% of Indias middle class
resides in rural areas.
Higher purchasing capacity: Purchasing power of rural people is on rise.
Market growth: Market is growing at a rate of 3-4 % per annum adding more thanone million new customers every year.
Development of infrastructure: Government is taking a number of initiatives and
investing towards development of infrastructure facility and public service projects in
rural India, which includes construction of roads, electricity connection, telephone
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connection.
Challenges in Rural Marketing
Though rural markets are a huge attraction to marketers, it is not easy to enter the market and
take a sizeable share of the market, in the short time due to the following reasons.
Low Literacy: - There are not enough opportunities for education in rural areas. The
literacy level is as low (36%) when compared to all- India average of 52%.
Seasonal Demand: - Demand for goods in rural markets depends upon agricultural
situation, as agriculture is the main source of income. Agriculture to a large extent
depends upon monsoon and, therefore, the demand or buying capacity is not stable orregular.
Transportation: - Many rural areas are not connected by rail transport. Kacha roads
become unserviceable during the monsoon and interior villages get isolated.
Distribution: - An effective distribution system requires village-level shopkeeper,
Mandal/ Taluka- level wholesaler or preferred dealer, distributor or stockiest at district
level and company-owned depot or consignment distribution at state level. The presence
of too many tiers in the distribution system increases the cost of distribution.
Communication Problems:- Facilities such as telephone, fax and telegram are rather
poor in rural areas.
Traditional Life: - Life in rural areas is still governed by customs and traditions and
people do not easily adapt new practices. For example, even rich and educated class of
farmers does not wear jeans or branded shoes.
Buying Decisions: - Rural consumers are cautious in buying and decisions are slow and
delayed. They like to give a trial and only after being personally satisfied, do they buy the
product.
Media for Promotions: - Television has made a great impact and large audience has
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been exposed to this medium. Radio reaches large population in rural areas at a relatively
low cost. However, reach of formal media is low in rural households; therefore, the
market has to undertake specific sales promotion activities in rural areas like participating
in fairs.
Marketing strategy for rural marketing
1. Product strategies
Meaningful product strategies for rural market and rural consumers are discussed here.
A. Small unit and low priced packing:-
Larger pack sizes are out of reach for rural consumers because of their price and usage habits.
This method has been tested by other products like shampoos, biscuits, pickles, Vicks five gram
tins, etc.
In the strategy of keeping the low priced packed the objective is to keep the price low so that the
entire rural community can try. This may not be possible in all types of products, but whereverthis can bane resorted to, the market is bound to expand.
B. New product designs
A close observation of rural household items indicates the importance of redesigning ormodifying the products. The manufacturing and marketing men can think in terms of new
product designs specially meant for rural areas keeping their lifestyles in view.
C. Brand name
The rural consumers are more concerned with the utility of the products. The brand name
awareness in the rural areas is fairly high. A brand name and/or logo is very essential for ruralconsumers for it can be easily remembered.
2. Pricing strategies
Pricing strategies are very much linked to product strategies. Some of these strategies are
mentioned here.
A. Low cost/cheap products
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This is a common strategy being adopted widely by many manufacturing and marketing men.
Price can be kept low by small unit packing.
B. Avoid sophisticated packing
Simple package can be adopted which can bring down the cost as it is presently being done in the
case of biscuits. Some innovation in packing technology is very necessary for rural markets.
C. Application of value engineering
This is a technique which can be tried to evolve cheaper products by substituting the costly raw
material with the cheaper one, without sacrificing the quality or functional efficiency of the
product, for example in food industry, 'soya protein is being used instead of milk protein. Milk
protein is expensive while soya protein is cheaper but the nutrition value is same. This technique
yields itself for application in many engineering or product designed areas so that the price can
be kept at an affordable level. These areas have to be explored by manufacturing and marketing
men in the context of rural markets.
The pricing strategy for rural market will depend upon the scope for reducing the price of the
product to suit the rural incomes and at the same time not compromising with the utility and
sturdiness of the product.
3. Distribution strategies
Most manufacturers and marketing men do have a distribution arrangement for village with a
population of at least 5000 people. While it is -essential to formulate specific strategies for
distribution in rural areas, the characteristics of the product, its shelf life and other factors have to
be kept in mind. The distribution strategies that are specifically designed for rural areas are:
through co-operative societies, public distribution system, multi-purpose distribution centres etc.
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4. Promotion strategies
Mass media is a powerful medium of communication. It could be television, cinema, print media,
Radio and so on. The other means of mass media available are hoardings/wall paintings,
shanties/hats, non-price competition, special campaigns etc. Besides these, other mass media like
hand bills and booklets, posters, stickers, banners of the schemes etc.
For disseminating the information, related to agricultural and other rural industries products, the
government should circulate pamphlets either to panchayati raj office or to schools where it can
be documented for the reference.
While making efforts to improve the marketing system within rural areas and the marketing of
rural produce to other areas, we should foresee the forces of globalization affecting the market
forces. The implications of globalization are explained in the following chapter.
Buying Decision Process:-
The BDP follows a logical sequence of five steps
Need Recognition
Information search
Evaluation of alternatives
Purchase Decision
Post-purchase behaviour
(a) Need Recognition: When the buyer recognizes a gap between his desired state and the actual
stat, buying process starts. Such recognition maybe caused by stimuli either internal (self) or
external (by environment or marketer). At this stage, marketer should help consumers identify
their current and future problems and felt or latent needs. To do this, marketers have to research
on consumer problems and needs.
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(b) Information search: Generally, consumers try to find information pertaining to their want
satisfying products to make the right choices. The amount of information required depends upon:
* Type of the product --- convenience, shopping or specialty good.
* Nature of the product --- complex, high-tech or simple and easy to distinguish
* Availability of sources --- the consumer may obtain information from one or more of the
following sources
Personal --- family, friends, neighbours
Commercial --- advertising, sale people, displays
Public --- TV, radio, internet and print media
Experiential --- handling, examining, using the product
Search expands with the availability of time. Marketers have to take into cognizance this aspect
and design offers to induce immediate buying. Keeping in mind the information needs of
consumers, marketers should design communication programmes to reach the consumers and
provide adequate and relevant information.
(c) Evaluation of alternatives: The evaluation process may be done more carefully and
logically in some cases, for example, consumer durables. In case of convenience goods, which
are purchased for one-shot consumption, the evaluation may be very less. Occasionally, it may
be impulse buying too.
(d) Purchase decision: All the existing brands in the market make a total set. Through
information search consumer will become aware of some brands in the total set. Awareness set
consists for brands which the consumer is aware of the brands, which meet initial, buying
criteria, will be considered for further evaluation. They make up the consideration set. Through
application of final criteria, the consumer evolves his choice set. All the brands in this set are
acceptable to the consumer. However, the final choice will be made in favour of one brand. The
choice is dependent upon factors influencing the mind of consumer at this final state
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(e) Post-purchase behaviour: A buyer feels satisfied when the perceived product performance
is close to his/her expectations, if it exceeds expectation, the customer is delighted. If it falls
short of expectations, the customer is disappointed.
OBJECTIVE OF STUDY
The objectives of the study are followings:
1. To find out the factor affecting the purchasing behaviour towards consumer durables
2. To evaluate the present level of satisfaction.
3. To study the brand choice behaviour of rural customer towards durable goods.
Need of the Study
The rural market is growing both in size and the volume. This gives rise to the need for a study
to evaluate the present level of satisfaction of the rural customers towards consumer durables and
to know about their brand choice behaviour. This study will provide the knowledge about the
potential of the rural market and it will help the company to make the strategy to cater the rural
market and increase the satisfaction level of the rural customer.
Scope of study
The study will provide some basic ideas about the factor affecting the buying behaviour,
satisfaction level of the customer and the brand choice behaviour of the rural customer towards
consumer durables viz. Washing machine, Air cooler, Television and refrigerator. For the study
the villages are selected from the three economically significant district of Punjab viz. Jalandhar,
Amritsar and Ludhiana.
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Literature review
Gupta (1987) examined the factor motivating consumer of buy durable, the factor consider by
them in making brand choice .source of information consider role of family member in
influencing brand choice and examine consumer satisfaction (Amritsar city) Shashikumar
Sharma & chaubey, D.S.(2007)assessed the consumer awareness and their attitude towards
different mobile service providers operating in Lucknow
Herbig (1997) observed that a typical Indian middle class family categorizes durable goods into
two groups; essentials and major purchases. Electric fans, gas stove, radio, electric iron, sewing
machine and mixer/blender fit in the first category. These products are concurrently purchased
within a short time of the establishment of the household. Among the major purchases, the
scooter or motorbike is the first durable product that the families aspire to buy. Hundal (2001) in
a study on rural Punjab, concluded that rural consumer considers the consumer durables as a
necessity as a source of entertainment, education, information and comfort. He suggested
increasing the number of distribution channels; introducing lower costs products with more focus
on quality and brand image and family liking and after-sales services.
D. Mohanty and T Pahni Madhav (2004) have put a light on the rural marketing done by LG inIndia. LG entered in 1993 in India and failed in 2 joint ventures and in 1997 again made
comeback and emerged as a market leader in washing machine, air conditions, and ovens. The
company has tried to capture rural market of India for further growth.
P. Balakrishna (2004) has studied the approaches used for selling in rural India. Indian rural
market has vast size and demand and offers huge opportunities to MNCs. The rural market
accounts for half of the total TV sets, fans, coolers etc market. 4Aapproach is used in rural
marketing i.e. Availability, Affordability, Acceptability, and Adaptability.
R.V Jain (2005). The article discusses the profile of the rural consumers which is very different
from the urban consumers. Some important characteristics of rural consumers are: that they are
very conscious about getting value for their money, they understand symbols and colour better,
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they does not like to pay extra for frills he cannot use, has an very high involvement in any
product purchased , especially when he buy high end products. Perception, traditions and values
changes from region to region.
Mason and Himes (2005) gained an insight into characteristics of consumers experiencing
dissatisfaction with some household appliances. The variables namely; number of people in
household, educational level of household head, annual household income, age of household,
marital status, whether the house hold owns or rents its home, were the prime reasons for the
differences in the socioeconomic characteristics of households experiencing or not experiencing
dissatisfaction with consumer appliances in the preceding 12 month period. CMIE (2005) states
that production index of consumer goods continued to display impressive year on year growth in
April 2004. During the month, index was up by 17.7 percent as compared with a negligible 0.4
percent growth in April 2003. This was also the eighth consecutive month of double-digit
growth. This impressive production growth of consumer durables in the past several months has
been due to increased demand from rural sector on account of higher growth in income.
Shanthi,R(2005) examined the perceptual dimensions of brand association with reference to
mobile users. He saw that how much affects the brand on consumer perception.
Anand & Hundle, B.S.(2007)examined buying behavior of rural and their urban counterparts
towards the purchase of refrigerator. The factors consider by them are Item of necessity, symbol
of social status, advertising influence, brand reputation and time saving device in (Punjab).
The Hindu (2008) speaks of the attempts made by Industrial and automotive battery major,
Amara Raja atteries (ARBL) with new retail concept 'Power zone' for the rural market. The idea
is to cater to the growing need for better technology, at affordable price, in the rural market. The
efforts are to take on the unorganized sector in the rural market. Similarly Kaur (2008) states that
the Indian mobile handset market is witnessing adoption from both ends of the customer
spectrum-from a value conscious mass market user to a customer demanding the best features
and innovative products. With most urban areas already covered by mobile operators, 40% of
new subscribers are coming from rural areas. According to the Federation of Indian Chambers of
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Commerce and Industry (2008), the number of rural households using consumer products has
grown from 136 million in 2004 to 143 million in 2007. A pointer to the fact that rural
consumers are moving to branded products. In a report by market research firm AC Nielsen, in
April-May 2008, it was seen for the first time that the rural market has outpaced urban India in
certain key product categories.
David M Wells (2008) studied that traditionally, consumers know little about the features and
benefits of various air conditioning brands. They generally have relied on dealers'
recommendations and expertise when choosing a new system. However, with the increase in
technology, the diversity of media selection, and the advent of the Internet, information about
consumer durables is more accessible. When it comes to brands, most consumers have a very
limited evoked set, since most HVAC manufacturers do not market directly to them. Consumers
form their consideration set from the brand choices presented to them by the dealer, according to
Decision Analyst. Choice criteria during the evaluation stage depend on the consumer's end
goals, and may include brand image, features, price, design, and past experience. Many HVAC
manufacturer offer co-op advertising and dealers can benefit from the brand equity of the HVAC
systems by including the manufacturer's logo on their signs. Brand loyalty to the dealer can be
achieved by contacting the customer regularly by phone or direct mail
Alan Cassidy, this article is about 4 ways to dispose of your old refrigerators and how those
consumers who are interested in disposing of their old refrigerators and how they are interested
in purchasing the new refrigerators with new schemes available in the market and how the
companies attract the new customers and what are the different ways of disposing of the old
refrigerators. Appliances are not made to last forever and sadly, that includes your refrigerator. It
may seem as if your refrigerator is irreplaceable because it suits you perfectly and works without
any problem but sooner or later it's going to give in. Sooner or later you will be seeing the
repairman one too many times and after that, it's going to have more problems beyond repair.Then you realize it's time to let go and look around for a cooler fridge. Anyway, a typical
refrigerator has a life expectancy of around 10 years. Some may extend up to 15 years while
some may not even last up to 7 years. If your fridge has been anything but normal this week, it
may be a telltale sign that old age is now taking its toll and your refrigerator already needs to
resign.
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Zoe Sans one, A washing machine comparison help you decide when you are ready to buy
This article is about how consumers make decision while purchasing the washing machines. And
the various factors that affect the purchase decision of the buyers like the consumption of the
detergent, the water usage etc. and also the brand name associated.
If youre in the market for a new washer, you should always do a thorough washing machine
comparison before making your purchase. Don't simply buy the cheapest one you can find.
Why? Because a small price tag now may have big (and expensive) consequences later.
To make sure you're getting the best deal, you need to look beyond price, and also decide
whether a front loading or top loading design is right for your needs.
Fredrick Joy, this article about the advantage of a steam washing machine Steam washing
machines are incorporated with slightly different features from its front loading and top loading
counter parts. Being informed about steam washing machines will guide you to take a proper
decision when you opt to buy a new washer machine for your home. When washing machines
have gained so much popularity every family is either buying or replacing a washing machine.
We cannot imagine our life without the indispensable system. Making the proper selection is
important so as to enjoy the best.
In a steam washer machine clothes remain comparatively dryer than in a top loading or frontloading machine. The feature of the steam washer is somewhat like the process involved in dry
cleaning.
Babu P George, Manoj Edward (2009) examine that how the degree of personal involvement in a
purchase decision affects the information needed to reduce cognitive dissonance associated with
that purchase. The authors argue that, highly involved individuals, because of their high
involvement in purchase decisions, are rigid in their preconceived cognitions that led to the
purchase. Consequently, they tend to downplay the new cognition and actively look out for
purchase supportive information, rather than changing the old cognition that led to the purchase
decision. Also, it is proposed that, to overcome the cognitive dissonance associated with a high
involvement purchase, more supportive information is needed to overcome the cognitive
dissonance associated with a low involvement purchase. Yet another finding of the study is that
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the willingness of a dissonant individual to accept the new cognition increases with the elapse of
time from the time of occurrence of the cognitive dissonance. The study also unveils that, for a
typical purchase, the degree of cognitive dissonance felt by more involved purchasers is less than
that felt by less involved purchasers. Thus, interestingly, even though the degree of cognitive
dissonance felt by highly involved purchasers is lower, the difficulty for them to grapple with it
is higher. An associated finding is that more planned and less spontaneous buying behaviour is
associated with a higher degree of cognitive dissonance.
Vidya Iyer (2010) states that in the recent years, rural markets in India have undergone
considerable changes as the urban markets have hit saturation and relative growth has slowed
down. Marketers have realized that rural India has tremendous potential and with increasingfocus of the policy makers on injecting money to pump the rural economy have all contributed
towards an increased interest of businesses towards rural India. This article is an attempt to
understand rural markets and how organizations serve the emerging rural markets.
This article will help us to understand the uniqueness of the Indian rural market,
Successful companies in the rural market and the present situation of the rural market.
This is essential for further research.
Research Methodology
Research methodology is the blue print of the Research. It has many dimensions, it includes not
only the research methods but also consists the logic behind the methods used in the context of
the study and explains why only a particular method of technique had been used so that search
lend themselves to proper evaluation. Thus in a way it is a written game plan for concluding
research.
Research Design Followed: -
In our study the research purpose is descriptive research study i.e. to gain familiarity with
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phenomena or to achieve new insights in it.
Sampling: -
Sample technique: - random samplings in the case of five blocks from each district and
from each block four villages are taken on the judgement basis. Considering 10 houses
from each village on judgement cum convince sampling.
Sample size: - 600 houses from rural areas.
Data Collection: -
Primary data: -primary data is collect through the personal interview and questionnaire.
Secondary data: - secondary data collected through previous research, articles, journals,
web pages and news papers
Research instrument: -
Research instrument for the research is questionnaire.
Analysis and Stastical tool: -
Chi square: - Chi square is use to analyse the nominal and ordinal data.
Z test: - Z test is use for analysis of interval and ratio data.
T test: - T test is also used for the analysis of interval and ratio data
Interpretation tool:
i) Graphs: Bar Graph
ii) Pie Chart
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REFERANCES:-
Herbig, Paul (1997), India's Middle Class: Real or Fiction? Feasible or Not?
http://www.geocities.com/athens/delphi/9158/paper21.html).
Kaur G. (2008), "Mobile Phone Manufactures Increasing Their reach in Rural India",
accessed from www.google.com.reviews 08.
Manchandani, R. (2003), "Rural Marketing in India", (www.projectshub.com).
Mason, J.B. and Himes, S.H. (2005), An Exploratory Behavioral and Socio- Economic
Profile of Consumer Action About Dissatisfaction With Selected Household Appliances,
The Journal of Consumer Affairs, pp. 121-127
Babu P George, Manoj Edward. (2009)Cognitive Dissonance and Purchase Involvement
in the Consumer Behavior Context IUP Journal of Marketing Management. Vol. 8, Iss.
3/4; pg. 7, 18 pgs
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David M Wells.(2008) Air Conditioning, Heating & Refrigeration News. Troy:. Vol. 235,
Iss. 11; pg. 24, 2 pgs
Iyar vidya(2010), Rural marketing, SIES journal of management, vol.6, no.6, Pg. 110,4pgs.
ANAND & HUNDAL, B.S. (2007). MOTIVATORS FOR PURCHASE OF
DURABLES FOR RURAL AND URBAN CONSUMER OF PUNJAB.
BALAJI SATHYA NARAYANAN (2007). RURAL MARKETING THE ROAD FOR
SUSTAINABLE GROWTH .MARKETING MASTERMIND,
GUPTA S.P. (2000). STATICAL INTERFERANCE-TEST IN HYPOTHESIS .IN
GUPTA S.P.,STATICAL METHOD.
SHARMA SHASHIKUMAR, L. & CHAUBEY,D.S. (2007)CONSUMER BEHAVIOUR
TOWARDS MOBILE SERVICE PROVIDERS:
ADESARA, HETAL.2004. ITC S E-CHOUPAL,
AHMED SHAMIM.1991.RURAL MARKETING IN INDIA . NEW DELHI :ASHISH
PUBLISHING HOUSE
DAVID UPTON AND VIRGINIA FULLER. 2003. THE ITC E CHOUPAL
INITIATIVE, AVAILABLE AT HTTP://HARVARDBUSINESSONLIN.HBSP.EDU.
IYER, SRIRAM K. 2000. HENKEL TO CHARM RURAL INDIA VIA ECONOMY
PACKS, THEECONOMIC TIMES, 27 SEPTEMBER.
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