Download Marketing problems of cottage industries

A STUDY ON CUSTOMER PERCEPTION AND MARKETING ISSUES OF
COTTAGE INDUSTRY PRODUCTS IN MADURAI DISTRICT
DR.S.SEKAR,
Asst. Prof, Dept. of Business Administration, Govt Arts College, Dharmapuri.
J.PARWIN,
Research Scholar, PERIYAR University, Salem
R.VIGNESH (corresponding author)
Asst Prof, Dept of Business Administration, PVP College, Singarakottai
email: [email protected]
Abstract:
The purpose of this paper is to discover the customer perception and marketing problems
faced by cottage industry products in Madurai District. A survey was conducted through
structured questionnaire and data were collected from 141 female and 112 male
customers about the cottage industry products with a response rate of 84 percent. The
data is analyzed using non parametric variance analysis and t-tests. The findings are listed
and suitable recommendations were pointed out.
Key words: Cottage industry products, Mann Whitney test, Kruskal Wallis test
Introduction:
A cottage industry business is the creation of products and services that are home-based
rather than being manufactured in a factory. The appeal of buying from a cottage industry
manufacturer is that the consumer can receive a unique, one-of-a-kind, hand-made
product that isn't mass produced. Many consumers also appreciate the human-aspect to
home-based created products and services and feel that the majority of these cottage
industry services produce a higher quality product than one that is mass produced.
The main attraction a home-based business brings to the creator is the ability to dictate
working hours, develop an item or service of interest, and sell the product or service for a
higher profit margin. The downside of cottage industry produced goods for both the
consumer and manufacturer is a slower production of product and less opportunity to
compete with larger brands.
According to Ahmed, S. F. (1989) Market is the ultimate destination of all industrial
concerns whether small or big where the produced are being bought and sold
(S.S.Khanka, 1994). Marketing is a broad process of linking the gap between the
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producer and consumer. The vital role of marketing in accelerating industrial
development lies in selling the goods and services produced by these units. The goods
have no value for the manufacturing units unless these are sold. Stanton found that
Marketing is a tricky technique involving detection of what the consumers wants, then
planning and developing a product or service which satisfies those demands and
ultimately determining the best way to price, promote and distribute that product. The
expertise of entrepreneurs in marketing their product plays a vital role in the success and
growth of his enterprise.
Marketing has been identified as an important aspect affecting the performance of small
scale industrial sector and which is the key element, if not practically assessed leads to
sickness and ultimately closure of the units. But Market analysis is almost absent in small
scale sector which leads to failure in marketing the products. Many problems which the
SSI units face in marketing their products related to lack of demand, poor quality and
design, poor bargaining power, poor service to customers, brand preferences and
ignorance of potential market areas, etc.
Review of literature:
Products are assessed on various attributes in relation to what consumers consider most
important. The cottage industry product attributes are identified under three titles as price,
quality and value respectively. But, different product attributes are included in product
evaluation by different researchers. Traditional products are cheap at the place of
production but it becomes costlier in the hands of middlemen, which ultimately affect the
market demand of these products. Moreover due to high transportation cost and high
wages etc. the cost of production is higher as compared to the male areas than female
areas. It is observed during the field survey that majority of the entrepreneurs are not
aware of the market survey of their products. According to Desai.V. Weak financial base
and poor bargaining power small scale industrial units required to utilize the services of
middlemen to get raw materials on credit. Such an arrangement results in higher costs
due to the high margins of the middlemen.
The availability of raw materials has been a major problem in our country. Some of them
are very scarce at times and abundant at others causing great price variations. There are
often artificial shortages created by dishonest manufacturers and suppliers to rig the
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prices up. This is particularly true for small scale and cottage industries. Bad conditions
of road networks and communication system especially during rainy season leads to
uncertainties in the procurement of essential raw materials and construction materials
from outside which creates artificial shortages. Due to their limited resources, the owners
of cottage industries cannot afford to purchase raw-material in bulk. That is why they get
low quality materials at high rates.
Industrial production requires not only machinery and equipment but also skilled
manpower, management, energy, banking and insurance facilities, marketing facilities,
transport services which include railways, roads and waterways, communication
facilities, etc. All these facilities and services which facilitate industrial and agricultural
production and accelerate the overall economic development of a country constitute
collectively the infrastructure or economic and social overheads of the economy.
Efficient, cheap and quick means of transport of wide varieties is essential for the
expansion of trade and commerce.
According to Aziz, A. & Babu, M.D. (1997), Power and electricity is the basic
infrastructure around which all economic activities moves. The degree of economic
growth is highly related with the generation and consumption of electric power. Growth
of industry in a particular region depends upon adequate and uninterrupted power supply.
Power shortage, power shutdown and power cuts could paralyze industrial activity, throw
thousands of workers out of job and cause inconvenience to consumers. Issue like the
geographical location, land distribution, climate, social setup etc stands as a combination
of obstacles towards industrial development. Capital, technical knowledge and
entrepreneurial spirit, which are the backbone of successful cottage industry.
3. Methodology
The present study is descriptive in nature. The product attributes related with the quality
dimensions for cottage industries are selected as lack of demand, poor quality and design,
poor bargaining power, poor service to customers, brand preferences and ignorance of
potential market areas. The socio demographic factors included in the survey are gender,
age, education and income. A questionnaire is prepared and data were collected through
convenient sampling method from female and male areas of Madurai District.
Questionnaires were given to 300 respondents and 274 filled questionnaires were
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collected later. After excluding 21 inappropriate questionnaires, 253 were used(Female141; female 112) for the analysis; this yielded an effective response rate of 84%.The
results are subjected to the reliability analysis and the Cronbach’s alpha is found to be
0.872. The favorable quality attributes are discovered using the mean and the standard
deviation. The relationship between the socio, demographic factors and the product
attributes are found out using the Kruskal Willis and Mann Whitney test.
4. Results and Discussion
The age stretches out between 21 to 45 among the respondents, 37% of whom are female.
The largest group (36-45) is composed of 79 people in female and 51 in male followed by
(26-35) including 38 people in female and 23 people in male areas. 22% of the
respondents belong to the lowest income class where only 13 % of the respondents are in
the highest income earners. Regarding the education level, 22% of the respondents state
that they are graduate. 51.6 percent of the respondents are married. 39 percent of the
respondents are having joint family and the family members are working in their own
cottage industry.
Table 1- Attitudes of the consumers towards cottage product’s attributes
Male
Constructs
Mean
Standard
Female
Mean
Deviation
Standard
Deviation
Product suitable to latest trend
3.720
0.9826
3.970
1.0160
Brand name & Image of the product
4.214
1.3602
4.253
1.3848
Quality of the product
4.656
1.3509
4.405
1.2806
Price of the product
3.630
0.9042
3.728
0.9268
Expectation- fulfillment
4.128
1.0953
4.323
1.4512
Product performance
4.476
1.5805
4.175
1.5520
From the Table 1, the important cottage product attributes considered by the respondents
are Brand name & Image of the product, Quality of the product, Customer expectationfulfillment and Product performance. Quality of the product is the most favored attribute
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with a mean of 4.656(male) and 4.405(female) customers. Price is the least bothered
factor by the customer respondents.
Table 2 - Mann –Whiney test results for Male –female factor:
Mann –Whitney
test ‘U’
23.500
Wilcoxon
test
51.500
-2.788
Asymp.sig
(2-tailed)
0.027
40.000
145.000
-3.004
0.001
Quality of the product
46.500
74.500
-2.516
0.043
Price of the product
42.500
127.000
-2.737
0.036
Expectation- fulfillment
47.500
152.500
-0.442
0.909
Product performance
38.500
143.500
-1.12
0.067
Durability
37.420
117.790
-2.378
0.045
Constructs
Product suitable to latest
z
trend
Brand name & Image of
the product
The relation between customer location (male or female area) and product attributes is
evaluated using Mann-Whitney test. A significant relation is found between location
factor and the attributes of cottage products. Specifically, female participants are more
alert than male respondents. More female (39%) respondents state that they prefer quality
products. 47% of the female respondents said that they knew the price of the product and
60% of them said that performance of the product is high. More male 42% than female
27% state that product suitable to latest trend was one of the important factors in making
purchasing decision.
Regarding the expectation -fulfillment, both female and male respondents confirm that it
is one of the important concern for them. Nonetheless, female respondents found to be
more careful about the durability (47%), availability (38.7%). 56.9% of the male
respondents are brand conscious.
The age factor
According to Table 3, a significant relation is observed between age factor and the
attributes of cottage industry products with a significance level p =<0.05 in the Kruskal
Wallis test.
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Table 3: The Kruskal Wallis test results for age factor
Constructs
Chi-Square
Product suitable to latest trend
18.634
Brand name & Image of the product
Quality of the product
17.844
21.458
Price of the product
19.036
Expectation- fulfillment
2.57
Product performance
1.27
df
Asymp. Sig.
2
0.009
2
0.087
2
0.001
2
0.093
2
0.909
2
0.260
Durability
a. Kruskal Wallis Test
b. Grouping Variable: age group
The age group of (36-45) is found to be loving of purchasing known brands followed by
the age group (26-35) with the percentages of 36% and 47%. The selection of branded
products by the age group is influenced by the TV advertisements and sales promotions.
On the other hand, 21% of the age group of (18-25) prefers the brands for brand name
and image. Although the age group of (26-35) is more interested in quality, only 21% of
this group answers positively to the question of “I would like to buy only the quality
product”. Nonetheless, 27% of the age group of (36-45) said, they were interested in
looking product performance.
The education factor:
Table 4: The Kruskal Wallis test results for education factor
Constructs
Chi-Square
df
Asymp. Sig.
Product suitable to latest trend
13.63
3
0.029
Brand name & Image of the product
15.844
3
0.017
Quality of the product
25.458
3
0.001
Price of the product
9.036
3
0.079
Expectation- fulfillment
12.575
3
0.059
Product performance
7.273
3
0.001
Durability
12.503
3
0.062
a. Kruskal Wallis Test
b. Grouping Variable: Education level
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The relation between the education level and the product attributes, latest trend, Brand
name & Image and Quality are statistically significant as seen in Table 4. Less than SSLC
qualified participants matched with the Expectation- fulfillment (37%) and price of the
product (51%). On the other hand, the performance and quality factors related with the
workmanship are favored by the Post graduate levels. For instance, 44% of the PG and
29% of the Graduate respondents take care of quality while purchasing. Regarding the
relation between the brand and education level, the respondents with lower education
level prefer buying unbranded. Higher educated people prefer to buy the products in the
products with brand name & image.
The income factor:
The income factor is in a statistically significant relation with the product attributes.
Table 5: The Kruskal Wallis test results for income factor
Constructs
Chi-Square
df
Asymp. Sig.
Product suitable to latest trend
10.207
3
0.051
Brand name & Image of the product
12.620
3
0.025
Quality of the product
19.190
3
0.001
Price of the product
8.996
3
.0.089
Expectation- fulfillment
9.204
3
0.071
Product performance
22.020
3
0.001
Durability
11.390
3
0.039
a. Kruskal Wallis Test
b. Grouping Variable: income level
63% of the respondents state that they purchase branded products that advertised well in
the Media. In the survey, the preference of product attributes is ‘Performance and
quality’, ‘Brand name or image’, ‘Durability’ ‘latest trend’, and ‘Expectationfulfillment’ respectively. This result is similar to the findings of Agac and Egindir
established among University students purchase behaviour of the products..
Findings:

Gender characteristics are in relation with latest trend Brand name & Image, Quality
of the product. The product properties, such as design, comfort and individuality have
a decisive role on buying behaviour, which vary depending on a set of factors, mainly
on gender. However, the results of the survey are different from the findings of Akin
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and astug which claim that female respondents are more effectual towards both brand
and trend. In this survey, brand name or image is much more favored by male
respondents.

Female respondents found to be more careful about the durability (47%), availability
(38.7%). 56.9% of the male respondents are brand conscious.

Age factor is related with the trend and brand name/ image. Even, the adult (36-45)
age group is more interested in brand name & image. This result is supported by
Rocha et al who claim that marketers should highlight the benefits of the products as
elder consumers considered their consumption in a more strategic manner than
younger consumers and they purchase for pleasure or need, but less for consistency.
The other result regarding age factor is that, in the age group of 26-35, they look
trendy in parallel with the younger consumers (18-25) tend to be very conscious of
their image.

PG and 29% of the Graduate respondents take care of quality while purchasing.
Regarding the relation between the brand and education level, the respondents with
lower education level prefer buying unbranded. Higher educated people prefer to buy
the products in the products with brand name & image. According to Oktay, product
quality when defined and measured from industry perspective tends to focus on
physical properties that can be measured objectively. Besides, Aktuglu and Temel
claim that lower educated people prefer to buy simpler products while higher
educated people would rather buy functional products having more technical
properties in similar with results. The people from higher educated level prefer higher
priced products.

Income level is in relation with purchasing branded products. This result is in parallel
with the findings of Agac and Egindir, the expenditure on products is affected from
the income level. Increasingly, in cottage industry products, brands are seen as cues
of achievement and identification for brand conscious and materialistic consumers.
5. Conclusion
The results reveal that the quality, durability, performance and latest trend are the most
favorable product attributes followed by price. Moreover, the importance given by the
customers to the product attributes, differ according to the socio economic characteristics
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of the consumers. The study is limited with the consumers only. But, the results obtained
are compared with the previous findings. Although, the product attributes handled are not
the same in all the studies, many cues and similar findings are found from the literature.
However, the importance of the product given by the customer to the attributes is
influenced by the socioeconomic properties.
This enables to state that the rate of development of the country affect the customers’
choice in terms of product quality dimensions in terms of product attributes. The findings
of the survey conducted in a large population are valuable for the cottage industry
manufacturers which establish customer oriented strategies. As the quality perception and
importance given by the customers is influenced by socio demographic properties and it
changes with time, it is recommended to the cottage industry product manufacturers to
analyze their market well in order to better determine the segments of the market with up
to date information.
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