The changing profile of rural consumers

Companies need to innovate their mobility platform to drive awareness among rural consumers

The buying preferences of India's rural consumers are changing fast and several factors - economic, psychological, and technological - are coalescing to fuel this transformation. Rural consumers' income levels are on the rise, enabling more of them to buy products and services that improve the quality of their lives. The monthly per capita spending among rural consumers has increased 17 per cent between FY10 and FY12, higher than the 12 per cent rise among urban consumers. Disposable incomes have gone up and fuelled aspirations, thus, resulting in a change in buying preferences. Spending on non-food items rose from 40 per cent of the total spend in FY2005 to more than 50 per cent in FY12.

There has also been a shift in the awareness levels of the rural consumer and the increased media penetration has played a vital role in rural India's values and attitudes. These economic trends, socio-economic changes and recent advances in technology, have triggered major changes in how rural consumers make purchase decisions and what they buy and from where they buy.

Accenture undertook a research to understand how Indian rural consumers' behaviours and attitudes have evolved in the past few years and what influences their buying behaviour the most. The study included focus-group discussions in 10 states as well as a quantitative survey that went to more than 2,800 consumers in 320 villages and 32 census towns in eight states.

Our study identifies three broad dimensions characterising behaviour change emerging among India's rural consumers: First, rural consumers are more aspirational. Accenture research findings indicate that Indian rural consumers are fuelled by a deep desire to provide their children a better future through education and healthcare. About 50 per cent of the survey respondents claimed that they plan to spend more on education of their children and healthcare of their family in the coming year. Today's rural consumer is also more brand savvy and is willing to spend more as long as quality is assured. As per Accenture's report, about 71 per cent of respondents purchase branded products only. About 60 per cent of respondents, in fact, believe brands are trustworthy and reliable. As consumers are becoming brand conscious, they are also trading up and seeking more features and better product designs that enhance their social image. About 42 per cent of our survey respondents indicated product upgrading as a reason for spending more in a category.

Second, rural consumers are better networked. They are better connected in both the physical and digital sense. Technological developments, particularly deeper penetration of mobile telephony and direct-to-home (DTH) television into India's hinterlands, have also reshaped lifestyle and consumption patterns among rural consumers. The total number of telecom subscribers (mobile plus landline) in rural India crossed 378 million in July 2014. And of the 205 million internet users in India in 2013, 68 million lived in rural areas. Even more impressive, one-fourth of the 100 million people in India who access the Internet using mobile devices live in rural areas. Women and children now play a more empowered role in purchase decisions. The recent Indian Census data shows that as many as 35 per cent of rural households have both husband and wife earning money for their families.

Third, rural consumers are more discerning. Rural consumers are street-smart about common retailer ploys and schemes and view value through a broader lens and share more information with more peers. While companies might feel that a rural consumer can be swayed by celebrity endorsements or catchy ad lines, in reality, consumers don't fall for such tactics.

While the rural consumers' needs at different points in the purchase cycle are evolving, they are also quite different from those of their urban counterparts. Companies need to develop products and services that address the unique needs of customers, innovate on the mobility platform to drive awareness for their brands and increase their physical as well as mental reach to win loyalty.

By Sanjay Dawar, Managing Director and Lead, Accenture Strategy, Accenture, India;Raghuram Devarakonda, Managing Director, Sales & Customer Services Practice, Accenture Strategy, Accenture, India;Vineet Ahuja, Principal, Accenture Strategy, Accenture, India

Starting March 9, 2015, The Strategist will publish a two-part series based on the Accenture rural market survey